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Annuity basics

Types of Annuities

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Tax Deferred Variable Annuities

Think of a tax-deferred annuity like a retirement savings plan. You put in money now, and, when you retire, you can take withdrawals to supplement your retirement or you can receive that money as regular monthly payments, guaranteed for life. And, because your annuity is tax-deferred, your earnings are reinvested and sheltered from current taxes.

Unlike Fixed Annuties, a Variable Annuity offers the opportunity for market growth through fund investing

Benefit from Market Gains

A tax-deferred variable annuity, which invests in a wide range of investment options, including equity funds, can provide additional investing opportunities for your retirement savings. Each variable annuity offers a choice of professionally managed fund options. Your returns are dependent on the performance of the underlying funds.

An Important Part of Your Retirement Plan

A variable annuity is a long-term investment. The longer you allow your savings to accumulate, the more likely you are to gain from your annuity.
In fact, an annuity does not require you to make withdrawals until you're 90. So, think of the money you invest in an annuity as long-term savings that you shouldn't need to withdraw until after you're 59 ½.

Funding a Tax-Deferred Variable Annuity

Buying a variable annuity can make sense if you are already maximizing your annual contributions to your employer-sponsored plan and IRA and have additional after-tax money you'd like to invest for retirement.

You can fund your annuity with a lump sum and contribute regularly to it over time. Or, you can exchange an annuity you currently own for a new annuity

Although many annuity providers let you place "qualified" money in a variable tax-deferred annuity—such as money rolled out of your 401(k) plan—it may not make sense. You'd be paying for something you already have: tax-deferral. A rollover IRA or fixed annuity may be a better option.


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