Deferred annuities


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Related to Deferred annuities: Fixed annuities, Variable annuities, Immediate Annuities

Deferred annuities

Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of a life annuity.

Deferred Annuity

An annuity in which the annuitant does not begin to receive payments until some future date. A deferred annuity has two phases: a savings phase and an income phase. During the savings phase, the annuitant places money into the annuity, which invests it on behalf of the annuitant. In the income phase, the annuitant receives payments. It is important to note that a deferred annuity is not taxed until the income phase begins. It also pays a death benefit to the survivor(s) of the annuitant. Nearly all retirement plans are deferred annuities. See also: IRA, 401(k).

Tax-Deferred Annuity

A retirement plan in which an employee makes tax-deferred contributions from his/her pre-tax income. The employee is not taxed on the contribution until he/she begins to make withdrawals after retirement. Strictly speaking, a 401(k) is a tax-deferred annuity, but the term especially applies to a 403(b) plan, which is directed at teachers and employees of tax-exempt organizations, such as charities or churches.
References in periodicals archive ?
The effect of the PPA rules regarding combination annuity/Q-LTC products is to clarify that inside buildup of deferred annuities may be paid tax-free as qualified LTC insurance, Adney said.
However, I believe the behavioral reasons cited above will continue to keep immediate annuity sales and annuitization of existing deferred annuities in check.
Spencer said deferred annuities had grown "phenomenally" in the last decade and now were coming under regulatory scrutiny.
Variable deferred annuities were quite straightforward when they started to make a splash in the financial markets back in the latter part of the 1980s.
Concern developed that deferred annuities were being used more as short-term tax shelters than as the retirement vehicles the federal government intended them to be.
It has become virtually accepted wisdom for many, despite the facts that: (a) it ignores the huge differences that exist between immediate and deferred annuities and between the fixed and variable varieties of the latter; and (b) the arguments most commonly made in its support are grievously and obviously flawed.
Swanson filed the Minnesota suit in connection with allegations that Allianz Life had sold deferred annuities to Minnesota senior citizens without first determining whether the annuities were suitable investments for the seniors.
Such contracts were defined as individual deferred annuities, the underlying assets of which are held in the general account and the values of which are subject to an MVA unless held for guarantee periods that are specified in the contract.
Many proponents of deferred annuities point to tax-deferral as a great advantage of these instruments.
* A 73-year old widow puts most of her $75,000 savings into deferred annuities. When she needs to pay for urgent dental work and home repairs, she is unable to access these funds or annuitize the contracts without significant surrender charges.
Sales of fixed rate deferred annuities also plummeted in the fourth quarter to $5.9 billion from $7.4 billion, a 20 percent dip.
One is the growing trend to impose heightened "suitability" requirements before deferred annuities can be sold to senior citizens--to protect the seniors.