Further, Treasury rules now provide that the TDFs offered within a plan can include deferred annuities
even if some of the TDFs are only available to older participants--and even if those older participants are "highly compensated"--without violating the otherwise applicable nondiscrimination rules.
also have an income stream built into the chassis, rather than an extravagant withdrawal benefit rider.
are primarily purchased for two reasons.
The IRS has been made aware that it would be actuarially unreasonable for insurers to offer a deferred annuity at a price that does not vary based on the purchaser's age, and, accordingly, a TDF that holds deferred annuities
should not be expected to permit participants whose ages fall outside the designated age range for the TDF to hold an interest in that TDF
offer various guarantees, which might include certain death benefits and certain amounts of cash flow during the investor's life, regardless of investment performance.
Through these regulations, the 1RS and the Treasury Department are encouraging the purchase of certain deferred annuities
that are purchased around retirement age and that provide that benefits will not begin until the purchaser reaches old age--typically between age eighty or eighty-five.
There is no stepped-up basis, to date, of death value for non-qualified deferred annuities
(IRC Section 1014(b) (9)).
provide an opportunity to accumulate these funds on a tax-favored basis.
Fixed deferred annuities
still accounted for the most sales, showing a 58% jump to $95.
allow partial withdrawals during the accumulation phase and, thus, have no distribution requirement.
There are other types to choose from, including deferred annuities
, which can be fixed or variable; single premium annuities, which are purchased with a lump sum payment; and flexible premium annuities (these are available only if you work at a nonprofit institution or school).
This article evaluates the non-deductible IRA and then compares it with viable alternatives, such as deferred annuities
, tax free investments and savings bonds.