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 ?
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.
Deferred annuities also have an income stream built into the chassis, rather than an extravagant withdrawal benefit rider.
Deferred annuities 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
Deferred annuities 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.
Deferred annuities 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.
Deferred annuities 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.