Deferred Annuity: Annuity

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2012年9月26日星期三

Taxes on Annuity Death Benefits

The death benefits from an annuity are subject to income tax. The amount of taxes due will depend on the amount of money involved and how it is inherited.

The term death benefit can apply to either the funds in the plan or to a life insurance policy attached to it.

Annuities are a tax-deferred investment which means that taxes are due when funds are taken out of one. Therefore taxes will be due if a person inherits all of the money in one or takes all of the funds out. Many people get quite a shock because they are not expecting the funds or the increase in their tax bill.

Any money that you receive from an annuity including funds you inherit from one is reportable income. That means it could increase your tax bracket and your tax rate. If there's a large amount of money in a plan it will affect your tax rate. Any increase in the value of an indexed or variable annuity that you inherit will be regarded as an increase in income by the IRS.

Annuity Payments vs. Death Benefit

The only time you will be taxed on annuity funds you inherit is if they are distributed directly to you. If you simply take over the payments you will only have to report the payments on your taxes. The funds in the plan itself will still be tax deferred.

So you can keep your tax bill lower by simply becoming the beneficiary of the plan. This will only be of benefit to people over 59? years old because the IRS will charge a 10% tax penalty on money persons under that age receive from annuities. If Giorgio had an annuity and named his 65 year old brother Sid as the beneficiary Sid could receive the payments.

Make sure you read the annuity contract carefully before you set such an arrangement up. It will only be allowed if the plan allows you to take that step. Another option might be to roll the funds over into another kind of annuity. That can preserve their tax-deferred status. You will have to check with the IRS or a tax advisor to see if that is possible before attempting it.

Inheriting an Annuity

If you inherit an annuity you should be prepared to pay some additional taxes. Most people that inherit will not be able to continue as a beneficiary so they will have to take all of the funds out. That means they will have to report that income and pay taxes on it.

There are some ways to reduce your tax liability if this happens. One is to invest that money in a tax-deferred retirement investment such as a deferred annuity, an immediate annuity with deferred payments or an IRA. You may still have to pay some additional taxes but you could lower future tax bills. You will not have to pay taxes into funds you put into such plan until you take the money out.

A good way to keep this money out of your reportable income is to put it into a deferred annuity or an immediate annuity with deferred payments. In such an arrangement you can put payments until you retire. By taking that step most of your additional income will be in a tax-deferred arrangement that will provide you with a regular stream of income after you retire. You should only have to pay income tax on the payments and not the principal of the money in the plan.

Steven Hart is a freelance writer and a Financial Advisor from Cary, IL. He writes about Annuity topics like Annuity Calculator, and Annuities Good or Bad.

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2012年9月25日星期二

Annuity Payments

Annuities are a series of payments made by an institution like an insurance company to the annuitant at regular intervals of time over a fixed time period. The payments are fixed and may be on a yearly, semi annual, quarterly or monthly basis. Generally, there are two types of annuity payments called "ordinary annuities" and "annuities due".

Ordinary annuities require payments at the end of every period until the maturity period of the investment. For example, with bonds, usually the seller pays coupon interest payments to the buyer at the end of every six months. However, sometimes annuity payments will be made at the beginning of each period like a rent payment. These are called "annuity due". Depending on the frequency of annuity payments, annuities can be divided into deferred annuities and immediate annuities. In immediate annuities, annuity payments are made at much frequenter intervals. Deferred annuities will make the annuity holders receive payments depending on the nature of the annuity. If the deferred annuity is a fixed deferred, the holder will get the guaranteed rate of return at regular intervals over the life of the contract. If it is variable deferred annuity, the payments depend on the performance of the underlying investment. This means the annuitant will not receive any guaranteed amount. However, the payments under the variable annuities are tax-free or tax-deferred.

There are several types of annuity payments depending on the nature of the annuity. If the annuitant or the nominee receives payments after the fixed period in spite of any contingency, such payments are called "annuity with period certain". If an annuity payment continues after the death of the annuitant, it is called a "life annuity" payment. If it continues over the annuitant's life or for a fixed period (whichever is longer), it is called "life with period certain". The latest version for annuity payments is called "equity-indexed annuity payments".

It is not advisable for the annuitant to get cash value of the annuity by cashing out, unless the annuitant is under financial stress. The ultimate responsibility of cashing out an annuity and getting the payments rests on the shoulders of the annuitant.

Cash For Annuities provides detailed information about cash for annuities, annuity brokers, annuity buyers, annuity payments and more. Cash For Annuities is the sister site of Senior Settlements Info [http://www.e-SeniorSettlements.com].

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Indexed Annuities - They Hybrid Annuity For Retirement Investors

Newer products on the market that rival the popularity of both the fixed annuity and variable annuity are the indexed annuities. Indexed annuities offer the stability and safety of the fixed annuity and the potential for more growth and inflation fighting properties of the variable annuity.

The indexed annuities use a specific index, such as the S&P 500 as the basis for the growth of the policy. They offer a low base return if that particular market doesn't increase or remains flat. If, however, the market grows, then policy offers the owner a percentage of the growth or the entire amount. Most policies contain a cap.

By using a percentage of growth and cap on the return, in good years, the insurance company recoups the money they lose if the index drops and they pay the guaranteed rate. The lower base rate, cap and percentage of growth are your payment for participation in the lucrative years.

