- What Is a Stretch Annuity and How Does It Work?
A stretch annuity lets a beneficiary receive inherited annuity payments over an extended period rather than all at once. Spreading payments over time can create a steadier income stream and may limit how much taxable income is recognized each year. The remaining balance continues to grow tax-deferred while payments are made, which can support longer-term… read more…
- What Is a Non-Qualified Stretch Annuity?
A non-qualified stretch annuity extends the payout of an inherited annuity over time, rather than receiving the full amount in a single lump sum. While qualified annuities (such as those within IRAs or 401(k)s) are subject to strict rules under the SECURE Act, non-qualified annuities, which are funded with after-tax dollars, may offer more flexible… read more…
- What Is a Group Annuity? Common Uses, Pros and Cons
A group annuity is a retirement savings contract typically offered through an employer that pools contributions from multiple participants to provide guaranteed income in retirement. Unlike individual annuities, these plans are structured for groups, which can lower costs and simplify administration. They are often used in pension plans or other workplace retirement arrangements, giving employees… read more…
- Early Withdrawal Penalties for Annuities and Exceptions
Because annuities are designed to provide long-term income, accessing funds too early can trigger an annuity early withdrawal penalty. Insurance companies typically impose surrender charges if you withdraw money within the first several years, and the IRS may add a 10% penalty on withdrawals before age 59 ½. These costs can reduce the value of… read more…
- Why Do Financial Advisors Offer Clients Annuities?
Some financial advisors promote annuities because they offer tax deferral, guaranteed income, or principal protection. But while these features can support retirement planning, annuities often carry high fees and commissions that can influence recommendations. Knowing why advisors recommend annuities can help you ask better questions and evaluate how this option could fit into your financial… read more…
- Annuities vs. Dividend Stocks: Taxes, Pros and Cons, Examples
Annuities and dividend-paying stocks work differently when it comes to income, taxes and risk. Annuities offer fixed or variable payments under a contract, often used for retirement. Dividend stocks pay income from company profits and may also grow in value. Which one works better depends on your needs for taxes, flexibility and risk. Whether you’re… read more…
- How Long Does It Take to Cash Out an Annuity?
The time it takes to cash out an annuity depends on the type of annuity it is, the withdrawal method and the company processing the request. Lump-sum withdrawals may take a few days to several weeks, depending on administrative requirements and potential surrender charges, whereas structured payouts follow a predetermined schedule and cannot be expedited.… read more…
- How Do Interest Earnings Accumulate in a Deferred Annuity?
A deferred annuity is a long-term investment that grows tax-deferred and provides income in retirement. Interest earnings accumulate without immediate taxes, allowing savings to grow. Taxes are paid when withdrawals begin, often at a lower rate after retirement. A financial advisor can help determine how a deferred annuity fits into your retirement plan and recommend… read more…
- 12 Annuity Terms Every Investor Should Know
Annuities can be a good option for investors seeking steady income during retirement. To get started, it’s important to learn some basic annuity terms. These 12 key terms will help you understand how annuities work and whether they fit your retirement plan. A financial advisor can also help you evaluate an annuity contract for your… read more…
- Should I Take a $78,000 Lump Sum or $650 Monthly Annuity Payments?
When faced with the decision of taking a lump sum pension payout or receiving monthly annuity payments, your course of action will depend on your individual circumstances. Key factors include your life expectancy, others sources of income and how soon you will be paid the lump sum. Speak with a financial advisor before making significant… read more…
- How Are Fixed Annuities Taxed?
Fixed annuities are popular for their stability and guaranteed returns, but it’s also important to understand the tax implications of this type of annuity when using it as part of your financial planning. The funds you contribute to a fixed annuity typically grow tax-deferred, meaning you won’t owe taxes on the interest earnings until you… read more…
- How Are Non-Qualified Annuities Taxed for Beneficiaries?
Non-qualified annuities offer tax-deferred growth, providing financial benefits during the annuity holder’s lifetime. When the annuity holder passes away, their beneficiary inherits the annuity, which comes with some specific tax implications. Understanding how inherited non-qualified annuities are taxed to beneficiaries is an important part of effective estate planning and tax management. Consulting with a financial… read more…
- What Is the Minimum Annuity Investment You Can Make?
