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  • Annuity Taxation

    Author: Vilensky & Company, LLC | | Categories: annuity , annuity distribution , early withdrawal penalty

    If you're wondering how an annuity is taxed, then here are the basics. Look no further because you will overthink it. In a nutshell, a distribution from a qualified annuity will be taxed at your current income tax rates. If you are 59 1/2 years of age then the early withdrawal penalty does not apply. Otherwise, you will pay a 10% early distribution penalty. You will pay tax only on earnings from a nonqualified annuity. Let me explain.

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