Assess you situation to see if indexed annuities are right for you. The product often fits perfectly into your portfolio if you're a soon to retire or younger retiree and you want to avoid risk. For those that are in their advanced senior years, the higher guaranteed rate of the fixed annuity often serves their purpose better. However, if there's a need to diversify investments they should consider this choice.

Another factor in deciding which of the indexed annuities is best for your situation is your need to access the funds. Some people simply want the tax deferred growth provided by the annuity and a higher potential for growth. They have enough assets to know they'll never use the funds and simply want to pass them to heirs. Penalty free access is of no importance to this type of person. If you worry that your emergency fund might not handle all the potential emergencies, or know you'll need some extra dollars in a few years, the penalty free access is important for you.

Just like the penalty free access, the surrender period penalties and length varies in importance from individual to individual. If you have specific plans for the money in future years, always check the length of the surrender period.

Of course, if you're younger than retirement, annuities might not be the best product for your situation. Since annuities have tax deferred status, they operate similar to an IRA when you withdraw funds. If you're under the age of 59 ½, you pay a 10 percent penalty on the growth of indexed annuities when you withdraw money. You also pay taxation on the growth at that time. Since the IRS considers the interest the first removed from any policy, any amount you take out has a tax penalty and taxation.

Look for the various percentages of participation and caps on the policy before you invest in indexed annuities. The index the policy uses as its basis is also important. The easiest way to compare indexed annuities is with the use of websites that show comparisons of several policies. These sites often don't sell policies but simply provide information for the concerned consumer.

Jonathan Tyler educates people on their options for retirement. In this article he discussed the benefits of indexed annuities for retirement and how they're different from the much more common fixed and variable types. If you'd like to learn more about annuities come see us.

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2012年9月24日星期一

Annuity: Homerun or Foul Ball?

I find the never-ending debate around annuities (good retirement investment or bad retirement investment?) fascinating and of personal interest, because I purchased a deferred annuity contract not too long ago. And you know, I was actually feeling kind of good about my annuity investment until recently when a financial advisor I engaged pointed out to me how expensive the fees were and suggested I might want to cash out my annuity at some point. The truth is my feelings about my annuity tend to ebb and flow with financial market performance, and I was already experiencing some misgivings about my purchase even before my meeting with this financial advisor.

So, why do I get a little queasy when I think about my annuity? First, prior to purchase, I never saw myself in an annuity. An annuity always seemed like a very conservative investment and I always considered myself more of gun slinger when it came to "playing" the market. Typically, I would have a liberal allocation to stocks and a conservative allocation to bonds, even as I got nearer to retirement age. Of course, my boat was rocked like everyone else's during the 2008-2009 recession when I saw my portfolio decrease by as much as 40%. I know this period changed my attitude about investments as I'm sure it did for many others, yet I held out like most and stayed pretty heavily invested in stock mutual funds. Still, the damage was done and a lesson was learned about the volatility of markets. Not that I wasn't aware of the volatility factor previously, but I had never experienced it like I did during the recession. In fact, as someone who is a little older, the markets had always been pretty good to me and setbacks were temporary at best. Most of the time my account balances were trending up.

It was the performance of my portfolio during the recession that first got me to think about the benefits of regular income in retirement that could be realized with an annuity. Adding to my concern at this time was the fact that my defined benefit pension plan had been frozen in the early 90's, and I really had no regular income I could count on in retirement apart from social security. Still, I seriously questioned tying my money up in an annuity which only stepped up 5% a year pre-distribution, and I pay for this step-up via a fee. I felt I could be left far behind should the market take off and we begin seeing double digit returns again.

Besides my concerns about tying my money up and possibly missing the upside of good market, I had all the other concerns that investors often have about annuities. I found my annuity contract to be extremely complex and I can honestly tell you today that I'm not 100% sure I fully understand the package I bought. Frankly, I don't think I'm alone here. I'm not sure the financial pro that convinced me to buy my annuity fully understood all the nooks and crannies of the contract I signed. Still, I felt that I had a good enough grasp on the contract details that I was comfortable in signing the contract. The key issue for me was having a steady flow of income in retirement and I was confident that this contract would meet my need in this area.

I had other concerns. I, like the financial advisor I recently engaged, was concerned about the high cost that went with my deferred annuity contract, because I bought the "Cadillac package"; the one that offered a guaranteed increase in benefit each year up to distribution and a death benefit. I knew this would cost me a lot in fees each year and, as indicated, my financial advisor drove this point home again in our very first meeting. He also mentioned that the sales person received a very nice commission for getting me into my annuity. The fact is I was already aware of this, but my financial advisor wanted to make sure this point didn't get by me.

My concerns did not end with the possibility of missed market opportunity and high costs. Another big concern I had with my annuity was the security behind it. If I put money in a bank, I know I have the protection that the FDIC provides. When I put my money into this annuity, the stability of the insurance company that sold me my annuity will determine if I see a benefit from my contract. To better ensure a payoff from my annuity, I bought from a major player. Still, American International Group/AIG (not my annuity provider) was a major player and nearly collapsed, and there have been concerns expressed about the stability of other large insurers recently. I do understand there is an industry-financed safety net for people like me should an insurer fail and not be able to live up its obligations.

All in all, it was a tough-tough decision to buy an annuity contract for all the reasons cited here, and it took me months to make my decision. Yet, I made the leap. "Why?", you ask.

