I've heard that insurance companies distribute annuities…is it right ? what kinda annuities are they ??
Robert client
Total Comments: 4
Posted: Thu Oct 04, 2007 09:20 am Post Subject: types..
Yes, you're right my friend....insurance companies are the ones who'd sell you the Annuities. There are different types of annuities & each one has its unique identity - differs in the nature of payment (can be deferred or current), can offer fixed or variable returns. The investor at an annuity may get the returns from the time after purchase or may be from a later date. Current or immediate annuities would offer the benefits to you as soon as you purchase them. Try it out, Fatman
Posted: Thu Oct 04, 2007 10:26 am Post Subject: SPDA use..
hi there...lemme try n make you understand somethings. See how a fixed annuity works --> your money is invested with an insurance co. They would agree to pay you a monthly return.
Jus as fatman explained that the payment can be a SPDA (single prem. deferred annuity), the payment may start even after you retire. It could be judged as a tax-deffered investment & can be regarded as a source of income for you after you retire from the job. Isn't that beneficial ??
regards,
Sportyladie
Posted: Thu Oct 04, 2007 12:30 pm Post Subject:
my friend,
Rest assured that if you don't weigh it upon taxes...then the index fund is certainly a better way to invest your hard-earned money. Rarely, can they overtake the index.
Cooldrums
Posted: Fri Oct 05, 2007 12:12 am Post Subject:
Just a quick note regarding taxation and annuity payouts. Just to be sure, the annuitant (the person who receives the payments from the annuity) is only taxed on the earnings portion, and not on the premiums paid. This is assuming that it's a non-tax qualified individual annuity.
If it's an employer sponsored retirement plan using an annuity as the retirement vehicle, such as in a 403(b) TSA, the tax picture is an entirely different story. Since that's not the case, we'll ignore it for now.
Taxation on annuities is based on an Internal Revenue Service idea referrred to as an "exclusion ratio." Fancy IRS lingo for this: each payment received under an annuity payout will be part interest (or ROI for variable contracts) and part a return of capital (read: premium paid). Only the interest portions and investment returns are taxable, as the premium paid was made with after-tax dollars and will not be taxed again.
So...annuities are not considered taxable income at a 100% level. FYI: the tax base is at ordinary income tax rates, and not considered interest or capital gains money.
Finally, be careful of indexed annuities. They are commonly very heavily loaded, and look out for the spread and margin numbers- they can be very tilted towards the company. Not meant to offend those selling MVAs or EIAs, but out of anyone- you know what I mean!
Posted: Thu Oct 04, 2007 09:20 am Post Subject: types..
Yes, you're right my friend....insurance companies are the ones who'd sell you the Annuities. There are different types of annuities & each one has its unique identity - differs in the nature of payment (can be deferred or current), can offer fixed or variable returns. The investor at an annuity may get the returns from the time after purchase or may be from a later date. Current or immediate annuities would offer the benefits to you as soon as you purchase them. Try it out, Fatman
Posted: Thu Oct 04, 2007 10:26 am Post Subject: SPDA use..
hi there...lemme try n make you understand somethings. See how a fixed annuity works --> your money is invested with an insurance co. They would agree to pay you a monthly return.
Jus as fatman explained that the payment can be a SPDA (single prem. deferred annuity), the payment may start even after you retire. It could be judged as a tax-deffered investment & can be regarded as a source of income for you after you retire from the job. Isn't that beneficial ??
regards,
Sportyladie
Posted: Thu Oct 04, 2007 12:30 pm Post Subject:
my friend,
Rest assured that if you don't weigh it upon taxes...then the index fund is certainly a better way to invest your hard-earned money. Rarely, can they overtake the index.
Cooldrums
Posted: Fri Oct 05, 2007 12:12 am Post Subject:
Just a quick note regarding taxation and annuity payouts. Just to be sure, the annuitant (the person who receives the payments from the annuity) is only taxed on the earnings portion, and not on the premiums paid. This is assuming that it's a non-tax qualified individual annuity.
If it's an employer sponsored retirement plan using an annuity as the retirement vehicle, such as in a 403(b) TSA, the tax picture is an entirely different story. Since that's not the case, we'll ignore it for now.
Taxation on annuities is based on an Internal Revenue Service idea referrred to as an "exclusion ratio." Fancy IRS lingo for this: each payment received under an annuity payout will be part interest (or ROI for variable contracts) and part a return of capital (read: premium paid). Only the interest portions and investment returns are taxable, as the premium paid was made with after-tax dollars and will not be taxed again.
So...annuities are not considered taxable income at a 100% level. FYI: the tax base is at ordinary income tax rates, and not considered interest or capital gains money.
Finally, be careful of indexed annuities. They are commonly very heavily loaded, and look out for the spread and margin numbers- they can be very tilted towards the company. Not meant to offend those selling MVAs or EIAs, but out of anyone- you know what I mean!
Hope this helps!
InsTeacher 8)
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