Annuities
are
contracts
issued
by
insurance
companies
which
allow
investors
to
defer
taxation
on
investment
income
until
withdrawal.
Most
modern
annuities
can
be
withdrawn
in
periodic
payments
or
a
lump
sum,
providing
additional
tax
deferral
opportunity.
No
taxes
are
paid
on
the
interest
accumulation
in
an
annuity
until
money
is
withdrawn
by
the
owner.
The
government
allows
annuities
this
favored
tax
savings
to
promote
Americans
to
save!
With
this
privilege
of
tax
deferral
also
comes
an
understanding
that
money
placed
into
an
annuity
is
primarily
for
long
term
savings.
Common
Types
of
Annuities:
Fixed
Tax
Deferred
Annuity
What
is
a
Fixed
Tax-Deferred
Annuity?
A
Fixed
Tax-deferred
annuity,
also
referred
to
as
a
tax-deferred
annuity,
is
a
contract
between
you
and
an
insurance
company
for
a
guaranteed
interest
bearing
policy
with
guaranteed
income
options.
The
insurance
company
credits
interest,
and
you
don't
pay
taxes
on
the
earnings
until
you
make
a
withdrawal
or
begin
receiving
an
annuity
income.
Your
annuity
contract
earns
a
competitive
return
that
is
very
safe.
These
are
similar
to
bank
CDs,
except
that
you
don't
pay
taxes
on
your
earnings
until
withdrawal.
This
tax
deferral
can
amount
to
large
savings
over
a
bank
CD.
Tax-Deferred?
Tax-deferred
means
postponing
your
taxes
on
interest
earnings
until
a
future
point
in
time.
In
the
meantime
you
earn
interest
on
the
money
you're
not
paying
in
taxes.
You
can
accumulate
more
money
over
a
shorter
period
of
time,
which
ultimately
will
provide
you
with
a
greater
income.
Savings
Advantages
Many
people
today
are
using
tax-deferred
annuities
as
the
foundation
of
their
overall
financial
plan
instead
of
certificates
of
deposit
or
savings
accounts.
Although
CD's
and
Annuities
are
very
similar
there
are
significant
differences
between
the
two.
The
most
important
difference
is
that
annuities
allow
for
the
deferral
of
the
taxes
due
on
the
interest
earned
until
the
interest
is
withdrawal!
By
postponing
the
that
tax
width
a
tax-deferred
annuity,
your
money
compounds
faster
because
you
can
earn
interest
on
dollars
that
would
have
otherwise
been
paid
to
the
IRS.
Later,
if
you
decide
to
take
a
monthly
income,
your
taxes
can
be
less
because
they
will
be
spread
out
over
a
period
of
years.
Like
Certificates
of
Deposits,
annuities
have
a
penalty
for
early
surrender,
however
most
annuity
contracts
have
a
liberal
withdrawal
provisions.
Single
Premium
Immediate
Annuity
What
is
a
Single
Premium
Immediate
Annuity?
A
Single
Premium
Immediate
Annuity
is
a
contract
between
you
and
an
insurance
company.
By
paying
in
a
lump
sum
of
money
you
are
guaranteed
to
receive
a
series
of
payments
over
a
period
of
time.
The
amount
of
the
payment
is
determined
by
both
the
current
interest
rate
at
the
time
your
contract
is
issued
and
by
choices
you
make
from
a
wide
variety
of
payment
options.
Once
your
contract
is
issued,
your
payments
are
fully
guaranteed
for
the
period
of
time
you
have
chosen.
Tax-Favored
Income?
If
you
use
after-tax
funds
to
purchase
a
single
premium
immediate
annuity,
the
income
payments
you
receive
are
only
partially
taxable.
The
non-taxable
portion
of
each
payment
is
a
level
percentage
that
represents
the
return
of
principal
over
the
life
of
the
contract.
Depending
on
your
age
and
the
payment
option
you
chose,
this
percentage
will
vary.
If
you
are
using
tax-qualified
funds
(IRA,
TSA,
401k
money
for
example)
to
purchase
your
Single
Premium
Immediate
Annuity,
the
payments
you
receive
are
generally
fully
taxable
as
you
receive
them
because
they
represent
funds
that
have
not
been
taxed
before.
Single
Premium
Immediate
Annuities
offers
a
variety
of
options
so
you
may
taylor
your
income
schedule
to
suit
your
needs.
You
can
chose
to
receive
payments,
monthly,
quarterly,
semiannually
or
annually.
The
payment
options
include:
-
Period Certain Only
Period Certain means a number of years you chose. Payments will continue for the duration of the number of years you chose, and then cease. If you should die before the end of the stated number of years, your beneficiary would continue to receive the payments for the remainder of those years.
