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In these uncertain financial times, indexed
annuities have gained huge popularity as a proven vehicle to
provide a guaranteed growth and/or retirement
income, free of loss due to
downturns in the market!
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Common
features of Fixed Indexed Annuities (FIA)
Here's
a summary of what FIA annuities can bring to your retirement
portfolio:
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Great Growth Potential Without the Risk! |
| Variable
annuities have been very popular in years past due to the
potential of growth based on the performance of individual
investments tied into the annuity. Unfortunately, when the
market crashes, you can can also lose your money. On
the other hand, Fixed annuities are very conservative, and
similar to a bank CD, with a guaranteed interest rate, and are
not tied to the market. However, as you would expect, the
interest rates on fixed annuities are usually fairly low
(although probably much better than CDs as of the time of this
writing).
FIXED
INDEXED ANNUITIES combine the best of both variable
and fixed annuities, without the downsides!
Depending on the FIA you sign up for, you could experience a
great gain based on the market growth, and also have a smaller,
guaranteed rate of interest, too. Plus, your gains are
locked in, usually on an annual basis, and you
will never lose a dime based on a market downturn!
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Several Ways Your Money Grows |
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many fixed indexed annuities offer an upfront bonus as
much as 6% or more, that gets credited on day one that
the insurance company receives your premium. For
example, if there is a 6% bonus, and you contribute or
rollover $100,000 to start the annuity, you would
actually receive a $6,000 bonus, and start earning
additional interest on $106,000!
Then,
additional fixed and indexed interest is usually
credited and "locked-in" to your annuity
usually each year on your policy anniversary date.
YOU choose the crediting options and allocation
percentages, and the insurance company will usually let
you change these every year.
Plus,
many fixed indexed annuities offer an optional income
rider with a guaranteed interest rate, (possibly up to
7.2% a year) that you could add to your annuity for a
small yearly fee. This "hedges your bet"
and guarantees that the income value of your annuity
will grow a certain minimum percentage each year,
regardless of how the annuity actually performed.
In
addition, some annuities offer other ways your money can
grow, like enhanced death benefit riders to offer a
potentially greater benefit to your loved ones in the
event of your passing.
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Ideal for Estate Planning |
| Proceeds
from annuities pass directly to your beneficiaries without the
delay, expense, and publicity of probate in most states. If
you've ever had a loved one's estate go through this
time-consuming legal process, you know just what kind of
advantage this is. |
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The Power of Tax Deferral |
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you do not pay taxes on earnings (until you decide to start
taking an income or money out), your annuity is able to work
harder thanks to tax-deferral. You will have to pay taxes on
earnings when you withdraw your annuity's gains, but at least
you can decide when that happens. |
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No Contribution Limits |
| Contributions
to other retirement savings vehicles, like 401(k)s and
Individual Retirement Accounts, are strictly limited. Annuities,
however, offer tremendous flexibility. Depending on the tax
qualification of the annuity you set up, you could potentially
contribute as much as you want, up to the limits imposed by the
insurer, and take advantage of tax-deferral savings. Plus, you
can add to your annuity contract at any time.
Or... if you choose, you can also set up your annuity as an IRA,
under the same contribution limits. Consult your tax
advisor for the best options for you. |
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Flexible Payment Options |
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Unlike
401(k)s and IRAs, which require that you begin making
withdrawals at age 70 1/2, you may be able to wait much longer
with annuities. When you do decide to begin receiving payments,
you can usually select one of the following methods:
 | Lump
Sum distribution (a one-time payment)
| Periodic
distributions (you can take money only when you need it)
| Systematic
distributions (a fixed or variable amount is sent to you at
regular intervals)
| Annuitization
(fixed or variable payments, guaranteed for the rest of your
life) |
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Tax Control |
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The
money inside your annuity is made up of two components --
principal and earnings. Assuming your annuity was opened with
after-tax dollars, you're only taxed on your earnings.
Different
distribution methods behave differently when it comes to taxes;
for instance, Lump Sum, Periodic, and Systematic distributions
exhaust all earnings (which are taxable) before tapping
principal. Under annuitization, each payment consists of both
principal and interest, spreading your tax liability evenly
among payments. Through these distribution options, you have
complete control over when you will pay taxes on your earnings.
Annuities
are not perfect when it comes to tax control. If you should pass
away while your annuity is accumulating, all deferred taxes on
your growth will become due, reducing your annuity's value.
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Easy To Start and Maintain |
| Usually,
a simple application, a check, and your signature begins your
annuity. And, at the end of each year, you will not receive a
1099 for income earned within your annuity contract. That's one
less thing to worry about when April 15th rolls around. |
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Other Features |
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Annuities
also do not offset Social Security benefits like bond, CD, and
other investment income does.
Annuities
are easy to establish and often come with a "free look
period." Your state of residence or the annuity contract
will define a length of time (usually 10 days) where can cancel
your contract if you decide it's not right for you.
You
can even exchange older, non-performing annuities into a newer
fixed annuity with no tax consequences, thanks to Section 1035
of the Internal Revenue Code.
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We work with many of the top
annuities on the market today!
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| The
best way to determine which annuity product is right for you is
to talk with an experienced Annuity
Specialist. or call 1-800-460-8238. |
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