Uh Oh, New Statement from TransAmerica

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djmbob
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Uh Oh, New Statement from TransAmerica

Post by djmbob »

My spouse and I each inherited a share of my mother's TransAmerica Vanguard Annuity.

The Vanguard Annuity was set up in 2005 from several different Annuities 1035'd which her former financial advisor put her into.

In her last few years, she took significant amounts from the annuity for her assisted and long term care expenses all of which was taxable. Looking at mom's initial values on her date of death, the total value was $445K and it showed the initial premium was $95K and total premium payments as $297K.

I completely forgot about all the 1035 exchanges until today when we received our first Quarterly Statement that showed the cost basis! I thought about 25% would be taxed and 75% tax free, but instead, the cost basis is $39K on a value of $87K for each of us... so we will owe on 55%, plus any future gains. Since we have to withdraw everything within 5 years, that really changes the equation in terms of taxes owed.

Should we just bite the bullet and max withdrawals up to IRMAA limit? We are already solidly in the 22% tax bracket, with no going back

Thanks for any advice,
Cheers,
Ray
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David Jay
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Re: Uh Oh, New Statement from TransAmerica

Post by David Jay »

I would certainly stay under the IRMAA limit.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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Stinky
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Re: Uh Oh, New Statement from TransAmerica

Post by Stinky »

djmbob wrote: Mon Oct 18, 2021 7:02 pm Should we just bite the bullet and max withdrawals up to IRMAA limit? We are already solidly in the 22% tax bracket, with no going back
I think that sounds like a solid plan.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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BolderBoy
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Re: Uh Oh, New Statement from TransAmerica

Post by BolderBoy »

Stinky wrote: Mon Oct 18, 2021 8:48 pm
djmbob wrote: Mon Oct 18, 2021 7:02 pm Should we just bite the bullet and max withdrawals up to IRMAA limit? We are already solidly in the 22% tax bracket, with no going back
I think that sounds like a solid plan.
I also agree with this.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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djmbob
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Re: Uh Oh, New Statement from TransAmerica

Post by djmbob »

Thank you, David, Stinky and BoulderBoy... appreciate the confirmation of my plan.
Cheers
Ray :sharebeer
aristotelian
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Re: Uh Oh, New Statement from TransAmerica

Post by aristotelian »

What choice do you have?
inverter
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Re: Uh Oh, New Statement from TransAmerica

Post by inverter »

Also be careful with the rule of annuities drawing on growth/taxable first, then tax free. May chance your calculus.
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djmbob
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Re: Uh Oh, New Statement from TransAmerica

Post by djmbob »

Also be careful with the rule of annuities drawing on growth/taxable first, then tax free. May chance your calculus.
Thanks, inverter, yes I confirmed with them that taxable will come out first.

Ray
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