Tax-Deferred Annuities
What is a tax-deferred annuity?
A tax-deferred annuity functions as a self-funded pension plan that provides a guaranteed income stream regardless of market volatility. The average life span is on the rise and along with that comes concerns about the stability of Social Security and some pension plans. Annuities can allow you to enjoy living a long and healthy life without worrying about outliving your savings.
What kinds of annuities are available?
Annuities are available as:
What are the benefits of investing in an annuity?
Options for Lump Sum Payments or Income Stream Payments
An annuity provides the opportunity to liquidate your account in the form of systematic payments and withdrawals over a specific period of time. Payments can be made in a lump sum, but they can also be made over a select period of time, giving the annuitant a guaranteed income stream.
Reduced Risk and Asset Protection
An annuity may provide you with protection from market losses. With fixed annuities, the insurance carrier who issues the annuity bears the market risk, thereby protecting the annuitant from market volatility.
Tax Benefits
Because you can control how you structure your payments, you can also control when you pay taxes. In addition, an annuity can yield significant tax benefits since the invested funds grow tax-deferred until you take a distribution. With the exception of an IRA, only the gains you realize on your investment are taxable. Because you will likely be in a lower tax bracket after retiring, you’ll be taxed at a lower rate than you would have been during your working years.
Living Benefits Options
Some annuities have an optional living benefits feature. As the name implies, living benefits protect your assets during your lifetime and provide an income stream during retirement. Your Allen & Company Financial Advisor can help you understand the differences among living benefits options and to determine if augmenting your annuity with living benefits is the right choice for you.
Is an annuity right for you?
You should consider investing in annuities if you want:
- To have a guaranteed income stream that you cannot outlive.
- To grow and protect your retirement income.
- To have a stable income regardless of market volatility.
- To invest for your future today, knowing that your investment is safe and your future income is predictable and secure.
- To shelter your savings from taxes.
You can review our comparison of the different types of annuities to understand the differences among them.
How can you separate annuity facts from fiction?
There is an array of information and advice available on annuities, but not all of it is presented in an accurate manner. It is important for today’s investor to make informed decisions based on facts and to choose a firm with a reputation and history of integrity. Your Financial Advisor can also answer any questions you may have.
Your Financial Advisor is here to help.
Your Allen & Company Financial Advisor can help you determine your savings and retirement income needs and choose the best vehicle for your short and long term objectives. If an annuity is right for you, your Financial Advisor can provide you with guidance to select the type of annuity that will help you achieve your financial goals.
Annuity Disclaimer
Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your Allen & Company Financial Advisor or the Insurance Company to obtain the prospectus. Please read the prospectuses carefully before investing or sending money.
Optional benefits are available for an additional charge. The long-term advantage of the optional benefits will vary with the terms of the benefit option, the investment performance of the variable investment options you select and the length of time you own your annuity. As a result, in some circumstances, the cost of an option may exceed the actual benefit paid under the option.
Guarantees are backed by the claims-paying ability of the insurance company and do not apply to the principal amount or investment performance of the separate account or its underlying investments.
Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.
Variable annuities are issued by the insurance company. May not be available in all states and state variations may apply. These contracts have limitations and restrictions including possible withdrawal charges, recapture charges and excess interest adjustments (interest rate adjustments in New York) where applicable. Please contact the Company for more information.
Fixed index annuities are issued and distributed by the insurance company. Not available in all states and state variations may apply. Depending on the product, additional premium may be permitted in the first contract year. These products are fixed annuities that do not participate in any stock or equity investments. Limitations and restrictions apply, including withdrawal charges and possible recapture charges on some products. Recapture charges may not apply in all states. During the Indexed Option Period the annuity´s cash withdrawal value may be less than the initial premium. For costs and complete details, contact your Financial Advisor or the Company. Fixed index annuities may not be suitable for everyone. Insurance companies issue other annuities with similar features, benefits, limitations and charges. Discuss them with your Financial Advisor for more information.
Fixed annuities are issued by individual insurance companies. May not be available in all states and state variations may apply. These contracts have restrictions and limitations, including withdrawal charges and possible excess interest adjustments. Insurance companies issue other annuities with similar features, benefits, limitations and charges. Discuss them with your Financial Advisor for more information.
The Latest Income Date allowed under variable and fixed contracts is the owner’s age 95 and is the required age to annuitize or to take a lump sum.
Investments and Insurance Products are:
· Not insured by the FDIC or any other federal government agency · Not bank/CU guaranteed
· May lose value · Not a deposit · Not insured by any federal agency