Overview of Annuities

Annuities should be considered in your long-term financial plan. People are living longer and that means more time and savings will be spent in retirement. If you need a tax-deferred investment to provide guaranteed income for life or a specified number of years in the future, an annuity may be worth considering.

An annuity is a contract between one or more individuals and an insurance company. In exchange for payment, the insurance company agrees to provide regular, periodic income to the individual(s). An annuity can provide a stream of income that the holder cannot outlive. This unique attribute makes it especially attractive as an asset to fund retirement. Investment gains inside annuities accumulate and compound tax-deferred – a highly advantageous characteristic.

Withdrawals from an annuity made by individuals younger than age 59 ½ are subject to a 10% penalty levied by the IRS. Annuities normally carry surrender charges that penalize early withdrawals above the level specified in the annuity contract. The investment-gain component of an annuity distribution is taxed as ordinary income. Although annuities are investment contracts rather than insurance policies, they typically contain insurance features such as death benefits and minimum guarantees.

We can assist you in evaluating whether purchasing an annuity as part of your financial plan will meet your needs. Helping you make a well informed choice is our objective. Call or email to schedule a consultation at 973.290.9505 or info@abigusa.com