Tax deferral helps your contract value grow
Your annuity value may grow tax deferred. This has the potential to increase your contract value. Here’s how it works:
- Your account value earns interest
- Your interest earns interest
- You earn interest on the money you would’ve otherwise paid in taxes
If the interest earned in an annuity wasn’t tax deferred, you’d have to pay taxes on it. But since it’s tax deferred, that money stays in the annuity—deferring taxes while you accumulate more assets.
Over time, tax-deferred growth can build a larger account value than that of a similar taxable account achieving the same rate of interest. Tax laws are complex and subject to change. Some entities may not have tax deferral status. Please consult your tax advisor before making any decisions.
Access to your money if you need it
Fixed annuities are designed for long-term planning purposes. However, unexpected emergencies do happen. In the event you need to withdraw some of your money, you can.
It’s important to keep in mind that some withdrawals or distributions may be subject to CDSC as well as ordinary income tax at any age during the specified term of the contract. If withdrawals are made prior to age 59½, a 10% early withdrawal federal tax penalty may apply.
Income options are up to you
You can receive income payments throughout your lifetime, or for a specific period of time, from your fixed annuity through annuitization. When you annuitize, you can choose to receive payments monthly, quarterly, semiannually or annually. Or, you can choose to take a lump-sum payment, minus any taxes and charges that apply. It’s your choice.
Transfer your assets without probate
The probate process can be lengthy and costly. With a fixed annuity, however, as the contract owner and annuitant, you can be assured that the money will be paid directly to the beneficiary you name. It will not be involved in any probate proceeding. If the owner and annuitant aren’t the same, assets may be distributed differently and CDSC may apply.