Hi Reader,

Retirement tax planning can feel confusing, especially when annuities enter the conversation.

I've found that many people aren't really asking about the annuity itself. They're trying to understand what happens to their money, how it's taxed, and whether an annuity is the right fit for their retirement.

"Taxes are very important, but taxes alone shouldn't determine whether an annuity belongs in your retirement plan. The planning objective always comes first. The tax rules simply help you understand how that decision affects you individually."

ERIC BLAKE

How Are Annuities Taxed? A Simple Guide for Retirement

In this episode, I continue our annuity series by walking through the tax rules that often create the most confusion. I explain why the source of your money matters, how qualified and non-qualified annuities are taxed differently, and why buying an annuity inside an IRA doesn't change the tax treatment of that retirement account.

We also discuss how withdrawals work, how tax deferral fits into retirement planning, and why every annuity decision should begin with one simple question: What do I want this money to do for me?

What do I want this money to do for me?

Key Takeaways:

• Understanding how the source of your money determines the way an annuity is generally taxed
• Why placing an annuity inside an IRA usually doesn't change the retirement account's tax rules
• The difference between qualified and non-qualified annuities when withdrawals begin
• How tax deferral allows earnings to continue growing until money is withdrawn
• Asking what role an annuity should play before deciding whether it belongs in your retirement plan
• And more!

You can catch every episode of The Simply Retirement Podcast on the website - or on your favorite podcast app.

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Related Links & Resources

• 📄 Read
  • ​Episode 118 Transcript​
• 🎧 Related Episodes
  • ​#115 - Understanding Annuities Before You Decide if They Belong in Your Retirement Plan​
  • ​#116 - Which Type of Annuity Fits Your Retirement Plan?​
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Did you miss it? Catch the replay

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I was joined by Certified Professional Retirement Coach Joy Levin for The Plan Nobody Hands You: Building a Life You'll Love After Work.

We talked about a question that doesn’t get nearly enough attention: What are you actually retiring to?

Joy shared practical ideas for thinking about the structure, relationships, identity, and sense of purpose that can change once work is no longer at the center of your life.

If you weren’t able to join us live, you can catch the full conversation here.

The Simply Retirement Toolbox

👉 Does An Annuity Fit Within My Financial Plan?​​​​​

Securing a predictable income stream in retirement is likely one of your primary goals if you are approaching or already in retirement. With so many products and strategies available, it can be difficult to determine which approach best fits your unique financial situation.

Annuities can provide guaranteed income along with several other benefits that may support your retirement plan. Depending on your needs and circumstances, an annuity may help protect your initial investment, supplement your retirement income, provide tax-deferred growth, help address long-term care expenses, or support your legacy and wealth transfer goals.

Before deciding whether an annuity is right for you, it deserves careful consideration rather than being automatically dismissed or accepted. To help you evaluate whether an annuity fits within your retirement plan, we created this checklist. It covers several of the key factors you should consider, including:

• Variable, fixed, and indexed annuities
• Immediate and deferred income annuities
• Purchase/funding methods
• Riders and other features
• Tax considerations

Have more questions about retirement planning? Just hit reply to this email. I read and respond to every message. 😃

Keeping Retirement Simple,

Eric Blake, CFP®

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Information here is provided, in part, by third-party sources. These sources are generally deemed to be reliable; however, neither Blake Wealth Management nor RFG Advisory guarantee the accuracy of third-party sources. The views expressed here are those of Blake Wealth Management. They do not necessarily represent those of RFG Advisory, their employees, or their clients.

This commentary should not be regarded as a description of advisory services provided by Blake Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.

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