Mike B, a long-term-care annuity is a new product that allows you to combine long-term care insurance with an annuity. That means you get something no matter what. If you don't need the long-term care, you can get an income stream, cash out the product (and pay income taxes) or continue to get tax-deferred interest until you annuitize. You will pay tax on at least part of the income with you turn it into an income stream. If you're thinking about buying an annuity and long-term care insurance, a hybrid plan may be the way to go.
Here's our next question from kjacobs
Yes, you would have to take an RMD from traditional IRAs regardless of whether you are working.
You also have to take RMDs from any 401(k)s held at other employers. If you have a 401(k) at the company you are currently working at, you don't have to take an RMD for that 401(k) -- unless you own 5% or more of that company.
Alright, it looks like we have just a couple questions left. Here's one from Bigred.
You look at the total value on your statement on December 31, 2011, and then look at your life expectancy for 2011 in the IRS Uniform Tables. Divide the total by your life expectancy, and you will come up with the payment.
One other note on RMDs: For those taking their first RMD, the deadline is April 1 of the year following the year they turn 70 1/2. But if you delay taking your first RMD until then, you will still have to take your second RMD by December 31 of that year. So you would double up on RMDs, and for some people that might push them into a higher tax bracket for that year.
Thanks for pointing that out, Rachel. That's an important deadline to consider
As for the withholding amount on an RMD, I would suggest looking at your tax return from last year, and doing a projection for your tax bill this coming year. If you pay as much in tax this year as you did last year, you generally won't get hit with a penalty even if you accidentally underwithhold this year.
Alright, looks like we're out of time for today's chat. Thanks for all the tough questions, all.
And thanks Rachel and Susan for helping out!
Enjoyed it...thanks for joining us!
Mike B, a long-term-care annuity is a new product that allows you to combine long-term care insurance with an annuity. That means you get something no matter what. If you don't need the long-term care, you can get an income stream, cash out the product (and pay income taxes) or continue to get tax-deferred interest until you annuitize. You will pay tax on at least part of the income with you turn it into an income stream. If you're thinking about buying an annuity and long-term care insurance, a hybrid plan may be the way to go.
Mike B, we looked at this topic recently in a cover story, which you may want to check out ... www.kiplinger.com
