Understanding Annuity Basics
An annuity is an agreement that you set with an insurance company, in which you contribute a set amount of money, and begin receiving payments after a certain period of time. Typically, an annuity can allow you to receive payments for the rest of your life. Additionally, you can decide whether you want to receive income in the form of monthly, quarterly, or annual payments.
Fixed Indexed Annuity Basics
An FIA (fixed indexed annuity) is an annuity product with the benefit of keeping your money safe. This is because, although your interest rate can rise based on the performance of a market index, your FIA’s value will not fall if the market does. No matter what happens in the stock market, the money in your annuity will remain protected.*
Annuities & Taxes
An annuity grows, tax-deferred. You only pay taxes on the money in an annuity when it’s taken out. Additional tax benefits may apply, depending on your situation. For example, if you have received a lump-sum payment from a 401(k) plan, you may, depending on several factors, be able to transfer that money into an annuity, in order to postpone taxes on it. However, when it comes to topics like this, it’s always recommended that you consult a qualified tax advisor.