Besides wanting a steady flow of income during retirement, as I've already pointed out, I also wanted the safety net that an annuity provides when investing in volatile markets. What I mean by this is that I continue to invest in the market and, of course, with the market comes risk. What my annuity has done, is it has allowed me to sleep better at night, because I now know that no matter how bad the markets get, I will always have the cash flow peace of mind in retirement that comes with owning an annuity. In baseball terms, I feel like I've hit a solid double with my annuity, and I'm hoping I can now hit a home run or two with the riskier investments outside of my annuity. Some financial advisors will recommend that you have enough regular income in retirement between social security, pensions and annuities to cover all your basic needs. I'm not there, but I'm part of the way there. I still consider myself a risk taker and I don't want to be too comfortable, because I don't think putting money in my mattress is the way to go, but my annuity does make me feel a lot better about taking and accepting risk. And I do sleep a little better knowing I have an annuity should we experience another recession like the last one. Yes, I'll always wince when I see the costs for my annuity and it will likely never be viewed as a homerun investment, and there'll always be some small risk regarding my insurer's ability to pay, but on the whole it works for me.

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Why You Should Consider Owning an Annuity As Part of Your Investment Strategy

Most investors are familiar with the idea of utilizing mutual funds to form the basis of their investment strategy. Ask them whether they would consider buying annuities to diversify this strategy and they may well stare blankly at you. This is hardly surprising as a sizable proportion of investment advisors are equally wary of incorporating annuities into their clients' portfolios.

This article will attempt to de-mystify this much under-used form of financial investment by explaining what an annuity actually is and assessing what circumstances, if any, favor their use.

At the most basic level there are two types of annuity, namely immediate and deferred. An immediate annuity involves paying a lump sum to an insurance company that guarantees to repay a fixed amount to the investor every year for an agreed term. The period of time involved will be either your lifetime or for a fixed number of years. Generally your money is not invested in the stock market but earns a small return over the period of annuitization.

If you choose the lifetime option your payments will be based on life expectancy derived from IRS mortality tables. The advantage of this option is that you will receive the guaranteed annual payout even if you exceed the assumed life expectancy period. The downside of this option occurs when you die before the assumed life expectancy period expires, in which case the insurance company keeps the balance of your investment.

A deferred annuity is designed to provide you with an income at some agreed point in the future, usually upon retirement. A major advantage of this option is that you are not liable for tax on the annuity each year allowing you to benefit from a triple compounding effect. Your investment continues to grow untaxed with gains taxed only when you withdraw money from the annuity. Such earnings are treated as ordinary income rather than capital gains.

The three most popular types of deferred annuity are the variable annuity, fixed annuity and index annuity. A variable annuity is essentially a tax-deferred mutual fund with death guarantees built in. This type of annuity is composed of several mutual funds, or sub-accounts, so the value of the variable annuity is dependent on how well these funds perform. The advantage of this type of investment is that the investor's beneficiary will receive a guaranteed dollar amount on his or her death.

Fixed annuities provide the investor with a guaranteed rate over the term of the contract. The rate payable is agreed at the time of purchase and does not fluctuate in response to market conditions. The fixed annuity shares the deferred tax advantages of the variable annuity but the benefit payable on death is limited to the contract value at the time of death. All in all the fixed annuity represents a more conservative form of investment and will therefore appeal to a sizable segment of the market.

Index annuities are a mixture of the variable and fixed versions. Generally, your investment will be tied to the performance of a named index with some downside protection built in to ensure the value of your investment does not fall in any given year. Unfortunately there will also be a cap on how much your investment can earn in a given year. The index annuity may appeal to investors who welcome the opportunity to beat inflation by linking to market growth but also want to enjoy the comfort zone provided by this particular investment vehicle.

Clearly, putting your money into annuities or any other form of investment warrants a great deal of careful consideration. In some circumstances annuities may represent the best option available, but this will not always be the case. Always seek advice and guidance from a qualified expert in this field before investing your money, but don't be afraid to ask relevant questions about the full range of investment options available.

Richard Mitchell owns and operates [http://www.insurancepolicyreport.com/]

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Charitable Gift Annuity - Immediate, Deferred, College, Flexible Annuity

For some people, a Charitable Gift Annuity (CGA) is a convenient way to donate funds to an educational, religious or other charitable organization. A Charitable Gift Annuity works very similar to other annuities you might purchase through your insurance company, but in this case you will receive an annuity payment directly from the organization. Typically, you donate a monetary amount to the organization of your choice and then begin receiving payments either immediately or at a predetermined date in the future.

Donations to charities are subject to the charitable tax deduction, and you are entitled to make this deduction on your income tax return for each year you make a new donation. You can choose to receive your annuity payments yearly, quarterly, or monthly, although most people choose quarterly payments. Quarterly payments from a Charitable Gift Annuity are received on the last day of the quarter, not the first.

Similar to other annuity options, Charitable Gift Annuities are subject to state and federal regulations. The American Council on Gift Annuities (ACGA) sets uniform gift annuity rates for use by charitable organizations. These rates set the recommended limits for payout rates to the donor.

If a charity stays at or below these rates, they are not required to justify that their rates are within state regulatory laws. If the charity chooses rates above those set by the ACGA then an actuary is necessary to ensure compliance to the individual state laws. Rates are determined by the age of the annuitant and when the withdrawal period for the annuity begins.

A charity may spend a portion of a donation immediately but must retain enough money in its reserve to satisfy its annuity agreement with the donor. The agreement for Charitable Gift Annuities states that the annuitant will receive fixed payment amounts for their lifetime only and not an additional period of time thereafter for their beneficiaries.