Annuities offer a reliable source of retirement income. But if you’re wondering how much it takes to buy an annuity, the minimum investment required can vary. Generally, the initial investment for an annuity starts around $5,000 to $10,000, depending on the type of annuity and the provider. As you’re beginning your retirement planning, it can… read more…
- What Is a Trigger Rate in an Annuity?
Annuities can be a valuable tool for ensuring a steady income stream and managing financial risk, particularly during retirement. One important aspect of certain annuities is the trigger rate. The trigger rate plays a significant role in determining the growth and performance of the investment. Knowing how the trigger rate is calculated, along with its… read more…
- 7 Questions to Ask Before Buying an Annuity
Annuities can help you create a retirement income stream, but they may contain liabilities that can undermine your financial stability in the long run. Be mindful of things like the fees that can erode your investment, the payout rates, and the trustworthiness of the issuing company. These all play a role in whether an annuity… read more…
- Types of Annuities for Seniors to Consider
Annuities can provide steady income for as long as you live, which is one reason a senior might purchase one. These contracts with insurance companies come in many different varieties, which can help address seniors’ specific financial needs. However, their variety and complexity can make annuities confusing compared to relatively straightforward investments such as mutual… read more…
- What Is a Life Insurance Annuity?
A life insurance annuity is a payout option for life insurance benefits. If you are the beneficiary of a life insurance policy, you may have the option to receive your payout in the form of a life insurance annuity. In this case, the insurance company will place your payout into an annuity contract upon the… read more…
- What Is a Guaranteed Lifetime Annuity?
Ensuring that you have enough income to cover your living expenses and support your lifestyle is one of the central financial challenges of retirement planning. Guaranteed lifetime annuities are designed to help retirees do just that, providing a stream of guaranteed income for life. However, like all investment products, they come with their own set… read more…
- Is It Better to Take Annuity Payments Monthly or Once Per Year?
A lot of retirees use annuities to simplify their income stream in retirement but that doesn’t mean annuities are simple. Beyond choosing what kind of annuity to purchase – immediate vs. deferred and fixed, indexed or variable, you’ll also need to consider how to receive your annuity payments. You can receive a lump sum from… read more…
- Differences of Immediate vs. Deferred Annuities
The guaranteed income of an annuity makes it a valuable retirement product for many households. While there are many different types of annuities, two of the most popular are immediate vs. deferred contracts. With an immediate annuity, you buy the contract in a single lump sum and begin receiving payments immediately. A deferred annuity, on… read more…
- Pros and Cons of Tax-Deferred Annuities
Retirement planning involves a lot of decisions, including whether or not to include annuities in your portfolio. The type of annuity you choose can impact your taxes and income streams in a variety of ways. The major advantages to a tax-deferred annuity are accumulation and security. By putting off taxes until retirement, your annuity portfolio… read more…
- Types of Annuities to Consider for Retirement
Annuities can provide retirees with a guaranteed stream of income, but choosing the right type is key to making the most of these products. First, however, you must be familiar with the major features of each type of annuity so you can determine the best fit for your retirement planning. It’s also essential to assess… read more…
- What Is an Investment-Only Variable Annuity (IOVA)?
For investors who want the tax advantages of an annuity without the high fees or restrictive features, an investment-only variable annuity (IOVA) offers a compelling alternative. Unlike traditional annuities that emphasize income guarantees, IOVAs focus purely on investment growth and flexibility, allowing you to build wealth on your own terms. With access to a wide… read more…
- How an Individual Retirement Annuity Works
An individual retirement annuity can provide guaranteed lifetime income, making it a potentially useful tool in retirement planning. It also comes with tax perks, similar to other retirement planning tools such as an Individual Retirement Account (IRA). However, individual retirement annuities differ from IRAs in key ways, including investing costs and flexibility in selecting investments.… read more…
- Pros and Cons of an Immediate Annuity
An immediate annuity provides guaranteed income payments shortly after a lump-sum investment, often starting within a year. Understanding immediate annuity pros cons can help highlight how these products trade liquidity for predictability. They appeal to those seeking steady retirement income, but they also limit access to the original investment and may offer less flexibility compared… read more…