Fixed Annuities: A Top Security Asset For Women

Fixed Annuities: A Top Security Asset For Women

But by its design an annuity works a little differently. An annuity offers guaranteed income for life, if you choose it to work that way. And you invest money into it same as you would any other money market account, like a 401k.
This is particularly likely for women, according to a recent report by New York Life Insurance Company, who traditionally endure a significantly longer retirement than men despite weathering the same economic conditions beforehand. The company said that women accounted for 64 percent of customers with fixed immediate annuities in 2009.

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Can Life Insurance be Used in a Section 403b Tax Deferred Annuity Plan?

Can Life Insurance be Used in a Section 403b Tax Deferred Annuity Plan?

Life insurance can be provided as an incidental benefit under a tax deferred annuity plan. It is provided on much the same basis as in a qualified profit sharing plan and subject to the same limits. Covered employees will have Table 2001 (formerly P.S. 58) costs to report as taxable income, as in a regular qualified plan. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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5 Fees and Costs Annuity Investors Should Know About

5 Fees and Costs Annuity Investors Should Know About

There are five typical fees or charges that investors usually incur when purchasing annuities, particularly variable annuities. Understanding them (and their differences) will help make the best possible decision. These include: Investment management fees – These fees are typically anywhere from a 0.25 to 1 percent, but sometimes higher for specialized funds such as foreign stock funds, sector funds, REIT-type funds, and others. Administration expense and mortality risk charge ­– This charge ranges from a…

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5 Ways to Buy Annuities

5 Ways to Buy Annuities

Almost all life insurance companies offer annuities, and these companies distribute annuities to customers through a variety of different options. The list below is a summary of these various options, followed by an explanation of variable annuities: life insurance agencies; many stock brokerage firms; independent insurance agents and financial planners; independent insurance brokerage firms; direct to consumers through the mail and the internet. In addition, many banks now offer annuities (often through internal broker-dealers). Variable…

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Taxation of Proceeds When an Annuitant Dies Prior to Contract Maturity

Taxation of Proceeds When an Annuitant Dies Prior to Contract Maturity

When an annuitant dies before receiving the full amount guaranteed under a refund or period-certain life annuity, the owner or beneficiary receiving the balance of the guaranteed amount will have no taxable income (unless the amount received by the beneficiary plus the amount that had been received tax-free by the annuitant exceeds the investment in the contract). If the refund or commuted (present) value of the remaining installments is applied by the owner or beneficiary…

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Taxation of Annuities During the Accumulation Period

Taxation of Annuities During the Accumulation Period

Income earned by a variable annuity (see Questions and Answers below) is not taxed during the accumulation period. No tax will be payable until the earlier of: (a) the surrender of the contract; (b) a withdrawal from the contract; or (c) the time payments under the annuity begin (annuitization). To obtain annuity treatment, however, the underlying investments of the segregated asset account must be adequately diversified according to IRS regulations. Payments made as an annuity…

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Taxation of Annuity Distributions during the Payout Period

Taxation of Annuity Distributions during the Payout Period

Annuitants’ investment in an annuity is returned in equal tax-free (return of capital) amounts during the payout phase. Any additional amount received is taxed at ordinary income rates. This means each payment consists of two parts: the first part is considered return of capital and is therefore nontaxable, while the second part of each payment is considered return on capital (income) and is therefore, taxable at ordinary rates. The amount of each period’s payment that…

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8 Circumstances When Penalties on Premature Annuity Distributions Will Not be Invoked

8 Circumstances When Penalties on Premature Annuity Distributions Will Not be Invoked

Premature distributions (those made before certain dates listed below) are subject not only to the normal tax on ordinary income but also to a penalty tax of 10 percent. The 10 percent penalty applies only to the amount of the distribution that is included in income. The penalty for premature distributions will not apply to any of the following: payments that are part of a series of substantially equal periodic payments made for the life…

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