Guaranteed Income Rider, Tax Deductible?

[Archman]

Is the cost of a guaranteed income rider on an annuity tax deductble, as an investment expense?

 

[brewer12345]

Whatever product you are thinking about is probably a terrible idea, but yes, riders are usually counted as part of contract expenses and therefore tax deductible.

 

[kaneohe]

Are these in the Miscellaneous category subject to a floor of 2% of AGI before you can deduct?

 

[brewer12345]

Are these in the Miscellaneous category subject to a floor of 2% of AGI before you can deduct?

Usually the cost of these idiotic riders is just subtracted from the returns (if any) of the contract, just like the expense ratio of a mutual fund.

 

[kaneohe]

Usually the cost of these idiotic riders is just subtracted from the returns (if any) of the contract, just like the expense ratio of a mutual fund.

so is the net return reported (as for a mutual fund) and you don't really deduct it yourself?

 

[brewer12345]

so is the net return reported (as for a mutual fund) and you don't really deduct it yourself?

Correct. All the IRS cares about is the net return of any investment.

 

[pb4uski]

Is the cost of a guaranteed income rider on an annuity tax deductble, as an investment expense?

I don't think so, at least not in the way you are thinking about it as a Schedule A itemized deduction in the year it is paid.

I will ultimately be reflected in gain if/when you surrender or the taxable portion of the annuity if you annuitize.

 

[Archman]

Is the cost of a guaranteed income rider on an annuity tax deductble, as an investment expense?

No.

 

[Archman]

Whatever product you are thinking about is probably a terrible idea, but yes, riders are usually counted as part of contract expenses and therefore tax deductible.

I've been looking into this closer, and it seems that these riders are not tax deductible.