Fixed Income Annuity Review - What are fixed income annuities?

• published: 04 Feb 2015
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What is fixed income annuity – Are fixed income annuities really any good? 1-800-566-1002 http://www.RetireSharp.com . Learn the steps on how to use a fixed income annuity specifically for retirement planning. Avoid the mistakes that individuals make when trying to set up their proper deferred fixed income annuity plan costing those thousands of dollars in retirement. Tax-Deferred Growth in a Fixed Income Annuity A common concern many people have regarding fixed income annuities is in regards to their tax treatment. The concept behind fixed income annuities is actually quite simple. A fixed annuity is simply an insurance product which pays out a fixed income over a specified period of time. This payment is determined at the time of the contract and typically does not vary. One of the most beneficial aspects of the fixed income annuity is the fact that you may receive payments out of the annuity for the span of the contract or the lifetime of the annuitant. These life annuities can provide a guaranteed income throughout the whole of one's retirement. The basic tax treatment of fixed income annuities can be considered relatively simple, whereas as with most other tax questions, the details can get rather complicated. Most annuities enjoy tax-deferred growth, and are only taxable upon distribution. This means that any growth inside of the account during the accumulation and distribution are not taxable until the money is taken out. Needless to say, tax deferred growth can be a significant boost to the overall value of the account. Each annuity distribution is split into two sections, a taxable section and a nontaxable section. The portion of the benefit that is taxable is dependent upon the exclusion ratio for the annuity. This ratio is calculated by dividing the amount invested in the annuity by the total amount expected to be received. This ratio is then multiplied by each anticipated distribution to calculate the taxable and non-taxable portions of the distribution. The portion of the contract that is non-taxable is generally the premiums paid, minus the previous non-taxable distributions and minus the value of any period certain or guaranteed features of the particular annuity contract. Fixed period contracts are typically easier to calculate than life annuity contracts. In life income annuities, the expected payout amount used to calculate the exclusions ratio is based on life expectancy tables from the U.S. Treasury Department. Though there are certainly disadvantages to fixed income annuities, the fixed annuity can be a very valuable resource for retirement planning and preservation of your hard-earned capital. The lifetime income guarantee that many annuities provide can give the investor a level of security, confidence, and low-risk growth that other vehicles cannot provide. Couple this safety with the tax-deferred treatment of fixed annuities and this insurance product can become a very effective financial planning tool. Please make sure to subscribe to our YouTube channel for the most updated videos. Thanks for watching! Related search terms: Fixed income annuity rates Fixed income annuities review Are fixed income annuity any good? Fixed equity indexed deferred annuities Fixed income annuities with income riders Fixed income annuity pros and cons https://www.youtube.com/watch?v=lF1d8LXtRCE