Annuities
Tax Deferral
Annuities: Tax Deferral
We believe that a solid retirement strategy is essential in preparing for your future. We work to protect your savings and get you a reasonable rate of return** in retirement. Additionally, we can help you find strategies to defer your retirement taxes.
Tax-Deferred Annuity After-Tax Dollars
Purchasing an FIA using after-tax dollars may provide tax benefits. Annuities work in 2 different phases:
Accumulation
The Accumulation Phase is the stage during which your annuity grows, tax-deferred.
Distribution
The Distribution Phase is the period when you begin to receive payments. As for retirement taxes, only ordinary income taxes apply when you withdraw the money.
The Difference Between Annuities and IRAs and 401(K)s
Tax deferrals are also available through traditional IRAs and 401(K)s. An FIA does not have a contribution limit like these plans do, however. The income amounts and policy limits are up to you.
An FIA may be beneficial for deferring retirement taxes and saving more money if these more traditional options have been exhausted. Your money will compound year after year, without being taxed until you withdraw it.
Annuities For Early Retirement Tax Deferral
If you retire early, how are annuities taxed? You may receive a bonus tax benefit depending on your situation. There are a few criteria you must meet in order to be eligible for this benefit:
- Are you under the age of 59 1/2?
- Do you have a 401(K) plan providing lump-sum payments?
- Was the lump sum payment a part of a severance package or retirement package?
If your answer was “yes” to all three questions, an FIA may be right for you. We can help you determine if this is the case.