-
Life Only
Payments will continue for the rest of your life. You cannot outlive your income. Upon your death, payments stop.
-
Life and Period Certain
Life and period certain means payments will continue for the rest of your life, but for no less than the stated number of years. If you should die before the end of the stated number of years, your beneficiary would continue to receive the payments for the remainder of those years.
-
Life Only with Guaranteed Minimum Option
Payments will continue for the rest of your life. If you should die before you have been repaid your initial investment, the balance of your initial investment will be paid in like installments to your beneficiary.
-
Joint and Survivor
Payments are guaranteed during the lifetime of two people. After the death of one, payments continue for the lifetime of the surviving person. You can chose to have either full payments, or a percentage you chose, to continue for the lifetime of the survivor. You can also specify a period certain, and if both individuals were to die within the period certain, payments would continue to the named beneficiary for the remainder of the period certain.
Tax
Sheltered
Annuity
What
is
a
Tax
Sheltered
Annuity?
A
tax-sheltered
annuity,
or
TSA,
is
a
long
term
retirement
plan
that
provides
a
systematic,
tax
sheltered
way
to
accumulate
funds
for
retirement.
If
your
work
for
a
school
or
other
qualifying
teahouse
organization
covered
under
IRC
Section
501(c)(3)
you
can
accumulate
money
for
your
retirement
in
a
special
tax
sheltered
plan
-
a
403(b)
Tax
Sheltered
Annuity.
A
TSA
reduces
your
current
taxable
income.
TSA
contributions
are
excluded
from
your
current
taxable
income
and
the
interest
earned
or
capital
gains
credited
to
your
account
are
tax
deferred
until
you
begin
to
receive
distributions
from
your
TSA.
The
IRS
has
created
a
formula
known
as
the
Maximum
Exclusion
Allowance
which
governs
the
maximum
contribution
that
you
may
make
to
as
TSA
in
a
given
year.
A
TSA
offers
a
high
degree
of
financial
security.
TSA's
are
commonly
offered
in
the
form
of
fixed
annuities
or
equity
index
annuities.
These
TSA's
are
guaranteed
to
earn
no
less
than
a
guaranteed
minimum
interest
rate
stated
in
the
annuity
contract.
The
fixed
annuities
are
backed
by
the
general
account
of
the
insurance
company.
Having
a
TSA
doesn't
reduce
other
retirement
benefits?
You
receive
TSA
benefits
in
addition
to
your
pension
benefits.
Social
Security
credits
are
not
affected
because
they
are
determined
by
your
gross
earnings
prior
to
TSA
contributions.
Variable
Annuities
Variable
Annuities
provide
the
advantages
of
traditional
fixed
annuities
with
the
potential
returns
that
are
available
by
investing
your
money
in
the
stock
market.
The
investment
options
that
you
may
chose
from
in
a
variable
annuity
are
referred
to
as
sub
accounts.
These
sub
accounts
are
structured
as
either
mutual
funds
or
as
segregated
investment
portfolios
that
are
managed
by
professional
investment
managers.
Family
of
Funds
Many
variable
annuities
offer
more
than
one
family
of
funds
to
chose
from
and
within
each
family
of
funds
you
many
chose
from
a
variety
of
funds
with
different
investment
objectives.
This
allows
you
to
diversify
your
investment
portfolio
to
minimize
risk
and
maximize
your
potential
investment
return.
Unlike
fixed
annuities
with
guaranteed
protection
against
loss
of
principal,
your
principal
is
at
risk
and
subject
to
loss
in
value.
Equity
Index
Annuities
Equity
Index
Annuities
are
relatively
new
in
the
investment
world.
These
annuities
are
a
hybrid
of
fixed
and
variable
annuities.
The
Equity
Index
Annuity
Offer:
Guarantee
-
No
Loss
Provision
Long
term
stock
marker
growth
Glossary
of
Terms
The
following
are
terms
used
in
describing
what
an
Equity
Index
Annuity
is
and
how
the
interest
rate
is
calculated.
"Standard
&
Poor's",
"S&P
500",
"Standard
&
Poor's
500"
and
"500"
are
trademarks
of
The
McGraw-Hill
Companies,
Inc.
and
have
been
licensed
for
use
by
companies
offering
Equity
Index
Annuities.
The
product
is
not
sponsored,
endorsed,
sold
or
promoted
by
Standard
&
Poor's
and
Standard
&
Poor's
makes
no
representations
regarding
the
advisability
of
purchasing
the
product.
As
you
can
see
there
are
many
types
of
annuities.
Although
the
basic
structure
of
annuities
is
fairly
uniform
throughout
the
industry
each
company
designs
their
own
product.
Because
of
this
products
vary
widely
and
we
recommend
you
visit
with
a
specialist
to
see
if
an
annuity
is
right
for
you.
