by GarySpicuzza » Thu Aug 14, 2008 11:19 am
Why protect your money with a FIXED Annuity?
Consider the advantages of a FIXED Annuity:
#1) Lawsuit Protection:
Annuities are NOT, in any case, liable to attachment, garnishment or legal process in favor of any creditor of the person whose life is so insured or of any creditor of the person who is the beneficiary of such annuity contract pursuant to Florida Statute 222.14.
#2) Incontestability:
Unlike a Last Will & Testament, no one may contest your decision as to who will receive your money at the time of your death. Florida Statute 222.13 states: “whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy.”
#3) Bypass Probate:
Your dollars will transfer immediately to your chosen beneficiary. Your loved ones will avoid attorney fees, court costs, publicity and the considerable time delays caused by your Last Will & Testament under the Probate Court system.
#4) No Market Risk:
Unlike stocks, bonds, mutual funds, limited partnerships, real estate investment trusts and municipals that can fluctuate daily and put your principal at risk, FIXED annuities offer guarantee of principal and an interest rate guaranteed for life.
#5) No Current Federal Income Tax:
Earn interest on your principal;
Earn interest on your interest;
Earn interest on those dollars you would have normally paid to the Federal Government such as the interest earnings on bank CDs.
Why pay income tax on your interest earnings unnecessarily?
#6) Accessibility to Your Dollars:
Free withdrawals of up to 10% per year.
Structure a monthly income you cannot outlive.
#7) Privacy:
Interest earnings are not reported on Federal Income Tax returns.
Only you and the insurance company know how much money is in your policy.
Consider the advantages of a FIXED Annuity:
#1) Lawsuit Protection:
Annuities are NOT, in any case, liable to attachment, garnishment or legal process in favor of any creditor of the person whose life is so insured or of any creditor of the person who is the beneficiary of such annuity contract pursuant to Florida Statute 222.14.
#2) Incontestability:
Unlike a Last Will & Testament, no one may contest your decision as to who will receive your money at the time of your death. Florida Statute 222.13 states: “whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy.”
#3) Bypass Probate:
Your dollars will transfer immediately to your chosen beneficiary. Your loved ones will avoid attorney fees, court costs, publicity and the considerable time delays caused by your Last Will & Testament under the Probate Court system.
#4) No Market Risk:
Unlike stocks, bonds, mutual funds, limited partnerships, real estate investment trusts and municipals that can fluctuate daily and put your principal at risk, FIXED annuities offer guarantee of principal and an interest rate guaranteed for life.
#5) No Current Federal Income Tax:
Earn interest on your principal;
Earn interest on your interest;
Earn interest on those dollars you would have normally paid to the Federal Government such as the interest earnings on bank CDs.
Why pay income tax on your interest earnings unnecessarily?
#6) Accessibility to Your Dollars:
Free withdrawals of up to 10% per year.
Structure a monthly income you cannot outlive.
#7) Privacy:
Interest earnings are not reported on Federal Income Tax returns.
Only you and the insurance company know how much money is in your policy.
Posted: Fri Aug 15, 2008 11:02 pm Post Subject:
A couple of things to clarify based on your post...
No Current Federal Income Tax:
Earn interest on your principal;
Earn interest on your interest;
Earn interest on those dollars you would have normally paid to the Federal Government such as the interest earnings on bank CDs.
Why pay income tax on your interest earnings unnecessarily?
Should be telling it all. Interest gains within annuities are not received tax-free by either the annuitant or beneficiary. The gain is simply tax-deferred, NOT tax-free. This means as long as the interest actually stays in the annuity, the taxation on that gain is deferred until it is withdrawn.
Secondly, the only time that an annuity will pass through outside of the estate is if there is actually a named beneficiary that supercedes the estate of the dead annuitant/owner. If the annuity is actually paid to the estate of the deceased, it would be included in the estate and subject to potential probate and estate taxation costs.
Next:
Accessibility to Your Dollars:
Free withdrawals of up to 10% per year.
The idea of "free" withdrawals is also somewhat misleading...sorry. This is commonly known as a "liquidity feature" of many deferred annuities. This means that the company will allow the owner to withdraw up to 10% of the accumulated value without imposing a company early surrender, or "bailout" penalty on the annuity owner. It will not escape taxation, nor will it escape the 10% premature withdrawal penalty imposed by the Feds for disallowed distributions prior to age 59 1/2.
InsTeacher 8)
Posted: Sat Aug 16, 2008 12:58 am Post Subject:
Hi InsTeacher!
I love having annuity debates.
It will not escape taxation, nor will it escape the 10% premature withdrawal penalty imposed by the Feds for disallowed distributions prior to age 59 1/2.
The 10% penalty prior to age 59 1/2 is a moot point as the vast majority of annuity investors are age 70 and above. Further, one can implement the section 72t exception known as Substantially Equal Periodic Payments (SEPP) and completely avoid the 10% penalty prior to age 59 1/2.
Interest gains within annuities are not received tax-free by either the annuitant or beneficiary. The gain is simply tax-deferred, NOT tax-free. This means as long as the interest actually stays in the annuity, the taxation on that gain is deferred until it is withdrawn.
True.
However, it is absurd for a 70 year old senior to be paying income tax out of current cash flow needlessly on bank CDs and money market accounts when they are not even spending the interest earnings and simply letting it roll over.
Yes, the gain in the annuity will be taxed at ordinary income tax rates but only on the amount you withdraw NOT on ALL the interest earnings whether you take it or not while you are alive, unlike bank CDs and other fully taxable accounts.
Yes, the beneficary will have to pay income tax ONLY on the interest gains in an annuity but they can also spread these payments out over 5, 10 years or longer if there was a substantial gain in the annuity and/or if the beneficairy was in a high tax bracket.
Secondly, the only time that an annuity will pass through outside of the estate is if there is actually a named beneficiary that supercedes the estate of the dead annuitant/owner.
True, but the above is an odd statement. Annuities have beneficairy designations just like life insurance and those proceeds when paid to a named natural person beneficiary DO NOT go through probate court and are EXEMPT from creditor's claims. (Florida)
The idea of "free" withdrawals is also somewhat misleading...sorry. This is commonly known as a "liquidity feature" of many deferred annuities. This means that the company will allow the owner to withdraw up to 10% of the accumulated value without imposing a company early surrender, or "bailout" penalty on the annuity owner.
True.
An annuity is a place to put your money after you've made your money. It is NOT a place to put money that you are planning on spending in the near future. Nor is it a place to put your money if you like to gamble playing stocks with the day traders like a flea market swap meet.
I usually get "banned" for commenting on annuities. :roll:
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