. I was looking over my end of May numbers and see that I've spent a gross/reportable $29,420 year-to-date. So in terms of keeping my traditional IRA distributions and annuity distributions state tax-free, I'm doing fine; you need to be under $75,000 gross for state tax-free retirement income.
My other goal is to keep taxable income under $50,400 so as to stay in the 12% tax bracket. Last year I had the $17,750 standard deduction and another $6,800 from the enhanced senior deduction and car loan interest, so I expect to repeat that this year, although since I paid the car off, the car loan interest deduction will be a little less. I withdrew a lot of $$ this month to pay for my new kitchen appliances ($3400 including incidental cabinet modification, delivery, tips and trim for the rear of stove) and upcoming property taxes ($3,900, which is half the annual payment).
I have one or two more projects that would be great to do this year: one is fairly certain to happen, back door replacement, and the other is really optional but would love to do. It involves removing an old door at the top of my stairs and redoing the trim for that door and my adjacent office so it's more uniform. I can't think of any reason to have the door and honestly it takes up a good 6 inches of space if you're ever moving stuff up or downstairs. Right now the trim for the door at top of stairs is built out a good 6" just to accommodate the door, and with the entry to my office immediately adjacent that lacks that buildup of trim, it just takes up space and is unattractive.
The bluebirds definitely have fledglings to feed; they are visiting the feeder and stuffing as many freeze-dried worms in their mouths as they can, then taking off. They used to just eat for themselves.
June 8th, 2026 at 12:11 pm 1780920717
So, I knew that traditional IRAs would be taxed as ordinary income, right? But annuities as well? I have one as well, but I haven’t even touched that thing yet. I don’t expect to get much out of that anyway, but one of these days, I’ll have to go looking into it, along with a bunch of other stuff.
June 8th, 2026 at 12:58 pm 1780923539
Yes, tIRAs are taxed as ordinary income, and annuities are, too, but the amount of your distribution that you pay taxes on depends on how your annuity was originally funded. If it was funded with after-tax money, only the earnings portion of your annuity is taxed, but your original principal comes out tax-free.
If you funded your annuity with pre-tax money, like money held in a 401k or IRA, the entire withdrawal is fully taxable as ordinary income. You should get a statement from your annuity issuer at year-end you'll need to file your taxes.
June 19th, 2026 at 08:58 pm 1781902707
Annuities in traditional IRAs are taxed on the full distribution every year.
Non-qualified annuities are funded with money you've already paid the tax on, so for them, an "exclusion" ratio is calculated based on the ratio of the amount you paid for the annuity to the total expected value of the lifetime payments. If you have an annuity paying you $1,000 a month and your remaining life expectancy is 30 years, that's $360,000 in lifetime expected payments. If you paid $180,000 for the annuity, you would get to exclude 50% (180k/360k) of the $12,000 received annually from tax and the rest would be taxed at ordinary income rates.