Annuity vs Lump sum with regard to SS tax

So, I just found out that pension annuity's do not count towards combined income which determines how much your tax on social security will be.

E. if you take the pension annuity there will be zero tax on social security income if your 401k withdrawals are below 25K since annuities do not get added to your combined income which makes taxable amount determination (combined income would be 401k withdrawals + social security income gross and not after deductions).

However, If you take the lump sum, roll to IRA/401k all distributions count towards combined income, if that figure is above 25000 you pay tax on 50% of social security income, above 34000 and you pay tax on 85% of SS income.

Seems the Annuity may have hidden value that does not seem to be found easily on the Web!

Thoughts?

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sorry, I meant if your income is above 34 grand, then up to 85% of your benefit is taxed.

The annuity counts toward taxable income. If your gross income is between 25 & 34 grand, then you pay taxes on up to 50% of your social security benefit, and if your gross income is between 25 & 34 grand, then you pay taxes on up to 85% of your social security. For example, if you are in the former category, and your benefit is 15,000 for the year, then you pay your tax rate on about 7,500 dollars, which might be about 15 to 25% of 7,500 dollars, or 1,125.00 to 1,875.00. The same would hold true for lump sum distributions, because they are part of your gross income.

I will take the lump sum over leaving it the hands of randy and stankey

This is the 2018 worksheet
https://www.irs.gov/pub/irs-pdf/p915.pdf

I found the new worksheet here.
https://www.irs.gov/pub/irs-pdf/n703.pdf

is that correct for 2019? looks to simplified for the IRS. what happened to being taxed on 85%?

I think you'll find on your pension annuity that you'll receive a 1099-R with income to be reported on your income tax.

If you annuity is small , perhaps . I would not know.

OP, who told you that? according to IRS web site, that is not accurate (https://www.irs.gov/pub/irs-pdf/p915.pdf, look at page 7) If you roll any deferred income to an IRA (403b, 401k, pension) it is NOT taxable. All other income are added together with 50% of your SS to determine how much of your SS is taxable.

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Annuity vs Lump sum with regard to SS tax

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