Tax-deferred growth can help your money grow faster than
a taxable investment earning a similar return. You pay no
taxes on annuity earnings until they are withdrawn. This means
all your money keeps working for you without being reduced
by annual taxation. Later, when you need your money, only
your earnings are taxed.
An annuity can allow you to manage your changing financial
needs throughout your life. You select investment options
to suit your financial goals and you can transfer money between
them tax-free. This allows you to adjust your investment strategy
as your goals or market conditions change without incurring
any loses from taxable events. There is usually no annual
limit on contributions and you generally are not required
to begin withdrawal at age 70 _ (unless your annuity is holding
qualified money). Annuity distributions are generally not
required until age 90. However, annuities are designed for
retirement needs so if you withdraw money prior to age 59
_, you may be subject to an IRS tax penalty of 10% of accrued
earnings.
- Fixed Annuities – A fixed annuity earns interest
at a rate guaranteed by the issuing company. It is a low-risk
product for people who want to know how much they’ll
be earning, and generally offers a lower return than the
potential of an investment based variable annuity. Annuity
purchases are not FDIC Insured
- Equity Indexed Annuities- An equity-indexed annuity is
a hybrid of both the fixed annuity and the variable annuities.
It is classified as a fixed annuity so they generally have
a guaranteed interest rate, however, they are linked to
an index such as the S&P or DOW. Equity indexed annuities
have the opportunity to participate in market gains while
not being subject to market losses.
- Variable annuities – A variable annuity is designed
for people willing to take more risk with their money in
exchange for greater growth potential. The value of the
annuity will vary according to the performance of the investment
options you choose (stocks, bonds, or money market funds).
Variable annuities will generally have higher fees and expenses
than a fixed annuity.
- Immediate annuities – An immediate annuity has little
to no accumulation phase. It is purchased with one payment
and must begin to make payments within 12 months. An immediate
annuity could help secure your financial future by locking
in a guaranteed income stream.
Annuities can help you manage your income with a choice of
several payout options, such as a continuous cash flow or
a guaranteed lifetime income, based on your contract value.
Many variable annuities offer a guaranteed death benefit
so that if you should die during the accumulation phase the
issuing company would return the amount of your original purchase
(less any withdrawals) to your beneficiary. This death benefit
avoids the costs and delays of probate. (Estate or other taxes
may apply) |
