Peak behind the Combo Split Annuity Curtain Jan. 2023 | Income & Growth Guaranteed & tax exclusions!

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2 years ago
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A peak behind the curtain:

Combo Split Annuity Illustrations January 2023 | Income & Growth Guaranteed with tax exclusion ratio.

Sample Illustrations

Total Premium $500,000:
SPIA: Immediate Annuity Side $387,133.00
MYGA: Multi Year Guarantee Annuity Side $112,867.00

Growth and Income:
Immediate Annuity Income $2,046.12 per month for 60 months
Multi Year Guarantee Annuity Interest Rate 5.25% guaranteed for 5 years

Premium Tax On Immediate Annuities:
States which charge a premium tax will have a lower monthly income. Premium tax states include CA, CO, ME, NV, SD, WY.

Immediate Annuity Exclusion Ratio:
Assuming 100% cost basis (previously taxed funds) the payment may only be 8.1% taxable. A $2,046.12 payment with 91.9% exclusion ratio = $1,880.38 excluded and $165.74 taxable. At a 25% tax bracket there would be $41.44 tax on each payment. $2,004.68 would be the approximate after tax income.

Multi Year Guarantee Annuity taxable interest:
$387,133..00 is the cost basis and $112,867 is the interest gain. The interest is tax deferred until withdrawn. After the 5th year if the annuity is surrendered/cashed out the $112,867 is fully taxable as income. If 1035 exchanged to a new split annuity, the tax deferral continues. If using a partial 1035 exchange and placing funds into a new split annuity, a prorated cost basis will be used and the income will have a lower exclusion ratio.

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