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What is an Annuity?

An annuity is an insurance contract that can provide you with an income you can never outlive.  By funding a deferred annuity today, you lock in income guaranties for your future.

 

Difference Between Qualified and Unqualified Annuity.

A qualified annuity is used to fund a retirement plan, such as, an IRA.  Premiums made to qualified annuities are usually tax-deductible.

A nonqualified annuity is used to fund a cash accumulation program.  There is no current tax deduction.

Interest on both qualified and nonqualified annuities build up tax-deferred.

 

Immediate Annuity.

If you are retired or ready to retire, an immediate annuity can convert your retirement savings into a safe income that, depending on the income option you choose, can be guaranteed to last as long as you (or you and your spouse) live.  This income can begin one month after the contract is issued.

Deferred Annuity.

If you are not ready to retire you may purchase a deferred annuity with a single premium or with flexible premiums. Contributions can be qualified or nonqualified.

 

Tax Pros and Cons.

Your interest accumulates tax-deferred.  You pay no taxes until you actually begin withdrawing funds.  BUT be aware that withdrawals may have tax consequences, included Federal tax penalty if you are not yet age 59 ½.

The value of your annuity is safe, backed by the assets of the insurance company.  Annuities offer competitive insurance rates.

 

Fund Withdrawal From Annuity.

Because your annuity is designed to provide retirement benefits, every effort should be made to allow the premiums to accumulate undisturbed.  But if you need to withdraw money, annuities may be more liquid than you thought!  You may withdraw a percent of your accumulated value without penalty in most states.  If you have a serious illness or a terminal illness the percent of unpenalized withdrawals is higher in most states.

 

 

Arranging to Receive Annuity Benefits.

When you are ready to retire, or at any time you choose, you may take your annuity value in a lump sum or choose among a number of options. *

Life only:  Guaranteed income for the rest of your life. 

Term certain:  A guaranteed income for you over your choice of a number of years (5 to 25), or for your beneficiary if you don’t survive the term.

 

Life plus term certain:  Guaranteed income for the rest of your life or the term of years you choose, whichever is longer.

 

Life plus refund:  Guaranteed income for rest of your life, or until annuity pays back your premium, whichever is larger.

 

 

Maximizer systematic withdrawal:  Allows you the option of taking the minimum IRS-required benefits from an IRA, pension, or other tax-advantaged retirement plan.

 

Joint plans:  Above options can include an income for your spouse if he or she survives you.

 

Deutsch Insurance Associates, Inc. represents various companies and can assist you with the information you need to make a decision about accumulating money for retirement.

 *Surrender charges do not apply to options with life-time income, or income for ten years or more.  For tax consequences of withdrawal, consult your tax advisor.