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Tax Reduction To Enhance Annuity, IRA and 401k Ownership For IRA, 401k, annuity and other retirement plan owners. Most plan owners do not realize plan and annuity ownership transfer is subject to the highest Federal and state tax rates. Learn how to enhance most highly taxed and popular supposedly tax deferred and conservative savings products with tax reduction. Maintain the tax deferral plus add tax deductibility, a LegacyChange plan and other advantages to this conservative savings instrument. We do not sell annuities or insurance products. Date To be announced
ANNUITIES: How Long Will Payments Last?
A major consideration is if one wishes risking losing a significant portion of one's investment to the annuity company if one dies before receiving enough payments to justify the annuity purchase. There are options.
These options include:
Single Life/Life Only
Also known as a straight-life annuity, this choice allows one to receive payments your entire life. Unlike some other options that allow for beneficiaries or spouses, this annuity is limited to the lifetime of the annuitant with no survivor benefit. The risk is if one will die before getting all or most of your money back. One can limit the possible loss here by choosing a life annuity with period certain.
Life Annuity with Period Certain (Fixed Period/Guaranteed Term)
Period certain annuities are the same as a straight-life annuity, but it includes a minimum period the payments will last – say 10 or 20 years – even if the annuitant dies. If the annuity holder dies before the end of the period, the payments for the rest of that time will go a beneficiary or the annuitant’s estate. Adding the period certain will cost, lowering the amount of one's monthly payments.
Joint and Survivor Annuity
Also known as a joint-life annuity, a joint and survivor annuity guarantees payments will last the lives of both the annuitant and another person, typically a spouse. This choice reduces the amount of each payment you receive with a life annuity or a life annuity with period certain. You can also elect to include a period certain with a beneficiary receiving payments if both you and your spouse die before the end of the period.
This option allows the annuitant to receive the entire worth of the annuity at one time. This can increase the tax burden substantially by requiring taxes all be paid in that year.
Systematic Annuity Withdrawal
In this method, you choose the amount of the payments and how many payments one wants to receive. This option does not include a guarantee it will last one's entire life. It is entirely dependent on the amount of money in one's annuity account.
If one elects to withdraw money from one's annuity before one reaches the age of 59 ˝, one will have to pay a penalty of 10 percent to the government, in addition to whatever taxes one owes on the money. If that withdrawal is within five to seven years of purchasing the annuity, you may also owe the annuity provider a surrender charge of as much as 20 percent, depending on how much time has passed since the purchase.
One's annuity contract may include a provision for a death benefit for a beneficiary you designate. Usually, the payout for the beneficiary will be the contract value or the amount of the premiums that have been paid.
If one is the non-spouse beneficiary or spouse beneficiary of an annuitant who has died, one has a few different options to receive payment from a nonqualified, deferred annuity unless the annuitant has arranged otherwise.
Five Year Rule
One involves invoking a requirement that all the money in the annuity must be distributed within five years of the annuitant’s death.
Beneficiary Life Expectancy
The beneficiary may also choose to have the money distributed according to his or her life expectancy. The life expectancy is used to calculate the minimum amount the beneficiary must withdraw each year.
And finally, the beneficiary may choose to annuitize the funds. This means the annuity becomes a guaranteed stream of income for the beneficiary. This can use the single-life or term-certain options described above.
Do Annuities Have Declared Dividends?
Annuities are different than stocks and do not have the same structure. With stocks, you have public corporations with boards of directors that decide to declare a dividend for payments to shareholders from company profits. Annuity payments are either fixed ahead of time or tied to the performance of an index or stock portfolio.
We do not market annuities, insurance or list real estate or businesses. We may, with client request or permission, refer to those who do.