Sentences with phrase «exclusion ratio»
The exclusion ratio is a term used to describe the portion of an income or benefit that is not subject to tax. It helps determine how much of the income or benefit is taxable and how much can be excluded from taxation. Full definition
A qualifying LTC event exempts withdrawals from surrender charges and turns the taxable portion of an annuity (gain in excess of basis amortized via exclusion ratio) into tax - FREE income.
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How do you calculate a tax - quivalent rate of return for an annuity with a exclusion ratio?
Just the terminology would befuddle anyone — «exclusion ratio», «annuitization», «indexed», «cap rate», «participation rate», etc..
The portion of income payments that constitute a return of investment, as determined by the exclusion ratio, are not taxable.
This non-taxable portion of the income payment is determined using an exclusion ratio, which is provided by the insurance company at purchase.
The exclusion ratio for Alan's policy is 17 %.
The exclusion ratio will be applied to each income payment, indicating how much is not taxable, until the full investment in the contract has paid out.
If you buy an annuity with non-qualified after - tax dollars, the Exclusion Ratio is the percentage of your lifetime income payments that you will not have to treat as income (for federal income tax purposes).
The exclusion ratio for Matthew's policy is 74 %.
It's also worth noting that regular annuity payments (under a regular annuity payout option) from an annuity where the Annuity Starting Date was after 12/31/1986 are taxed under the «exclusion ratio» regime only until all investment in the contract has been received tax free.
There are three things you should look at when purchasing an annuity — expense ratio, surrender charges, and exclusion ratio.
Because there is an exclusion ratio with this type of annuity, a portion of your income stream is tax - free.
If the annuity starting date is after December 31, 1986, the exclusion ratio is applied to the payments received until the investment in the contract is fully recovered; thereafter, any payments received are fully includable in income.
The exclusion ratio is applied to each annuity payment to find the portion of the payment that is excludable from gross income.
Exclusion Ratio The exclusion ratio is the ratio of the total investment in the contract (normally the gross premium cost) to the total expected return under the contract.
In order to figure out the taxable portion of an annuity payment, an exclusion ratio is used to determine the ratio of taxable to nontaxable proceeds in an annuity payment.
The exclusion ratio is the amount of each monthly payment that can be excluded from taxes.
Before you buy the annuity the insurance company can also tell you what your exclusion ratio would be.
Distributions received by the beneficiary during the remainder of the payout period will result in income tax liability that is equal to what the original owner would have owed, which is tax liability for only a portion of each payment called an «exclusion ratio.»
Because there is an exclusion ratio with this type of annuity, a portion of your income stream is tax - free.