Veteran Services: Finance Questions

Finances

You're working, and you've got a family that depends on you - both now and down the road. Where do you invest your money? Do you borrow against the equity in your house? Through a preferred provider relationship with USAA, The American Legion can provide expert financial advice to just about any question.

Questions & Answers

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Financial Questions & Answers

Question:

I will be 85 yrs old in July 2011 and I have been notified that my annuity with Metlife will be annuitized at that time or I must take this money out. What would you recommend that I do at this time? I do not want to annuitize. – Kenneth

Answer:

If you don’t annuitize and take a lump sum payment from your non-qualified annuity, the earnings you’ve had over the years would be taxable income. This may be what you’re trying to avoid. If that’s the case, you may be able to transfer you annuity to a new contract through a nontaxable 1035 transfer. Such a move could allow you to extend your maturity date to age 90 or beyond. Newer contracts typically reflect the longer life expectancies used today. However, a new contract would likely come with a new set of surrender charges and could even change the tax treatment of your annuity. Another alternative would be to annuitize over a short period of time, say five years. This would allow you to spread out the taxable income over a number of years, but not lock you into a longer term payout. Figure out what your goal is and then talk to your tax adviser and insurance representative to determine what makes the most sense.