Are there tax breaks for retirees?

Nicole Stevens

tax dayAnnuities have become common place, especially among retirees. Not many know the tax benefits of having an annuity. Here you’ll find out what an annuity can be, how it protects you, and the huge tax benefit an annuity holds.

In most cases, an annuity is typically offered by an insurance company to protect the buyer at risk of outliving their income. Something such as this is very beneficial to a retired person, keeping an insured steady flow of income without continuing to work. You pay into the annuity, and when the time comes to start receiving it back, it can be a high sum (upwards into the 100,000’s).

When annuities are being paid out if taxed the rates could be sky high, and a good chunk of that money would be gone in no time. Thankfully, there is a way to get your annuity sans tax! As long as the money is used to pay for quality long-term care, it will not be taxed. This amount includes money deposited into the account and interest built up.

This is all thanks to the Pension Protection Act of 2006, keeping annuity payments not subject to tax so long as they’re used for the proper care, starting back in 2010. Work alongside your insurance provider to figure out a plan for your future with an annuity today. 

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Skip West | Financial Planner | West Financial Group

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