This means that once an annuitant dies, payments cease and the remainder of the annuity is absorbed by the charity. The donor can opt to extend the annuity agreement to an additional annuitant, as with the joint and survivor or two lives in succession options, but the annuity payments will be split between the two individuals and will cease after both parties have died.

DIFFERENT TYPES OF CHARITABLE GIFT ANNUITIES:

IMMEDIATE GIFT ANNUITY

1. If you choose an Immediate Gift Annuity, payments will begin in the payment period immediately following the final contribution date. As mentioned previously, the annuitant can choose to receive payments annually, quarterly, monthly, etc. Depending on when the contribution was made, you can request your first payment to be for the full, and not prorated amount.

DEFERRED GIFT ANNUITY

2. With a Deferred Gift Annuity, the annuitant is allowed to receive payments at a future date predetermined by the donor. The date chosen must be at least one year from the contribution date, but the payout schedule offers the same flexibility as the Immediate Gift Annuity.

COLLEGE ANNUITY

3. A parent or grandparent may want to establish a college fund for a child to offset the rising cost of higher education. In this case, they would donate money for a College Annuity which will only pay out over the lifetime of the child (annuitant). Payments usually begin at age eighteen, or when the child/annuitant is old enough to attend college. The annuitant may choose payments for life or receive larger payments spread out over the number of years they attend school.

FLEXIBLE ANNUITY

4. A Flexible Annuity allows the annuitant to decide the starting date for payments. Usually the annuitant chooses retirement or another date of importance to begin receiving payments. Keep in mind that one factor for the annuity payment rate is age, so you will receive larger payments if you wait until you are older.

HOW DOES A CHARITABLE GIFT ANNUITY WORK?

You may be asking how this works in a real life example. Let's assume you just turned seventy-five and have $25,000 that you would like to donate to your alma mater as a Charitable Gift Annuity. You opt to receive immediate annuity payments on a yearly basis, and your calculated annuity rate is eight percent. Based on your annuity agreement with your alma mater, you will receive a payment for $2000 every year for the rest of your life, and an immediate tax deduction of over $9000!

This is only an estimate, and your actual deduction will vary according to changing tax laws and changing rates established by the ACGA. You should always consult with a knowledgeable financial advisor such as Estate Street Partners before donating or investing large sums of money to guarantee your rights are protected.

Author bio - Rocco Beatrice, CPA, MST, MBA
Award-winning estate planning & trust expert
MS - Taxation, Master of Science Taxation
MBA - Management / Taxation
BSBA - Management / Accounting
CPA - Certified Public Accountant
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The Ins & Outs of an Annuity

The first question you're likely to ask yourself when entering the annuity universe is how does an annuity work? The answer to how does an annuity work depends on the type of annuity program you select. Deferred annuities provide an accumulation of retirement assets, while deferred annuities are designed to provide a stream of income, typically within a year of the annuity contract's purchase.

Types of Annuities

The simplest type of annuity is called the Single Premium Annuity (SPIA), and it requires you to make a lump sum payment to an insurance firm on the date at which you want payouts to begin. Payments may be maximized for as long as you live, if the SPIA contract specifies these payments. In this case, the payment amount is likely to be greater than returns produced from other kinds of fixed-dollar investments, but your income will not run out during your lifetime. On the other hand, if you die after receiving only a few payments under this contract, you will have put in more money than you ultimately received.

The Single Premium Deferred Annuity (SPDA) allows for deferred payments instead of immediate income. You make the single lump sum payment to the insurer, but payments to you will not begin until the contract's maturity date. On this date, you may take the total value of the contract or receive annuity payments. Some deferred annuity contracts will allow you to make periodic payments instead of the lump sum and build up value over time. As you make each periodic payment, the money in your account increases as a result. When you reach retirement age (or some other date specified in the contract), you will begin to receive annuity payments.

Annuity Options

There are different types of pay-in, withdrawal, and investment options available, depending on the kind of contract you select. With a single premium annuity, you invest a single lump sum amount, while flexible premium annuities let you make a minimal investment, with various payments amounts during the investment period. Fixed annuities generally use more conservative investment vehicles such as bonds, and guarantee your principal investment and minimum earnings interest rate. Variable annuities are usually invested in mutual funds, and the principal is not guaranteed. Also, the earnings on your investment determine your payouts.

Things to Consider

Annuities are not insured by banks, the Federal Deposit Insurance Corporation, or any other federal agency. These accounts are not deposits or obligations of a bank or a bank affiliate. They are not underwritten or guaranteed by any agency. In the case of a deferred annuity, there is an element of investment risk involved, including the loss of your principal.

I write columns on annuity investment. If you're looking for expert annuity advice, read more of my articles at: Annuity Articles Annuity types have you confused? Use Steven's handy annuity investor guide to determine which annuity types is ideal for you: Guide to Annuity Types

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2012年9月23日星期日

Take The Structured Settlement Annuity Option Today

You never know when you are going to need a huge amount of money. You have gone in for an annuity plan that will be giving you a fixed amount of money for a certain period of time. When you realize that you need the money immediately, you go in for structured settlement annuity plan.

For a person who has never before heard of structured settlement annuity, the going is really tough. Just imagine this scenario: you have retired after thirty years of glorious service in a bank. You have ensured that a certain amount of your salary has been put aside and has therefore become the backbone of an annuity plan. One month after you retire, you realize that you need to have a large amount of money, since your son has decided to become an engineer. Why should this worry you? Well, as a doting father, you would like to ensure that he has enough to see him through college and university. For this you realize that the educational institution in which he is going to make his engineering dream a reality, will not accept monthly installments of fees. They would want the money upfront. So now, what is the solution: you need to be able to pay a whole lump sum of money, how do you achieve this?

