Trying to understand the ACA income reporting procedure

[BlueStreak]

13. I'm not an expert, so don't rely on anything I say

But depending on the nature of the annuity, there could be a capital gain component that would be taxable, even if the corpus was past-tax. And in the event that the annuitant receives more than originally deposited, that's where the life insurance comparison comes in. I don't know exactly how the tax law treats that excess, but it might be taxable.

If you are looking to get up to the low threshold (around $16K for 2 people) in order to qualify for subsidies, you can take any pre-tax money in IRAs or 401Ks and realize that. You would have to pay the tax on that amount, but the numbers are strongly favorable. Let's say you took $20K of pretax money as income for 2014, you might have to pay $2000 in Federal and state taxes on that. But you might receive as much as $17K in subsidies as a result, so you are way ahead of the game.