RECENT ARTICLES
    COMMUNITY CALENDAR
    BUSINESS DIRECTORY
    CLASSIFIED ADS
    PRESS RELEASES
    ARTICLE ARCHIVE
    HOME DELIVERY SUBSCRIPTION
    CONTACT US
    HOME
   
    PONY POSTAL CENTER
    REMEMBER WHEN ANTIQUES
    HAGERSTOWN AUCTIONS
   


 
 

Article Archive >> Business

Advice from Labib: Can an Annuity Help My Retirement Money Grow Tax Deferred?

Advice from Labib
Can an Annuity Help My Retirement Money Grow Tax Deferred?

What Is an Annuity?
An annuity is a contract between you and an insurance company. In exchange for a current premium, your insurer agrees to pay you a future stream of income. Annuities are very flexible financial vehicles. You can pay your premium all at once or you can pay it over time--it's up to you. In addition, you can specify when you would like to begin receiving the income from your annuity. You can start immediately or you can let your annuity accumulate.
One of the most attractive features of annuities is that they are allowed to grow tax deferred. Because you do not have to pay taxes on the growth of your annuity until withdrawn, annuities have become an attractive accumulation alternative.
Immediate Annuities
With an immediate annuity, payments usually begin a month after you have paid a lump sum premium. This makes them a popular source of supplementary income for retirees.
Immediate annuities provide some tax deferral. Only the interest portion of each payment is considered taxable income. The rest of each payment is considered a return of your principal. Taxes on the earnings of the annuity are spread over the payout period, which means you pay fewer taxes in the early years.
Deferred Annuities
With a deferred annuity, you allow your premiums to accumulate before you begin the payout period. Deferred annuities give you the option of paying fixed or flexible premiums, and you can pay them all at once or over time. The earnings of the annuity are not taxed until they are withdrawn. This may allow you to accumulate more over the long term than taxable investments would. And you decide when to start receiving income from your annuity.
Annuities are insurance-based financial vehicles designed to provide income in retirement. There may be a 10 percent penalty on amounts withdrawn prior to age 591/2, in addition to regular income taxes. Surrender charges may also apply in the early years of the policy.

Alfred Labib is an Independent Financial Advisor. "Our Goal Is To Help Investors Grow And Preserve Their Wealth Through Discipline And Process." 301-824-4523, www.labibfinancial.com.

Printable version

<< back to Articles on Business
<< back to All Articles