One of your friends talks to you about the structured settlement annuity option that you can take. You want to know more about this option, so you log on to the net for more updated information on this option. You understand that there a few firms who are willing to give you a whole lot of money (equal to or slightly more than) which will be instead of the monthly payments that you were supposed to receive as annuity payments. Basically, the idea is that the company involved ensures that you get the money at one shot rather than having to wait every month for an annuity payment check.

The entire prospect of structured settlement annuity seems to be quite attractive. Since you have put in long and arduous hours of work for the last three decades or more, you are certainly entitled to having your money when you really want it. Now that your son has decided to go in for higher education, you need to supplement his scholarship with the money that you have. It is in this kind of a situation that the option of a company buying up your annuity comes in handy. You do not have to go through life waiting for your annuity payments; instead you get the money when you need it the most and make use of it as you deem fit. Since there are quite a few companies who specialize in structured settlement annuity options, you need to make sure that the company is a genuine one, before you enter into any kind of deal.

Francisco Segura owns and operates [http://www.annuity-reviews.com] Annuity [http://www.annuity-reviews.com]

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2012年9月22日星期六

Benefits and Costs of a Variable Annuity

The new variable annuity has become a staple in many people's financial plan. The reason is the guarantees offered by the new variable annuity. The guarantees come in both living benefit and death benefit form. Living benefits offer guarantees to make certain the owner doesn't lose if the stock market or other investments drop below freezing. The death benefits guarantee the beneficiary a specific amount regardless of the stock market performance.

A variable annuity is nothing more than mutual funds with tax sheltering. What makes the new variable annuities so much different is that they include popular funds from a plethora of fund families and of course, contain guarantees no mutual fund can offer.

The tax sheltering of the mutual fund is a benefit for more than tax-free growth. If you own mutual funds and attempt to rebalance as the markets fluctuate, at each rebalancing you have a reportable tax incident. As anyone that actively manages their mutual fund portfolio can attest, it becomes a nightmare to track all the changes in a rapidly moving market. The tax sheltering of the annuity eliminates all the record keeping involved in mutual funds.

Variable annuities aren't all alike, however. Each of them has different surrender periods, charges, funds and guarantees. The interior charges on a variable annuity affect the investment return. The easiest method of finding the best variable annuity is to compare the rate that you'd receive if you invested into the product. Many of the companies offer hypotheticals based on past experience. While they aren't predictions of future returns, they do give you an idea of the policies with the best performing funds and lowest costs.

Variable annuities have guarantees on many products. The guarantees, known as living and death benefits, are different for every policy type. Some of the living benefits offer the guarantee that you'll never lose a penny of principal as long as you leave your funds in a specified length of time. The length of time varies from policy to policy and the some policies actually guarantee more than just the principal but also a specified return on your funds.

Other living benefits guarantee that if you take a specified percentage of income from your policy, you'll never run out of fund. Even if your real market value drops, the company has a second column that shows a guaranteed growth. If you withdraw five percent every year and the guarantee is five percent, even if the market drops ten percent every year, you'll still get five percent of the base amount until you die. If the market increases however, often these policies offer the right of resetting the base amount used to calculate the payment. Of course, if you access more than the five percent allowable, the guarantee cancels.

Death benefit guarantees are important also, particularly if the investments in the variable annuities are heavily loaded in the stock market during a volatile time. The principal may shift wildly as the market fluctuates, but the investor knows that his principal is safe and secure when he has a death benefit guarantee on the balance.

Variable annuities are wonderful retirement product but you need to know what you're buying before you dive in headfirst. It pays to decide what you need, compare annuities and seek the advice of a trained annuity specialist before you purchase any variable annuity.

Jonathan Tyler writes about investments for retirement including annuities insurance. Annuities can be a smart investment tool, but there are many different options to choose from, and few investors truly grasp how to properly assess the information available. If you would like to learn more about getting a variable annuity or the other types of retirement investments available, come see us at the above links.

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Different Types of Fixed Annuity and Its Benefits

Spiritual gurus may prophesy to live life in the moment but at times, it is very important to think about the future as well. And one of the most important aspects of future planning is financial planning. In the increasingly volatile world of today it is imperative that we have an assured source of income at retirement or when an economic calamity hits us.

For the daring investors, there is the stock market which can help you make quick money. But for the not-so-daring who are looking for a secure investment is a fixed annuity. This investment option basically gives you interest which is guaranteed by the insurance agency.

Fixed annuity is also at times referred to as tax deferred annuity. Reason being that it delays tax payments on your earnings until you withdraw money from it or start earning an income. This investment option is a great way to secure your retirement plans and gives you a steady flow of money.

A fixed annuity is of different types. They are:

· CD annuity - The certificate of deposit or CD annuity gives you a fixed rate of interest for a specified period of time. The interest rate does not change for the decided time period which is chosen by you at the time of setting up the annuity.

· Traditional Fixed Annuity - As the name suggests, this is the oldest and most popular kind of annuity. In this kind of annuity, the insurance company revises the rate of interest each year at the starting date of your annuity. But you can be rest assured that the revised interest rate would not be less than the minimum rate of interest guaranteed by the insurance company. The minimum rate of interest is clearly mentioned by the company at the time of fixing up your annuity. This kind of annuity is market linked and does have its pros and cons because at times of adverse economic conditions, the interest rate can be significantly lower than that in a CD annuity.

