Generally speaking, Immediate Annuities are complex sophisticated financial instruments and purchasers of these type products should be conversant with and understand the terms, conditions, tax consequences and other implications of owning annuities in their investment portfolios.
Can be either a deductible or non-tax deductible contribution depending on account type.
Immediate Fixed Annuities are sold by insurance companies.
Generally, Immediate Fixed Annuities are purchased with a single premium lump sum amount, usually with a minimum purchase of $10,000.
Fixed Immediate Annuities pay a fixed monthly payment for a period of time or life based on a single life or joint lives.
At time of purchase the interest rate and the monthly payment is fixed for a period of time or life(s).
The interest rate and the monthly payment never changes.
The annuity payment is guaranteed by the insurance company issuing the Immediate Fixed Annuity.
You have several choices for annuity payouts: single life, joint and survivor lives, and life with period certain.
The amount you receive monthly depends on premium paid, current interest rates, choice of payouts and the age of the payout recipients.
Unless you purchase an Immediate Fixed Annuity within an IRA or company pension, a goodly portion of the monthly amount you receive will be tax-free since it’s considered a return of capital. Only the part that represents earnings will be taxable.
An Immediate Fixed Annuity purchased within an IRA/pension, except if purchased with non-deductible IRA dollars or after tax 401K contributions, will be fully taxable.
Annuity insurance products are state specific and not all insurance companies offer annuity product to residents of all states.
- The death benefit payable and other payment the owner of an annuity receives is dependent on the claims paying ability of the issuing insurance company.
