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Structured Settlement Annuities Are Tax-Exempt

Hello everyone it's Greg Maxwell with

Amicus Settlement Planners.

I just wanted to give you a little quick

tip about structured settlement annuities

and the fact that they are not taxable.

They're completely tax-exempt.

It's a question we get every now and then,

and in certain situations, that can be a

big deal.

So as you know, as plaintiff attorneys,

anytime the physical injury, the origin of

the claim is based on a personal physical

injury, the principal amount of the

settlement to your client is going to be

tax-exempt they don't report that on any

1040.

It's completely tax-exempt.

Generally then, if they go and invest that

in whatever investment, the interest that

is earned in that investment is then

taxable, right, and that makes sense.

However, with a structured settlement

annuity, if they put all or a portion of

their net settlement into a structured

settlement annuity, and you have to follow

the process to do that, and I'll talk

about that maybe in a different video, but

assuming that the process is followed

correctly, then that's structured

settlement annuity.

The interest that it earns, not only is

the principal tax-exempt but the interest

that it earns over time is also

tax-exempt.

And that's in, found in section 104 (a) (2)

and in section 130 of the Internal Revenue

Code.

So that's a little benefit to structured

settlement annuity recipients as they

don't have to worry about even reporting

that income in the future.

It's completely tax-exempt.

So if you happen to have a client where

that's a big deal where they are in a high

tax bracket, and they need just future

income or they want to defer income to

maybe later in retirement.

They can do that on a tax-free basis.

So if you have questions about that, give

me a call.