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Annuities FAQs

Annuities – What Are The Benefits?

  • Tax-deferred interest accumulation. The interest earned on an annuity premium is not subject to current taxation until it's withdrawn from the Contract. This allows for a potentially greater cash buildup than if income taxes were payable on accumulating interest as earned.
  • Competitive current interest. Current annuity interest rates generally are competitive with those from other fixed-interest vehicles.
  • Safety/guarantees. The value of your annuity is backed by the assets of the insurance company. And all fixed annuities offer a minimum interest rate guarantee.

Do Annuities have any annual fees or up-front charges?

There are no annual fees or up-front charges for a fixed annuity — 100% of your money goes to work earning interest for you. Variable annuities, however, frequently have higher fees than other investments. Be sure to check your prospectus.

Willl I be penalized for early withdraw?

An annuity is intended to be a long-term, tax deferred investment tool designed for retirement purposes. Earnings are taxable as ordinary income when withdrawn and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Withdrawals may be subject to withdrawal charges and an excess interest adjustment. During the withdrawal charge period, the annuity's cash value may be worth less that the principal allocation. Also, the insurance company may impose a penalty, called a surrender charge, if you receive disbursements early, prior to the end of the surrender charge schedule defined in your contract.

How  much can I withdraw from my annuity without paying the surrender charge?

Most annuities allow you to receive up to 10% annually without having to pay the insurance company's early surrender charge. You will still have to pay your normal income taxes on the earnings portion of the amount you receive. And, if you're under age 59½, you'll pay a 10% federal tax penalty on the interest taken out.

Are annuities  life insurance?

No. Even though annuities are issued by life insurance companies, they are not life insurance. They are contracts between the purchaser of the annuity and the issuing insurance company.

Does the FDIC insure annuities?

No. Even though annuities are often sold through banking organizations, they are not insured by the FDIC or any federal government agency. They are not deposits of or guaranteed by any bank.

Are  contributions to my annutiy tax-deductible?

It depends on whether the annuity is qualified or non-qualified. Both are tax-deferred. A non-qualified annuity is purchased with after-tax dollars. This allows you to defer paying income taxes on the earned interest from the annuity until you take the money out. When purchased for an IRA or other qualified retirement plan, the contributions to the annuity may be tax-deductible as well as tax-deferred.

What is the limit I can deposit into my annuity?

There is generally a minimum requirement, typically $1,000 to $5,000, but you can set aside unlimited amounts in one annuity or any number of different annuities.

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2079 Constitution Blvd., Sarasota, FL 34231 Tel. 941-923-1218 fax. 941-923-1765
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