This is intended to provide a general guideline for the type of
SPDA's offered through our agency. Please call us at 1-800-752-0150
and speak to an Annuity Specialist for complete product details.
What Is A Tax-Deferred Annuity?
A Tax-Deferred Annuity is an interest-earning Annuity set up with
an insurance company. The insurance company credits interest, and
you don't pay taxes on the earnings until you make a withdrawal or
begin receiving an Annuity income.
What Does Tax-Deferred Mean?
Tax-Deferred means postponing your taxes on interest earnings
until a future point in time. You can accumulate more money over a
shorter period of time.
Why Are My Taxes Deferred With An Annuity?
Your taxes are legally deferred because of Section 72 of the
Internal Revenue Code (1954), further clarified by subsequent
Revenue Rulings and federal legislation.
When Do I Have To Pay Taxes?
Taxes are paid when you or your family withdraw the interest.
Can’t I Earn Higher Interest Elsewhere?
Yes. On occasion you can find a higher interest rate elsewhere.
The other rate, however, is typically fully taxable. Call us to see
how a tax deferred rate may out perform a higher taxable rate.
What Does The Insurance Company Do With My Money?
While investment portfolios vary by company, your money is
invested by the insurance company in a manner that is very similar
to the way banks invest your deposits. These invested dollars are
also regulated by statute in a similar manner. There must be
diversification coupled with conservative investment limitations in
order to meet the legal reserve requirements. The types of qualified
insurance company investments include: bonds (government and
Corporate), mortgages, commercial papers, bankers acceptances,
certificates of deposit.
What Happens To My Interest After The Initial Guarantee Period?
Your new level of interest will be based upon portfolio earnings
as well as the investment rates obtainable at that time.
What Is The Interest Tied To?
The interest earnings paid on the Annuity are tied to the
interest rate the insurance company can obtain from the investment
of all Annuity funds.
How Often Does The Return Change?
The interest on new funds fluctuates when necessary to reflect
changes in the general economy. The renewal rate is established
annually for each oncoming 12 months.
How Will I Know My Balance?
Most companies provide you with an annual statement that reflects
your Annuity value as of that date. You also have the right to call
the company at any time to obtain this information.
Is My Principal Guaranteed?
Most annuities we offer provide a guarantee of your Principal at all
times.
Are There Any Fees?
There are no fees to open your Annuity policy and there are no
administrative fees along the way.
Can I Make Withdrawals?
Yes, while your account is compounding, you may withdraw funds in
accordance with the policy provisions.
What If I Need More Money Than The Penalty- Free Portion?
A withdrawal fee will be charged on withdrawals that exceed the
penalty-free portion. This will be fully described in your policy.
Will The Future Tax Be Capital Gains?
The future tax will be ordinary income tax on the interest
earnings.
Is There Any Government Insurance?
There is no government insurance (FDIC/FSLIC) on any insurance
product. All companies that we deal with are backed by the State
Insurance Guarantee Funds. The State Guarantee Funds protect annuity
contract holders against loss of deposit due to the failure of the
issuing insurance company.
Will I Receive A Form 1099?
Because the interest is tax-deferred, it is not necessary to
issue a Form 1099 while your money is compounding.