· Immediate Annuity - The name says it all. This kind of fixed annuity does not give you the benefit of tax deferral. Instead, it immediately starts giving you a steady flow of guaranteed income at the outset. This type of annuity is best suited for people who are nearing their retirement and do not sufficient time to build upon their resources with the help of tax deferral. Tax deferral annuities are meant for people who have a long way to go for retirement and can build a substantial reservoir of finances for their old age.

These are the different kinds of fixed annuities. But before you take a pick from the above, make sure that you consult some top notch financial planners to make an informed decision. Most of the times, insurance companies or banks would not tell you what is best for you. Hence, it is always wise to consult an expert before you decide to invest your hard earned money.

Click on the link below to learn more about a Fixed Annuity.

Visit http://www.annuitycampus.com for more Annuity and Life Insurance Tips and Tricks. Call Robert Eldridge directly at 800-643-7544. Robert Eldridge holds over a decade of experience as a multiline agent in multiple states and currently serves on the membership council of the National Association of Insurance and Financial Advisors.

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Retirement Annuity - Making After-Retirement Life Worth It

Retirement can be full of worries if one does not have enough funds to live rest of the life in a dignified way. For spending an anticipated after-retirement time it is important that you decide on Annuity options (better understood as pension plan) when we are in good working condition.

Annuities are available in several flavors and it has potential to become a lucrative investment vehicle for two basic reasons. The first reason being that the money you invest in annuities can be tax deferred. Secondly you are already preparing for retirement so that you don't have to worry later. These days, a large number of employers withheld a small amount from your weekly paycheck and invest it into an insurance product so that when you retire, it should be a relaxed phase of your life.

By investing in an annuity you pay a suitable amount to insurance companies through regular payments or so-called premiums. The insurance company invests this money in bond portfolios and stock as a result of which your money grows over a period of time exponentially. Since the money is invested in conservative portfolios, you remain protected from any kind of downfall in the stock market. When you receive a lump sum amount after you have retired, you do not only get the total of what you paid as premiums but an amount that would have grown exceptionally over these years.

Basically three kinds of annuities are available: deferred annuities, variable annuities and immediate annuities. All these different types have their own advantages and disadvantages and they should be selected depending on the income and tax goals in your mind.

Immediate annuities can be understood as a money management tool which allows you to invest a portion of your savings for monthly payments that you will receive either for rest of your life or for a specific period of time that you have decided. The only disadvantage with immediate annuity remains the fact that you cannot withdraw any cash in case of unforeseen emergency.

Deferred Annuities is one-up over immediate annuity because of the facts that the money that you plan to receive after retirement can be taken as a lump sum or as paycheck withdrawals. Variable annuities plans allow investment of your money in selection of portfolios. You can mix and match various annuities products and also receive tax benefit.

Brian Sibet also writes about Retirement Planning and Annuities including Lump Sum Annuity and Personal Injury Settlements

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2012年9月21日星期五

How to Buy an Annuity

When you are on the verge of making a major financial decision, you must walk through the proper steps to make sure you avoid all risks. At Annuity Straight Talk, we have devised a basic strategy that will help an investor take all necessary steps to determine the best strategy for long-term financial stability and profitability. These steps are listed below.

Suitability- Is an annuity right for you? The suitability quiz on this site will help align your goals with the benefits of an annuity. We provide the straight talk and you set the standard. If our ideas meet your standards then further investigation of annuities is warranted.

Financial Review- You must review all of your financial assets and goals to determine what portion of your portfolio can be allocated if any to this type of investment. Things to consider:

Time Horizon- How much time do you have until you retire or will need your invested assets.

Current Asset Allocation- How are your current assets divided and does that adequately represent your needs and desires?

Goals- Do you need more growth, asset preservation or an income plan?

Strategic Positioning- Will an annuity provide for multiple uses in your financial future? The best products often do. Too many people have tunnel vision while saving for retirement and become limited as that day approaches. The distribution of assets is an art. Give yourself as much potential as possible by remembering these important facts.

Length of retirement... life expectancy- It's extremely important to make sure your assets last a lifetime and if at all possible increase to provide for adjustments to the cost of living.

Number of working years remaining- Are you still saving for retirement? Depending on how much time you have it may be a good idea to start drawing your retirement income picture now so you can fill in the gaps before it's too late.

Future cost of health/long term care- These costs will likely have a significant impact on your retirement years. Learn all you can now so you don't have to face this potential burden without being prepared.

Maintain growth throughout retirement- Have you explored a variety of strategies that will give you increased income when you need it most?

Navigate the maze of mandatory retirement plan distributions- This is self explanatory. Depending on your personal situation, mandatory withdrawals may or may not be a problem. It's best to figure it out now so the lack of planning doesn't unexpectedly alter a working retirement plan.

Product Selection- Which product offers you the best terms, flexibility and profitability? The annuity report will give you the tools to analyze all viable products. This is an essential step so you can make sure the insurance company and advisor are offering/recommending the right products.

Review and Implementation- Make a list and check it twice. Leave no question unanswered. Then, buy the annuity and relax knowing you have made a solid choice.

This approach will allow you to make an informed decision based on all factors unique to your personal financial life and tell you with certainty whether an annuity will help. It may or may not so you need to know that now before you get caught in a barrage of sales pitches.

Remember, in regards to make financial decisions, the only person you can trust is yourself. Tackle that responsibility with all the information and knowledge provided by Annuity Straight Talk. Trust, but verify.

