What exactly is an Annuity?
An annuity is an arrangement between two parties; and individual and an insurance company. There’s no tax on your earnings in the annuity until you withdraw them. “Deferred” annuities are intended to accumulate money for mid to long term financial goals. Consider an annuity only if you already contribute the maximum to a 401K, and Individual Retirement Account (IRA) and a ROTH IRA; if you can afford to leave the annuity untouched for at least 15 years; and if you won’t need the money until you’re more than 59 ½.
The interest income from a tax-deferred annuity is neither reportable nor taxable until it is withdrawn. Instead, the insurer imposes a schedule of declining early withdrawal charges, which are generally entirely eliminated after a designated period of time. The interest income from a tax-deferred annuity is neither reportable nor taxable until it is withdrawn (withdrawals from tax-deferred annuities prior to age 59 ½ may result in a 10% federal income tax penalty). Interest income for a tax-deferred annuity is not reportable until withdrawn; it is not included in the calculations for Social Security crossover taxation, preserving the value of the Social Security benefit. There is emergency access depending on the type of annuity selected and its provisions, penalty-free withdrawal options may be available to clients so they can access portion of the funds. Tax-deferred annuities are not FDIC insured; however, they are backed by the financial strength of the insurer, without federal limitations as to denomination or styling.
It is estimated that there is almost as much money invested in annuities today as there is in 401K plans -- $1.8 trillion.
- Help protect you against outliving your assets
- Help protect your assets from creditors
- Help you meet your retirement income goals
- Help you diversify your investment portfolio
- Help you manage your investment portfolio