split annuity purchased from after tax savings

L1: split annuity purchased from after tax savingsI am 54 and have $100,000 in after tax savings that I keep in a CD earning about 5.2% interest. It has been brought to my attention that I could purchase a split annuity which is 1 part immediate annuity and 1 part fixed annuity. It will provide me with an immediateannual income comparable to the CD interest, but I”ve been told that only 12% of the income generated will be taxable since the balance is actually the original principal. The fixed annuity would grow to the original $100,000 at the end of the 6 years. Is the income generatedfrom the immediate annuity considered a 72(t) payout? 2007-01-27 14:48, By: Anne, IP: [65.4.100.76]
L2: split annuity purchased from after tax savings>>Is the income generated from the immediate annuity considered a 72(t) payout.
No. It is considered an immediate annuity. Immediate annuities purchased with after tax dollars are exempt from the 10% penalty.

>>but I”ve been told that only 12% of the income
That’s because part of every payment that you receive is a return of the premium you paid, the balance is taxable and spread out over the immediate annuity payment period.

This is one of those sales ideas that look great on paper, but seldom does more than generate commissions to the person that made the presentation to you.

And did they also mention that while the deferred annuity grows back to the original amount, that your basis is now less so the next time lots more is taxable. And if you are under 59.5 at the end of the period that it won’t work a 2nd time since the funds converted to the immediate annuity are from the deferred annuity and the immediate annuity under that circumstance isn’t exempt for the 10% re-age 59.5 penalty.

Just my thoughts, but I would look at this whole idea in an extremely skeptical way!2007-01-27 15:03, By: Gfw, IP: [24.148.85.129]