Differed Annuities are always tax differed when it comes to the growth! Regardless if you have qualified funds ( 401(k), IRA, 403(b), SEP IRA, Simple IRA, or Profit Sharing) or you have non-qualified funds (personal savings, CD’s, or Roth IRA) the tax is differed till you start receiving funds. When you start receiving funds the growth will be taxed at your current federal income tax rate. Now this might sound bad at first, but think about the fact that if you are going to put your funds in an annuity it should be for retirement years or it really isn’t practical to put the funds into an annuity in the first place. At retirement it is likely that your federal tax rate will be lower than your working years. Even if your tax rate is the same, there is still a slight advantage due to the compounding interest and having more of your funds compounding. For some people this may be the same tax rate or lower than the capital gains rates they would pay in other investments. For those that have higher tax brackets, an annuity can offer even more relief if they have already fully funded all other avenues. For example, if you are a highly compensated employee or business owner you may have fully funded your 401(k); your income may be too high to contribute to a Roth IR; you’ve already fully funded you IRA. Now, where can you save funds tax differed and with a fixed guaranteed rate? CD’s? Nope, you pay the tax each year! Municipal Bonds? Well… actually the tax treatment can be even better because they can be federal tax free, but think Detroit, Philadelphia, and other places that the bonds have defaulted.
So what’s the answer? ANNUITIES! Fixed or Fixed Indexed Annuities can offer both tax differed benefits as well as guarantees on the principal and the rate of return. The ideal buyer of a Fixed or Fixed Indexed annuity is looking for peace of mind, low maintenance investments, and long term growth goals. There are no income limits on contributing to an annuity and the only limit to amount you can contribute is how much a particular carrier is willing to accept. Most carriers will accept up to a million without prior approval or authorization. However, like many investments there are suitability factors that must be met in addition to your desire to contribute.
If this sounds like an annuity could be the answer you’re looking for, request a no obligation quote or consultation with us.