by John Darer CLU ChFC MSSC RSP CLTC
Whether or not structured annuities are taxable depends on the type of damages that each structured annuity payment represents
- If the structured annuity payments represent damages for physical injury, physical sickness, worker's compensation or wrongful death then the payments are income tax free pursuant to Section 104(a)(1), or 104(a)(2) or 139F of the Internal Revenue Code.
- If the payments were for taxable damages then the payments are taxable as ordinary income.
- With some settlements it is possibe that portions of the settlement that are tax fee and other parts are not tax-free.
If the payments are from a structured sales (also known as structured installment sales) then a portion of each payment represents return of principal, a portion of it represents a capital gain and a portion represents ordinary income.
Allstate Life Insurance Company, which issued structured annuities until February 2013, offered structured annuities for all types of solutions. Check your annuity contract. If your structured annuity is owned by Allstate International Assignments, Ltd., or its predecessor NABCO Assignments Ltd then there's a good bet it is taxable or has an element of it that is taxable.
If you have any further questions feel free to call or email me, or note contact details below
- For Allstate Life Insurance Company, contact Everlake Life Insurance Company
- For Allstate Life Insurance Company of New York, contact Wilton Re Life Assurance Company of New York at one of the folloowing two numbers. You will need to the policy number your policy number.
800-256-9392
800-833-0194
Background information on the sale of the two Allstate entities that issued structured settlement annuities
Allstate Life Structured Settlements | What You Need To Know (4structures.com)
Last updated July 26, 2023