4. Consider immediate annuities.
Think about using immediate annuities to defer taxable income while recovering basis. When clients collect income from an immediate annuity, part of the money coming back will be basis — the money that was initially invested — and the rest of it will be considered income. The portion that’s basis will go back to the client tax-free. Effectively, this income stream reduces the client’s tax rate, Mr. Keebler said.