The Money Farm Team

Before you go out and buy a variable annuity, be sure you understand the disadvantages of this retirement savings vehicle. The most significant downside of a variable annuity is its cost. Fees on variable annuities can be rather costly. Administrative costs, fees for unique features, and fund charges for mutual funds you invest in are […]

MYGAs, or multi-year guaranteed annuities, are a type of fixed annuity that guarantees a stable interest rate for a set length of time, often three to ten years. MYGAs, like standard fixed annuities, are subject to surrender costs, which are penalties that an annuity holder must pay if he or she withdraws money from an

When you purchase an annuity, you are pooling your risk with the other people who are also purchasing annuities. The insurance company from which you purchase the annuity manages that risk, and you pay a charge to reduce your risk. You may never make more money from an annuity than you put into it, or

In a recent piece, I talked about some of the disadvantages of variable annuities. The high fees, deceptive guarantees, and tax treatment can make investors feel uneasy. But what if you’ve purchased a variable annuity and are experiencing buyer’s remorse? To get out of a problematic variable annuity, you have a few options. Take the

You will be obliged to pay Uncle Sam a 10% early withdrawal penalty as well as ordinary income tax on your investment returns if you make withdrawals before you reach the age of 59 1/2. (You will not be taxed on the amount you put into the annuity.) If you take withdrawals within the first

In retirement, annuities can provide a steady income stream, but if you die too young, you may not get your money’s worth. When compared to mutual funds and other investments, annuities can have hefty fees. You can tailor an annuity to meet your specific needs, but you’ll almost always have to pay more or accept

A 403(b) plan (sometimes known as a TSA plan) is a retirement plan established by public schools and certain 501(c)(3) tax-exempt organizations. Employees contribute to individual retirement accounts in order to save for retirement. Employers can donate to their employees’ accounts as well. Is a 403b the same as an annuity? The 403(b) was first

What are CD annuities, and how do they work? That’s an intriguing question with an even more intriguing response. The crux of the situation is that a CD annuity does not exist. A bank issues a certificate of deposit (CD), whereas an insurance firm issues an annuity. Why are certain types of annuity products referred

Fixed annuities are a good investment for anyone searching for a secure, tax-advantaged option to earn a guaranteed return on their retirement assets (3 to 10 years). Fixed annuities are fairly similar to CDs in terms of how they work. Both vehicles provide a secure way to store money by requiring you to lock your

An insurance company and you enter into a contract called a variable annuity. It functions as a tax-deferred investment account with some insurance characteristics, such as the possibility to convert your account into a stream of periodic payments. A variable annuity contract can be purchased with a single purchase payment or a series of purchases.