Q. My husband and I have had Tax-Sheltered Annuities for many years and they are about to mature. We are both 70 years old and do not need to take an income from our annuities because of other income sources. In addition, we don't want to increase our taxes. What are our options with these annuities? Do we have to "annuitize" and take an income?
A. You do not have to annuitize at this time although your TSAs are about to mature. You have other options. One would be to roll the TSAs over into IRAs. That would maintain the tax-sheltered status of the principal and allow you access to the principal which you would lose once you annuitize. However, as with TSAs, IRA money is subject to a minimum distribution rule that begins at age 70 and one-half years.
A better option would be to roll the TSAs into other 403(b) plans with a mutual fund. Because you both have had your TSAs for many years, you are eligible to elect a smaller minimum distribution than you could with a new IRA. And that would mean less income tax.
Send questions to Karen Lazarovic, Columbia Features Inc., PO Box 1957, New Smyrna Beach, Fla. 32170.