Bryan J. Anderson
Annuity Expert at http://www.AnnuityStraightTalk.com
Unbiased Resources For Choosing Annuities

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Immediate Annuity

Immediate annuity is a type of annuity in which the contract owner starts getting payments after a single premium is paid. Payments can be made on a monthly, quarterly, annual or semi-annual basis. The rate of payment in immediate annuity is of two types, fixed rate and variable rate. The fixed rate guarantees a set income that will not fluctuate, whereas in variable rate payments will fluctuate according to the performance of selected investment the annuity is based on.

Immediate annuity is a vehicle for distributing savings with a tax deferred growth factor. Insurance company assumes the risk of the payouts lasting annuitants whole life in case of immediate annuity. Generally one can never outlive these payments and various choices are available for payment set up as well. There are some plans available which allows change in payment structure at a later date.

Immediate Annuity provides security and stability to its buyer by providing stable lifetime income or a guaranteed income for a specified period of time. It is simple and easily manageable because the annuitant does not need to manage his/her investments, watch markets, report interest or dividends. Immediate annuities provide quality return because insurance companies generally give higher interest rates on annuities than CD or treasury rates and also the principal is returned with each payment. We suggest you to select annuity product carefully according to your need due to the fact that most conventional immediate annuities cannot be revised or cashed in.

An immediate annuity can be purchased with funds from a variety of possible sources, such as: a maturing certificate of deposit, monies which have accumulated in a deferred annuity account; or funds from a tax-qualified defined benefit, 401k or IRA account. Under current tax law, a portion of each payment received from a non-qualified immediate annuity is tax free until your total premium is recovered. The remainder of each payment will be taxed as ordinary income in the year you receive it.

Nick Jameson is a well known author who writes on Immediate Annuities for the website fixedannuitylibrary.com

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2012年9月20日星期四

Open The World Of Single Life Annuity To Yourself

Annuities can be described as a financial contract with insurance company that helps people save money for retirement. The money that are deposited into such provisions grow all the time, they are tax-deferred until they are withdrawn that happens generally after the person reaches retirement age. A fund that brings income to the person insured during retirement is called a single life annuity. The one who is insured is called annuitant. Further some information about annuities is provided to those, who search for such financial product.

Different payout options are available in single life annuities. In straight annuities, the money is paid out till the death of annuitant. There is also a possibility to purchase a refund option. According to this, after death of the annuitant, any remaining money in the account will be forwarded to beneficiary, whose name is stated in the contract.

There is an interesting option of these contracts called a guaranteed period or term. Guaranteed term ensures that payments will be made for stated number of years, despite if the annuitant is alive. If he or she will die till the end of guaranteed period, the payments will be made to estate of annuitant or their beneficiary, stated in the contract until the term comes to an end.

Interest earned with the funds is tax-deferred till the time the interest is withdrawn. In the USA, all annuitants that are below age fifty-nine and a half must also pay a penalty tax on funds, that are withdrawn from single life annuity. This penalty tax comes with income tax due on the withdrawal.

In the majority of the cases, a contract can be deferred or immediate. Deferred single life annuities are split into two distinct periods; known as the accumulation and payout phases. First, during the accumulation phase, the funds are deposited into the account where they earn interest over a number of years. After that, throughout the payout period, payments are received by the annuitant. These comprise the principle and accumulated interest earned over the period. The interest portion accumulated is taxed, in accordance with the annuitant's current tax rate.

When purchasing immediate annuities, the holder starts receiving payments from the first year of the contract. The remaining amount earns interest that is tax-deferred. Just like with deferred annuities, income tax on the interest is charged when the interest is withdrawn.

Joint and survivor annuities are more preferred for married couples than separate single life annuities. When purchasing joint annuities, both spouses will receive retirement income payments. Upon the death of the one spouse, the other will receive the remaining value. The payments will be made to surviving spouse during period, specified in the contract.

It can happen that income from an annuity is not needed during the retirement time. Then, couples can use the funds to buy a joint policy. These funds are also subject to income and penalty tax.

If further advice on any financial product is needed, including a single life annuity, it is strongly recommended to take appropriate legal advice. Before signing any agreements it is very important to check the credentials of the all parties involved.

Visit http://www.annuitycampus.com for more Annuity and Life Insurance Tips and Tricks!

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http://www.annuitycampus.com/understanding-annuities-newsletter.html

Call Robert Eldridge for Questions, Quotes, and a Free Consultation 1.800.643.7544 Ext. 1

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Only a Sucker Would Buy an Annuity

This was the statement made by a recent referral I received. I was not surprised with all the negative press surrounding this product owned my millions of Americans. But, I was interested in how my prospect came to this conclusion. I asked him to tell me what an annuity was in his opinion. He said, 'An annuity is a product that pays you money every month, and when you die, the insurance company keeps the rest of your money.

For a minute I thought he was talking about Social Security; currently scheduled to go broke in 2037 according to the Social Security Administration. Now think for a minute. If this were true, do you think millions of Americans would have placed hundreds of billions of their hard earned money into such a product. Americans bought $34.9 Billion in fixed annuities alone the first quarter of 2009 (1)

The answer is no. Would almost every University, 501(c) 3, Church, and public school fund their retirement account with one? Would Congress be considering giving a tax break to Americans who purchase an annuity for retirement if it were true? No. So what is an annuity?

