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URL:  http://boards.fool.com/individual-retirement-annuity-options-29834894.aspx

Subject:  Individual Retirement Annuity Options Date:  2/8/2012  2:15 PM
Author:  snazzman Number:  115000 of 121061

I like the advice that I’ve seen posted here and now that I have a decision of my own to make I’m throwing my situation out for a response.
This April I turn 65 and an Optional Purchase Payment Individual Retirement Annuity which I have matures. The Annuity Company is giving me three main options.
Payment Option 1: A Life Annuity with no certain period would provide me with a monthly income of $140. However, under this option all payments would stop with my death, even if it occurred after only one payment.
Payment Option 2: A Life Annuity with 120 certain payments would provide a monthly income of $131. This option provides a monthly income as long as I live. In addition, if I die before I have received all 120 payments, I can designate that the remaining payments which will continue to be made to my beneficiary on a monthly basis.
Payment Option 3: By electing to surrender my contract I will receive a one-sum payment equaling a cash value of $20,877. There are no fees but I am told that it will be taxed as ordinary income. I can also elect to change the annuity date to any date which occurs before Oct 2017 which is when I would have reached the age of 70 1/2. I don’t know if there are any risks with doing that but it would buy me more time to take action.
I retired in 2011 with an annual pension of $37K. My wife and I will draw approximately $33K combined social security in 2012. Since we don’t work now we will not have regular income in 2012. I could use a way to reduce my 2011 taxes since it is composed of a lump sum severance payment, pension, and Soc. Sec.
I really don’t want to annuitize this IRA but I just don’t want to get beat up on this unnecessarily tax-wise since I contributed most of the money that is in this plan. Any thoughts are welcome. Thanks.
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