Unlock your after-tax numbers
Cumulative income after tax, by age
Where insurers land right now
Names and tiers only, no numbers. Rankings change daily; ask for a current quote. Ratings are AM Best financial strength ratings as published by AM Best or the insurer, with the date shown.
Assumptions and how this is calculated
SPIA, GLWB and DIA in plain words
SPIA
Single premium immediate annuity. You hand an insurer a lump sum and it pays you a check every month for life, starting about a month later. Highest guaranteed income per dollar. The trade: the lump sum is gone.
GLWB
Guaranteed lifetime withdrawal benefit. A rider on a deferred annuity. Your money stays in an account you can see, and the rider guarantees a yearly withdrawal for life, even if the account runs out. Costs a yearly fee.
DIA
Deferred income annuity. A SPIA with a waiting period. You pay now, the checks start in a year or more. Waiting buys a much bigger check, because the insurer holds your money longer and fewer people live to collect.
Annuities are really only good at three things
1. Tax
On money you already paid tax on, a SPIA or DIA lets part of every check come back to you as return of your own money. A deferred annuity grows without yearly tax. In an IRA there is no extra tax benefit; the annuity is just a wrapper.
2. Income you cannot outlive
A pension from an insurer. If you live to 98, the check still comes. That is the one thing a portfolio cannot promise.
3. Sequence risk
A bad market in your first years of retirement does the most damage when you are also taking withdrawals. Guaranteed income covers the basics so you are not forced to sell low.
If you are buying one for something else, such as chasing a return, stop and ask me first. They are not built for that.
How each one is taxed
Qualified money (IRA, 401(k))
Every dollar that comes out is ordinary income, whichever of the three you choose. So the tax does not change which one pays more. It only lowers all three by roughly the same share. The real choice on IRA money is payout versus flexibility.
Non-qualified money (you already paid tax on it)
SPIA and DIA use the exclusion ratio (IRC §72(b)). The IRS divides what you paid by the total it expects the contract to pay you, using a life-expectancy table (IRS Publication 939, Table V for one life, Table VI for two). That share of every check is treated as return of your own money; the rest is taxed as ordinary income. A 65-year-old single life gets a ratio near two-thirds. Once you have recovered everything you paid in, every dollar is taxable, and if you die early the unrecovered amount is deductible on your final return (§72(b)(3)).
GLWB withdrawals are gains first (IRC §72(e)). Earnings come out first and are taxed; your original money comes out last. That makes the early years more taxable than a SPIA and the late years less, until the account hits zero. After that, rider payments are generally treated as fully taxable; confirm with your tax advisor.
Net investment income tax. Taxable gains from a non-qualified annuity count toward the 3.8% NIIT once your modified adjusted gross income is over $200,000 single or $250,000 married filing jointly (IRC §1411). Distributions from an IRA or 401(k) are not net investment income, though they still raise your income.
The widow’s single-filer effect
A joint life annuity keeps paying the survivor the full check. The tax return does not stay generous. After the first spouse dies, the survivor files as single: a smaller standard deduction and brackets about half as wide, on nearly the same income. A SPIA or a joint GLWB that looked comfortable at two can cost noticeably more in tax at one. The calculator shows that estimate when you pick “Me and spouse.”
Under 59½, taking gains from a deferred annuity can add a 10% IRS penalty. A SPIA paid as a life annuity generally does not. Ask before you move money.
RMD notes (IRA and 401(k) money)
- SPIA and DIA. Once the annuity is paying, the payments count toward the required minimum distribution for that contract (Treas. Reg. §1.401(a)(9)-6, as updated by the 2024 final regulations).
- A DIA that starts after your RMD age. If you will be 73 or 75 (depending on your birth year) before it pays, the contract’s value counts toward your RMD while you wait. A qualified longevity annuity contract (QLAC) is the exception: the value is left out of the RMD calculation. The 2026 limit is $210,000 per person (IRS Notice 2025-67), and income must start by 85.
