A Look at Tax Deferred Annuities

15 Jul

A resident of New Haven, CT, and an Accredited Asset Management Specialist, David Chorney acts as president and owner of Financial Concepts Unlimited, LLC. For clients in CT, and numerous states around the country, David Chorney advises on a variety of economic matters, including the efficient passing of ones’ estate, and retirement planning. Some of the vehicles David Chorney uses to accomplish these goals are REITS, mutual funds, and both fixed and variable annuities.

Provided by insurance companies, tax deferred fixed annuities refer to life insurance policies that earn interest, provide guaranteed income you cannot outlive, and lessen tax burdens. As the policy increases in value through the interest, holders can choose when to obtain the funds and do not need to pay taxes on the gains until they actually acquire the money. By letting the policy “sit,” annuity income that would otherwise be taxed continues to compound in interest thus increasing one’s overall yield. However, when people collect an annuity income or withdraw from the account, they will be taxed.

Another benefit to this process involves the amount of taxes one needs to pay. Annual taxes tend to be less through a tax-deferred annuity because it spreads out the holder’s liability over a period of years. Random withdrawals can also become advantageous because the person can decide when and how to retrieve that money while considering how it will affect that year’s taxes.


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