Are Annuity Distributions Investment Income?

[Tahoe Ray]

It seems like the Federal Government thinks so....

Federal Register | Net Investment Income Tax

 

[Norwayguy]

It seems like the Federal Government thinks so....

Federal Register | Net Investment Income Tax

Works for me as taxes on investments are normally lower than taxes for income and most annuity withdrawals are taxed as ordinary income.

 

[Tahoe Ray]

Works for me as taxes on investments are normally lower than taxes for income and most annuity withdrawals are taxed as ordinary income.

I thought it was interesting that they were qualifying it that way. Distributions from IRAs and Qualified Plans (also ordinary income) are "exempt" and yet NQ annuities are considered "investment income"?

Does that mean that if a distribution from my IRA pushes me over the income tax threshold for the 3.8% tax, I don't owe it but if my NQ annuity does the same thing, I do?

 

[iceco1d]

I don't think these new rules were really thought through very well.

...I know, shocking.

 

[Tahoe Ray]

I don't think these new rules were really thought through very well.

...I know, shocking.

 

[Chad.C.O]

Different rules though for qualified vs. non-qualified funds. Be sure to do your homework