- GLWB. RMD withdrawals from an IRA annuity count toward your RMD. Whether an RMD larger than the rider’s guaranteed withdrawal reduces your benefit is contract language; many riders allow it, not all. Check the rider before you buy.
- Roth IRA. No lifetime RMDs for the owner.
Pros and cons
| SPIA | GLWB | DIA | |
|---|---|---|---|
| Income per dollar | High, starts right away | Lower; fees come out of the account | Highest, if you can wait |
| Your money after you buy | Gone. Optional refund feature lowers the check | Still yours, with limits and surrender charges | Gone. Little or nothing if you die before it starts |
| Heirs | Nothing on life-only | Remaining account value | Nothing on life-only |
| Complexity | Low. One check | High. Benefit base, roll-up, fee, activation | Low |
| Tax, non-qualified money only | Exclusion ratio | Gains first | Exclusion ratio, from the start date |
| RMD (qualified) | Counts when paying | Withdrawals count | QLAC can postpone RMDs |
| Fits you if | You want the biggest guaranteed check and heirs are not the goal | You want income plus control and something for heirs | You have other money for the gap years and want the biggest check later |
One honest note: a GLWB’s “roll-up” grows the income base, not cash. You cannot withdraw it or surrender for it. It only sets the size of the guaranteed check.
Already own an annuity?
If you already have a SPIA, a GLWB rider or a MYGA (multi-year guaranteed annuity, a fixed interest annuity), I can review what it pays now, what it nets after tax and whether it fits your RMDs. Get my annuity reviewed.
Selling a business or property? A structured installment sale works the same way
It is an insurer-backed stream of payments instead of one lump sum. It is set up before closing, and the tax follows the payments, so you pay tax as the money arrives instead of all in the year of sale. If a large sale is why you are here, ask me and I will show you the after-tax numbers.
Questions people ask
What is the difference between a SPIA and a GLWB?
A SPIA trades your lump sum for a guaranteed monthly check for life. It pays more per dollar, and nothing is left afterward unless you add a refund feature. A GLWB is a rider on a deferred annuity. Your money stays in an account and the rider guarantees a yearly withdrawal for life. It pays less per dollar, costs a yearly fee, and leaves whatever remains in the account to your heirs.
Should I wait and buy a deferred income annuity (DIA) instead of a SPIA?
If you do not need the income yet and have other money to live on in the meantime, waiting makes each check much larger. The risk is dying before it starts. A DIA bought for income at 75 can pay far more than a SPIA bought today, but you give up access to that money for the wait. A refund feature protects your family; it also lowers the check.
How is SPIA income taxed?
On money you already paid tax on, part of each check is treated as return of your own money under the exclusion ratio (IRC §72(b)), and the rest is ordinary income. After you have recovered everything you paid in, every dollar is taxable. In an IRA or 401(k), every dollar is taxable.
Do income annuities count toward my RMDs?
Annuitized payments from a SPIA or a DIA that has started paying generally satisfy the RMD for that contract. A DIA bought inside an IRA that starts after your RMD age counts toward your RMD base unless it is a QLAC. GLWB withdrawals count as IRA withdrawals. The rules are in Treas. Reg. §1.401(a)(9)-6.
What happens to a SPIA when I die?
On a life-only SPIA the payments stop and nothing is left. A cash refund or period-certain feature pays your beneficiaries the unpaid balance of what you put in, and the monthly check is a few percent lower. A joint-and-survivor SPIA keeps paying your spouse after you.
Why can’t the calculator show an exact payout?
Payouts change daily and depend on the insurer, your exact age and health, the state, and the options you choose. The calculator shows a ballpark range of current market payouts so you can compare the three options. For the exact number, I run a real quote for your age and state.
Licensed insurance producer, NPN 20602398, California license 4273294. Goldstein & Co. LLC dba Goldstein Insurance Services. Questions first? Call 213-414-2808.