What are deferred and immediate annuities?
Author: Ammon Yorke
Website: http://www.AnnuityYes.com
Added: Sat, Jun 24, 2006 8:47:41
Category: Annuity Questions
|
|
A deferred annuity is a pay-out plan offered to investors who are willing to receive payments at some later date, usually at the retirement of the investor. This type of pay-out is advantageous for long-term retirement plans for the following reasons:
* Payment of income tax is deferred until withdrawal of the money
* There are no limits on yearly annuity contributions
* Death benefits are readily available. If the investor dies before he collects his annuity, the beneficiaries get the amount the investor paid in, plus investment earnings.
In an immediate annuity, the investor begins to receive lump sum pay-outs immediately upon investing. Payments start usually a month after you have invested in the annuity. This offers financial security in a sense that you will receive income payments for the rest of your life. Also, this annuity permits you to:
* Add pay-outs received in your current income
* Pay taxes on the portion of the annuity payments that are considered to be earning income
Immediate annuities can be fixed or variable. Fixed immediate annuity payments depend on the amount you have contributed, your age, and the interest rate at the time you purchased the annuity. Variable immediate annuities vary according to the type of investments you purchased.
See also: Annuities | Taxes | Investment About the Author:
Ammon Yorke answers frequently asked annuity questions at PrettyGreatAnswers.com.
--- Grab the Feed for related Questions and Answers. If you'd like to use our questions and answers on your website for content, we've created a simple free tool you can use to create a custom RSS Feed! ---
More
|
