subject: All about Fixed Annuity and Retirement Annuity [print this page] All about Fixed Annuity and Retirement Annuity
Annuities are of two kinds, fixed annuity and variable annuity. For your retirement portfolio, both these kinds of annuities are extremely helpful, and contribute significantly. Retirement annuity policy is also beneficial for the retired individuals. Fixed annuity, just like a variable annuity comes with a number of benefits. According to section 72 of the Internal Revenue Code, in case you are not spending at the moment, then the deferred earnings in that case would grow without any kind of current taxation. This policy stands the probability of reducing or eliminating taxes on your Social Security income during the time that you receive it. Fixed annuities always help in estate planning. In case you ever had been a witness to the process involved in the proceeds from annuities, then you can vouch for the fact that this time consuming and legal process can be done away with by following the simple process from annuities. The proceedings form the annuities get passed on directly to your beneficiaries without any kind of delay, publicity of probate, and expense. Your annuity gets the opportunity to work harder due to the fact that you do not have to pay taxes on your earnings on a yearly basis.
You only have to pay taxes when you are withdrawing the gains derived from your annuities. However, it is completely up to you to decide when this withdrawal would take place. This power of tax deferral is a big advantage with these annuities. One's contribution to any other sort of retirement savings vehicles, such as 401(k)s and Individual Retirement Accounts are very limited, and you have to strictly follow the limit. However, in case of these annuities, you are given total freedom in terms of contribution. You can contribute as much as you wish, and there is no limit. This contribution also lets you take right advantage of tax deferral or variable accounts. Additionally, you get the freedom to keep adding to your annuity contract whenever you feel like. These annuities also provide you with flexible payment options. Once you decide on receiving payments, you have the freedom to select from a few methods which are lump sum distribution, periodic distribution, systematic distribution, and annuitization.
In case of these annuities, you are only taxed on your earnings, assuming the fact that your annuity was started with after tax dollars. In this way, you gain total control over the tax amount which you have to pay. An annuity is also easy to get started with and maintain. All that it takes is a simple application, your signature, and a check, and your annuity is all set to roll. Annuities often are associated with a free look period. You have the freedom to get your older, non performing annuities exchanged for newer ones with no added tax consequences. This has been made possible due to Section 1035 of the Internal Revenue Code.
Apart from fixed annuity, retirement annuity also comes in with a number of advantages such as survivor benefits, guaranteed income, tax efficiency, no risk of market fluctuation, and the likes.
welcome to Insurances.net (https://www.insurances.net)
