| Tax deferred annuities are contracts that are issued by insurance
companies that offer a guaranteed rate of interest and guaranteed
payout options. Interest earnings inside of annuities grow on a tax
deferred basis unlike other investments. Taxes are paid only when the
money inside of the annuity is withdrawn. There are several advantages
of tax deferred annuities. Annuities offer very competitive returns
that exceed CD's, money market and savings accounts. Unlike other
investments, these competitive returns are sheltered by taxes for as
long as the earnings remain inside of the annuity.
401(k)
Rollover Annuities
These annuity plans are suitable for
those interested in avoiding the mandatory 20% withholding for federal taxes on
distributions and the potential 10% penalty imposed on those under the age of 59
1/2.
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Credited interest rates in
cd type annuities are guaranteed for the
entire term. Terms vary anywhere between 5 and 10 years for most
products. These annuities have gained in popularity this year as
people are seeking guaranteed rates for periods exceeding one year.
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Credited interest rates in
equity indexed annuities are based on an index such as the S&P500, Dow, Nasdaq
and 10 year treasury bonds. Equity indexed annuities have gained popularity
quickly as many investors are attracted to the possibility of stock
market returns on a tax deferred basis without the stock market risk.
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Single premium annuities that offer several payment options to
the contract holder that currently offer competitive rates of interest
and in some cases bonus rates of interest.
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Relatively new in the industry but one of the most popular
today. These annuities have several investment options inside
including a fixed interest rate option. These annuities permit
investors to split up their money into different options. Investors
seeking high returns while minimizing risk find the diversification
features attractive. Great for 401(k) rollovers.
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Flexible premium
annuities are perfect for investors who want a tax deferred investment that
they may systematically add to on a consistent basis. Suitable for
either traditional or Roth individual retirement accounts.
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Bonus annuities offer bonus credited rates of interest usually
in the first few years of the contract in addition to the current
stated rate of interest. In some cases the additional bonus rate can
exceed 7%. It is not uncommon for people to experience better than 14%
in the first year with certain policies. Also very suitable for
retirement plan rollovers.
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Medicaid annuities that are often used in connection
with estate planning and qualification for Medicaid.
Structured
Settlement Annuities
Structured settlement annuities frequently used by
attorneys and accountants in connection with structured settlement arrangements
for their clients.
Split
Annuities
Split annuities provide an enhanced
guaranteed retirement income by combining immediate income and deferred
annuities in a single retirement solution.
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