Annuity FYI Visitor Blog

In “AXA Equitable Launches Variable Annuity With Dual-Account Investment Platform,” a staff reporter at Insurance Business Review describes AXA’s new product.  AXA Equitable Life Insurance Company says that their new variable annuity gives a greater selection of investment portfolios and protection from the downside.  Variable annuities across the market are changing after losing steam in the recent financial crisis.  Retirement Cornerstone is their new dual-account investment platform.  It is a tax-deferred platform supporting two accounts that are interactive.  The first focuses on maximizing the performance of your investments by using money managers.  The second account is optional and simply focuses on retirement protection.

The account focused on long-term accumulation gives the choice of over 90 different investment portfolios with different investment styles and asset classes.  The account with downside-protection has a guaranteed income benefit option which invests in index portfolios and asset allocation.  The Retirement Cornerstone has what AXA believes to be one of the best annuity rates available for similar products.  Their roll-up rate is one point higher than the 10-year treasury rate average and is updated annually.  The dual-account platform has many tax benefits including tax-free transfers among portfolios which helps investors build lifetime income and respond to changes in economic conditions.  AXA believes that their new annuity product is a unique response to the past market turmoil which allows investors to build up their cash and protect it in the future.

From the 1888 Press Release “InsuranceAgents.com Publishes a Guide to Tax Deferred Annuity,” investors can see the basics and benefits of tax deferred annuities.  Tax deferred products may be the best annuities for you as an investor.  The products allow investors’ wealth to accumulate tax free, building a solid nest egg for their future.  Unlike other investments like stocks, bonds, mutual funds or CDs, annuities offer investors a guaranteed stream of lifetime income.

There are three different types of tax deferred annuities which are fixed, variable, and indexed.  A fixed annuity product guarantees the investors’ rate of return over time.  Variable annuities do not offer that guaranteed rate, but are subject to market changes and offer the possibility of higher rates of return over the time the account is accumulating.  Indexed annuities are like a combination of the first two types of tax deferred annuities.  The rate changes periodically based on the market indexes.  It is wise to speak with a financial professional to determine which type of tax deferred annuity is best for you.

From Online PR News, Rafael Onak’s article “Find Solidity in a High Interest Annuity” urges investors to take advantage of the opportunity before it passes by.  High interest annuities offer a guaranteed rate of return while the rest of the equity market is still pretty volatile.  They are available as variable annuities, fixed annuities, or equity-indexed annuities.  Variable and fixed are the most common types of high interest annuities.  You can get a 10 to 14 percent rate of return with variable annuities but the product is the riskier investment.  Fixed annuity rates are guaranteed, but the investor loses the ability to directly manage their account.

High interest annuities grow at a faster rate than other investment products.  They also offer guaranteed income over your lifetime and withdrawal benefits.  Making a 401k annuity transfer to purchase a high interest annuity can give you tremendous tax savings as well.  Annuities grow tax-free until an investor begins receiving payments, unlike CD’s that are taxed yearly.  As with all retirement products, investors should shop around for the best annuities to add to their portfolio and speak with an expert.

In “Advice: Protecting your money” from the Cape Fear Business News, James D. Gidley gives wary investors an alternative to using their mattress as a bank.  It is obvious why people are scared of the stock market right now.  If you are looking for extra security for your savings, Gidley suggests fixed annuities, money market accounts, and certificates of deposit.  Each alternative has its own benefits and pitfalls so speaking to an expert is the best way to find the one that works for you.

Fixed annuities protect your principal from losses and pay you a set amount in interest income over either your lifetime or a predetermined time frame.  By searching for the best fixed annuity rates, you have the ability to grow your initial investment.  Annuities are not meant to be cashed in so they are long term investments.  The taxes are deferred until you receive your monthly payouts, usually in retirement.  Unlike money market accounts and certificates of deposit, fixed annuities are not guaranteed by the FDIC so it is wise to use financial strength ratings reports to find a strong insurance company.

Making the right decisions regarding your annuities can save you on taxes, according to “Swapping Annuities Tax-Free” by Bill Bischoff in Smart Money.  The rising popularity of annuities since the Dow Jones largest plummet almost a year ago makes sense because they guarantee retirement income along with the potential of growth without the risk.  The tax benefit of an annuity lies in the fact that its accumulated income does not get reported on tax returns until you start receiving payments from the annuity.  Cashing out an annuity not only brings on large taxes, but could get you a penalty if you are younger than 59 1/2.  To avoid throwing your money away like that, the best bet is to transfer your annuity funds to another annuity product.

The IRS code’s Section 1035 allows for a tax-free transfer from one annuity to another as long as both are in the same name and the money goes directly to the new annuity rather than coming to the investor in cash first.  You might want to transfer to an annuity with a different company after you compare annuities and find a better one to suit your needs or one with a lower cost.  If your needs change and you want to switch between a fixed annuity and a variable annuity, a direct transfer will save you from paying taxes before you are making withdrawals.  Whatever the reason for leaving an annuity contract, transferring to an annuity that better suits your needs will save a hefty tax payment and allow you to hang on to your money longer.