First you must be aware that the "term" annuity is often confused for the "product" annuity. The term annuity means "a series of payments guaranteed for a specific or lifetime term of years in order to methodically liquidate a specific sum and provide guaranteed income for the contractually guaranteed term." The "product" annuity is a contract sold by an insurance company that provides a future promise to pay income benefits a contract owner cannot outlive. Growth occurs on a tax deferred basis and income is taxed as last-in first-out known as LIFO when withdrawn. A 10% early withdrawal penalty may be applied to withdrawals made by a contract owner before the age of 59 1/2 unless owner uses provisions available under IRC Sec 72(t).

This is why annuities are used predominately for a retirement vehicle. It is important to note that there is no additional tax advantage to owning an annuity in your IRA or retirement account since they are already tax deferred. It is not however inappropriate to own an annuity in your retirement account if safety of principle is importnt to you. Many corporate pensions are partially funded with an annuity for that very reason. Fixed Annuities guarantee a fixed payment at liquidation while variable annuities do not. In a volatile interest rate or stock market environment, fixed payments make more sense to investors wanting to lock in a specific income stream that will not vary. Investors like annuities mainly for safety. There are several types of annuities and one must be sure of the specific form and uses of each.

Annuities come in 2 types - Immediate and Deferred.

Each type offers 2 forms - Variable and Fixed

Fixed annuities come in 2 types- Fixed Rate and Fixed Indexed- a hybrid product

The deferred annuity is an accumulation vehicle with certain guarantees attached including the right to move your money after the surrender charge period is over. This period can be any where from 3 years to over 15 years. I don't see any real value in getting a contract over 10 or 12 years though unless you just want your agent to make more commission for a small increase in your product promises or benefits.

Immediate annuities provide "immediate" income for a fixed period or lifetime depending on the income needs of the client. Investors should be cautious buying one of these and make sure they understand all the rules including provisions that may be unpopular with their heirs. Immediate annuities can provide the highest income for the amount of money used and can be very suitable for income planning as long as the client has adequate money in other accounts or life insurance in place for the heirs.

Deferred annuities come as Variable accounts and Fixed accounts. On Variable Annuities, the income payment in the future would vary with the underlying investment performance of the sub accounts. It is one way of owning mutual funds with the goal to outperform fixed rate annuities and create a future income stream that may be higher than one provided by a fixed annuity with consistent annual performance at a lower rate. By assuming the risk of investment performance, a client may get lucky and do well with this arrangement. On the other hand, the market could react like the last 10 years and you have no growth at all or even lose money. These products have several fees associated with them to provide certain guarantees. Investors who want protection from stock market risk may like the death benefit guarantees or income guarantees but these all come at a cost.

Fixed Rate annuities usually provide a fixed multi year interest rate or a first year rate with a floating rate in future years. They operate in a similar fashion to a CD in that interest is credited daily or annually or other term, but taxes are deferred until earnings are withdrawn. Annuities can be used to shelter interest income by retirees so they can avoid paying taxes on their social security income.

Fixed index annuities are hybrid products that credit interest based on the performance of an external stock market index. Interest credits can be no less than 0%, and many have an interest rate cap on the amount of interest that can be credited to the product in one year. The cap is one of the costs associated with principle protection. Some are uncapped but have additional design features that limit the upside as well. Index annuities have outperformed almost all alternatives that provide guarantees over the last 10 years and compared to the number of consumers that own them, complaints are surprisingly low. Some of these products appear to be quite complex. And clients should stay away from any products that have surrender charges for more than 10 or 12 years. Even though most annuities have liquidity of 10%-15% of the account value annually, caution should be taken if an advisor suggests you put all of it into only one account.

Annuities provide some compelling reasons to own along with some reasons not to own. Once you have compared all the products available on the market that provide safety and a good rate of return, you may find that you may be happy to own one of the safest places in America to keep some of your money too.

(1) Beacon Research, Fixed Annuity Premium Study, May 27, 2009 as quoted by Globe Newswire

Robert B. Scott - email him at rbscott21@gmail.com /800-228-3454 Not available in all states, No investment, legal or accounting advice is being given with regard to this article. Please seek the counsel of your trusted advisor in these areas. Licensed in TN, MS, AL, VA and IA.

http://www.nationalfinancialservicesgroup.com

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Deferred Annuity

2012年9月26日星期三

Taxes on Annuity Death Benefits

2012年9月25日星期二

Annuity Payments

Indexed Annuities - They Hybrid Annuity For Retirement Investors

2012年9月24日星期一

Annuity: Homerun or Foul Ball?

Why You Should Consider Owning an Annuity As Part of Your Investment Strategy

Charitable Gift Annuity - Immediate, Deferred, College, Flexible Annuity

The Ins & Outs of an Annuity

2012年9月23日星期日

Take The Structured Settlement Annuity Option Today

2012年9月22日星期六

Benefits and Costs of a Variable Annuity

Different Types of Fixed Annuity and Its Benefits

Retirement Annuity - Making After-Retirement Life Worth It

2012年9月21日星期五

How to Buy an Annuity

Immediate Annuity

2012年9月20日星期四

Open The World Of Single Life Annuity To Yourself

Only a Sucker Would Buy an Annuity

2012年9月19日星期三

The Overlooked Annuity - Equity Indexed Annuities

Assessing the Difference in Annuity Quotes

2012年9月18日星期二

You Can Ladder Annuity Payouts Different Ways - Here Are Two

Insurance Annuity

2012年9月17日星期一

Immediate Income Annuity - A Better Choice for the Retirees

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