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Retirement Planning > Retirement Investing > Annuity Investing

Ask the expert: annuity starting date

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The question was: What is an annuity starting date?

The answer is: The exclusion ratio for taxing annuity payments under a particular contract is determined as of the annuity starting date.

This is the “first day of the first period for which an amount is received as an annuity.” (IRC Sec. 72(c)(4); Treas. Reg. ?1.72-4(b).

For example, suppose that a person purchases an immediate annuity on July 1 providing for monthly payments beginning August 1. The annuity starting date is July 1 (the first payment is for the one-month period beginning July 1st.)

Payments under settlement options usually commence immediately rather than at the end of the month or other payment period; hence the annuity starting date is the date for the first payment.

Source: This is an excerpt from 2009 Tax Facts On Insurance & Employee Benefits, a reference annual published by the Professional Publishing Division of The National Underwriter Company, Cincinnati, Ohio, p. 12. Click here to learn more about this reference book.


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