50+ Lifestyles

Annuities: Tax Deferral, Compounding, and Protection for the Win!! And Currently Paying a 45% Bonus

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Annuities can be a powerful addition to a retirement plan, especially since they offer the combined benefits of tax deferral, compounding and protected income generally not present in many other investments. The tax-deferral is made more powerful because by not paying taxes on the asset each year, a larger dollar amount will compound going forward. To be clear, all qualified accounts, including IRAs receive tax-deferral compounding. The annuity advantage over taxable
products is that no IRA 1099 form is triggered until a withdrawal is made and the portfolio attains a level of protection.

Further annuities provide tax deferral even when funded by after-tax dollars. When any funds (before or after tax) are placed in an annuity, taxes on gains are not due until a withdrawal is made, later in life and at a lower tax bracket. However, even if one’s tax bracket remains the same over time, it is still better to pay taxes later. Keep in mind, the purchase of an annuity within a retirement account such as IRA, provides no additional tax deferred benefit beyond that provided by the retirement account itself.

Annuities are available for qualified and non-qualified plans. There are no contribution limits with after-tax (non-qualified) annuities – except those that may be imposed by the insurance company – effectively allowing for tax deferral and compounding on a larger dollar amount. Conversely, the IRS imposes annual contribution limits on traditional plans such as 401Ks, 403Bs, IRAs may hamper an investor’s ability to save. But remember the non-qualified annuity has no limit on contributions. And shares in the benefits of tax deferral, compounding, and protection.

We currently have available a special index annuity that is offering a 45% bonus.

Contact us for additional details. Remember Warren Buffett’s quote that “investing is simple, just not easy”? At times, it’s easy to overlook the simple things. While compounding and tax deferral are not new, they are key investing concepts. Now add that tremendous bonus to help maximize returns.

Insurance and Financial Advisor with RJS and Associates, Inc. He can be reached at (563) 332-2200.