CA Ins. Number: 0K44884
  

 
 

FIXED ANNUITY TAX STRATEGIES

Enjoy the tax benefits of opening a Qualified or Non-qualified annuity through the insurance carrier of your choice. Payments made towards either type are tax deductible and both types offer considerable tax savings. Plus, the payments go towards your retirement. Additional benefits include spending flexibility which is made available by the accumulated funds from your payments.

Qualified Annuities

The term qualified plan refers to an employer-sponsored retirement plan meeting the requirements for favorable tax treatment under Internal Revenue Code § 401. The term "qualified plan" can also be applied to plans that are not sponsored by employers as with annuities you can freely purchase from an insurance company.

Main Features

  • Premiums are either fully tax deductible, limited to a cap, OR in the case of a Roth IRA excluded from income upon distribution, but not both

  • A 10% penalty applies to early withdrawals, meaning before retirement age, unless specific criteria is met

  • Minimum distribution requirements are enforced past retirement age, and retirement age is defined as age seventy and a half

Nonqualified Annuities

These are simply annuities that are not a part of a Quaified Plan and are usually purchased from an insurance carrier.    

 

Main Features

  • Designed to provide an income stream that can't be outlived

  • Distributions of gain are taxed at ordinary income rates

  • Tax benefits are in the form of an exclusion ratio

  • Premiums are NOT tax deductible

  • Can be structured as split annuities, one that provides an additional income stream to fund the future balance of a second annuity for an equal amount

Life Insurance

Life Insurance has evolved from Term Life Insurance to Universal Life Insurance (synonymous to Permanent Life Insurance)  and, in turn, Universal Life Insurance has branched out into two types: Guaranteed or Indexed. Why has life insurance evolved you ask? Here's why:

Originally, policyholders were happy paying into a policy that expired at the end of the term even though they survived the expiration term and thus were unable to enjoy any benefits from their premium payments. In order to offer policyholders with greater incentives to pay into a life insurance premium on a continuous basis a permanent policy plan was created that guaranteed a cash value benefit at the end of a predetermined term. But why not offer an even greater incentive and place a cash value on the policy that is indexed at a pace aligned to an economic growth rate metric? Hence, was created the Indexed Universal Life insurance plan, which offers a greater cash value at the end of some predetermined term but that can chip away at the actual death benefits.

To discuss the pros and cons of each type and evaluate which type is best for you call today for a consultation. (888) 670 - 0750!

How much do I need for a Life Insurance Policy?

According to some experts, the average monthly premium can range from about $60 to $730 for a $1,000,000 20-year-term policy depending on whether it's "Term" or "Permanent," under the assumption that the policy holder is in good health.

Here are the main factors that will cause variation in premiums:

  • Age

  • Health Profile

  • Gender

  • Occupation

  • Region of residence

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