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I am surendering a life insurance policy that has a cash value of $77,000 should I take the fed & state withholding tax out now or wait until I file a tax return, the taxable amount is about $41,000. What factors should I consider in my decision?


Expert Thomas Graham iii's Answer:

Great question, it really is just a personal choice. Some people prefer to go ahead and get their tax liability squared away when they surrender the policy. Others prefer to take all the funds right away and put them to good use in the meantime. Personally, you aren’t going to earn very much even if you put the funds in a 3-6 month CD. I would probably go ahead and get the liability out of the way so you aren’t thinking about it until April 15th.

Thomas Graham iii, CPA, CFE


7 yrs experience

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