Annuities
Variable Annuities
If you're seeking to secure your financial future beyond your working years, you have many options for saving and investing your money. But when it comes to long-term planning, certain investments let you save on a tax-deferred basis.
Combine tax deferral with the long-term growth potential inherent in stock and bond investments and you have an alternative that can help you build the retirement assets you'll need - a variable annuity.
Variable annuities offer a combination of tax-advantaged growth opportunities and protection including:
- Tax deferral. You pay no current income tax on earnings or other taxable amounts until you make a withdrawal. At that time, it's important to be aware that withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59 1/2, a 10% federal tax penalty may apply. Withdrawals from annuities will affect both the cash value and the death benefit1
- Potential for long-term growth of your money. You're able to invest in professionally managed investment portfolios.
- Valuable guarantees. 2 These include protection for beneficiaries and choices for income you cannot outlive.
What is a Variable Annuity?
A variable annunity is a contract between you - the annuity owner - and a life insurance company. In return for your purchase payment, the insurance company agrees to provide either a regular stream of income or a lump-sum payout at some future time, generally when you retire.
How Does it Work?
A variable annuity has an accumulation phase and an income phase. The accumulation phase begins as soon as you invest. Your purchase payment(s) can be invested in the securities portfolios and fixed-interest options that are available in your contract. Unlike a mutual fund, where interest, dividends and/ or capital gains are taxed each year, any growth in an annuity accumulates on a tax-deferred basis. Of course, your investment can also lose value, since both investment return and principal value will fluctuate in response to changing market conditions.
When you are ready to take distributions, typically at retirement, you can choose to have your principal and interest paid out in the form of income payments - called annuitization - or you can take systematic withdrawals or receive a lump sum payout.
To learn more about the role variable annuities can play in your retirement planning, please contact David today.
You should consider the investment objectives, risks, and charges and expenses of variable annuities carefully before investing. Each variable annuity's prospectus contains this and other information about the variable annuity and is available from our office. You should read it carefully before investing.
1 Tax-qualified contracts such as IRAs, 401(k)s and others are tax-deferred regardless of whether they are funded with an annuity. However, annuities do provide other features and benefits including, but not limited to, a guaranteed death benefit (based on the claims-paying ability of the issuer) and income choices, for which a mortality and expense risk is charged. Both investment return and principal value will fluctuate in response to changing market conditions.
2Guarantees are based on the claims-paying ability of the issuer.
This site is published for residents of the United States only. Raymond James’ financial advisors may only conduct business with residents of the states for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.
© 2008 Raymond James Financial Services, Inc. member FINRA / SIPC
