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Don't enroll in an annuity program until you've researched your options thouroughly. We encourage you to browse the topics below.


Immediate Annuities

Immediate annuities are a way to defer income taxes and to increase monthly income. These annuities are annuities funded with a large sum of money and available to be drawn on immediately. Immediate annuities are a contract between the insurance company who holds the funds and the owner who deposits the funds. Usually these are funded from an IRA or 401(k) upon retirement for two reasons, to defer income taxes and to increase monthly income.

When the funds of an IRA or 401(k) are withdrawn from the plan and converted to funds available to the owner, income taxes are due on the full balance available. This additional income could move a holder into a higher income tax bracket and reduce the amount of money available for investment. By rolling these accounts into an immediate annuity, the only income tax due is the tax due on the payments received. This defers the balance of these taxes to a later date. Immediate annuities are therefore a wise tax savings strategy for many investors.

Immediate annuities allow for payments to start right away. Payments can be set up in a number of ways, depending on that holder’s desires. A financial advisor will outline all the choices and assist the investor in choosing the one that best fits the investor’s financial goals. Most holders take their payments monthly; however, quarterly, semi-annually or annually payments can be requested. The payment received will depend upon the amount invested, in what time frame the owner wants to get the money and the rate of return on the account.

These annuities can be either a fixed annuity which is a fixed rate of interest on the funds left in the account or variable annuities where the return depends upon the investment in the stock market. With a variable rate, the investor accumulates the profits or losses of the investment. This is somewhat more risky type of investment as compare to a fixed annuity. Different insurance companies have different interest rates, expenses and fixed costs with these policies. It pays the holder to shop and compare different options before signing any contract. The contract will state all the terms of the agreement, when the payments are to be made to the holder, the amount of the payment and for approximately how long these will continue, how the income on the plan is to be computed and accumulated, any charges to the account, what happens when the holder dies, if any changes can be made to the agreement and how these changes can be made.

Immediate annuities are annuities funded with a large lump sum usually from a retirement account like an IRA or 401(k) and start making payments to the owner right away. There are wonderful boost to many retirement plans by providing additional income for many years in a safe, secure way and conserving money by delaying payment of income taxes. If you are considering a retirement plan then you should consider immediate annuities.