Annuities

The exclusion ratio simply refers to the percentage of an investor’s return that is tax-free. The exclusion ratio is a percentage based on the return on an original investment in dollars. Any profit that exceeds the exclusion ratio is taxed, such as capital gains tax. The exclusion ratio usually applies to non-qualified annuities. What is […]

Annuities are retirement plans that can assist offer a predictable, guaranteed income stream throughout retirement. An annuity is a contract with an insurance company that guarantees you a certain amount of money during your retirement years. What is meant by annuity in insurance? An annuity is a financial product that allows you to receive a

A deferred income annuity may be perfect for you if you’re seeking for a future source of guaranteed income that will last the remainder of your life. A deferred income annuity (DIA) allows you to purchase a guaranteed1 “retirement paycheck” with a lump amount or repeated transactions. Starting at a future date of your choosing,

An annuity is a long-term contract between you and an insurance company that allows you to amass cash tax-deferred in exchange for a guaranteed income that you cannot outlive. What is an annuity and how does it work? An annuity is a long-term investment issued by an insurance company that is intended to protect you

A qualifying annuity is a retirement savings plan that uses pre-tax earnings to fund it. A non-qualified annuity is one that is funded by after-tax funds. To be clear, the Internal Revenue Service is the source of the nomenclature (IRS). Qualified annuity contributions are deducted from an investor’s gross earnings and grow tax-free alongside their

An annuity in arrears is the polar opposite of an annuity in advance (also called an “ordinary annuity”). An annuity in arrears is a regular, identical monetary payment given at the end of equal time intervals, such as a mortgage payment. Mortgage payments, like rent, are due on the first of each month. The mortgage

When you retire as a member of a pension fund, pension preservation fund, or retirement annuity fund and choose to take a lump payment, you can take (commute) a lump amount equivalent to one-third of your retirement interest in that fund. The remaining two-thirds of the money will be paid out as an annuity (a

A grantor retained annuity trust (GRAT) is a financial tool used in estate planning to reduce taxes on substantial monetary transfers to family members. An irrevocable trust is established for a specific term or amount of time under these plans. When a trust is founded, the person who establishes it pays a tax. The assets

A reversionary annuity is a reduction in your retirement benefit in exchange for a higher survivor payment for a beneficiary when you die. A reversionary annuity cannot be canceled. What is a reversionary policy? You sell all or part of your house in exchange for a cash lump sum, a recurring income, or both under

The potential for higher interest and premium protection are two of the benefits of indexed annuities. Higher fees and commissions, as well as gains caps, are drawbacks. What are the downside of indexed annuities? Penalty of 10% imposed by the Internal Revenue Service Withdrawing income before reaching the age of 59.5 triggers a 10% IRS