What about taxes on remaining Anuity?

Reply #6

justxploring — Sun, 26 Aug 2007 06:14:09 GMT

I want to add something here. One of the reasons I rarely consider estate tax when discussing annuities is that the majority of people I know in the real world never pay this tax. The entire estate tax issue is being debated, so nobody really knows what will happen after 2010. However, most annuities are paid as a lump sum benefit when a person dies.

I hope I can post this link. Apparently, dying after winning the lottery is not as uncommon as one would think. It looks as if many famili... [ More ]

Reply #5

justxploring — Sun, 26 Aug 2007 05:22:41 GMT

We weren't talking about an inheritance, dvdiva. The question was on who pays the taxes while an annuity is growing in value.

Reply #4

dvdiva — Sun, 26 Aug 2007 03:40:05 GMT

That's not true if the owner of the annuity dies. The estate is taxed on the cash value of the annuity at once. Yet another reason why people who talk it over with professionals choose cash.

Reply #3

sfilippo — Sun, 26 Aug 2007 00:13:07 GMT

Thank you justxploring,

That makes sense.

Also found this in the FAQ @ Powerball's site...

IS THE CASH AMOUNT THE JACKPOT AMOUNT AFTER TAXES?

No. When we advertise a prize of $100 million paid over 29 years (30 payments), we actually have less than $50 million in cash. When someone wins the jackpot and wants cash, we give them all of the cash in the jackpot prize pool. If the winner wants the annuity, we invest the $50 million in cash to fund the annuity payments. The winner gets th... [ More ]

Reply #2

starchild_45 — Sun, 26 Aug 2007 00:11:21 GMT

you beat me to the punch and you are so smart.

Reply #1

justxploring — Sat, 25 Aug 2007 23:57:01 GMT

An annuity is a tax deferred product sold by insurance companies. The interest accumulates tax deferred. You only pay income tax when you withdraw the money.

There are different types of annuities and the lottery is a usually a structured, immediate annuity. That is, you get the same payment for a certain amount of years. PB is now a graduated immediate annuity. You can do that with your own savings, that is, invest so interest isn't taxed while the money is building. If you buy an ann... [ More ]

What about taxes on remaining Anuity?

sfilippo — Sat, 25 Aug 2007 23:50:02 GMT

Let's say you won a large Powerball jackpot and decided to take anuity payments over the next 30 years.

It makes sense that you would be liable for taxes on your anuity payments and any capital gains generated there on from that payment, but what about the taxes owed on the capital gains being incremented on the remainder that Powerball has control of?

Who's liable for paying taxes on the remainder of your anuity that is not in your possession