Fixed Annuity
May credit a declared interest rate for a period of time. Guarantees depend on the issuing insurance carrier and contract terms.
Annuities
Understand annuity options before moving retirement money.
Annuities may be used for retirement income, interest-crediting, beneficiary planning, or protection from market loss depending on the product. They also come with rules, limitations, surrender periods, tax considerations, and carrier-specific terms.
Common annuity conversations
Annuities are contracts, not one-size-fits-all products.
Features, guarantees, riders, liquidity, surrender charges, tax treatment, and suitability vary by carrier and contract.
Fixed Indexed Annuity
May credit interest using an index-linked formula. It is not a direct investment in the stock market, and crediting is subject to caps, spreads, participation rates, and contract rules.
Income Rider
An optional feature that may provide future income calculations. Rider fees, waiting periods, payout rules, and guarantees must be reviewed carefully.
Surrender Period
A contract period when withdrawals above allowed amounts may create surrender charges. This can affect access to money.
Liquidity
Many annuities allow limited free withdrawals, but liquidity varies. An annuity should be reviewed against emergency savings and short-term cash needs.
Beneficiary Planning
Annuities may include beneficiary features. Tax treatment, payout choices, and estate considerations should be reviewed with appropriate professionals.
Carrier Strength
Annuity guarantees are backed by the claims-paying ability of the issuing insurance company, not by bank insurance.
Tax Considerations
Withdrawals may be taxable, and early withdrawals may have penalties. Consult a qualified tax professional for tax advice.
Important limitations
Review surrender charges, fees, taxes, and income rules before applying.
Annuities can be useful for some retirement goals, but they can also be a poor fit when liquidity, short time horizons, fees, or tax concerns are not reviewed carefully.
Questions to discuss with an advisor.
What money would be used? Is it qualified or non-qualified? Is the goal growth, protection, guaranteed income, legacy planning, or something else? How much liquidity is needed? Are there existing annuities, surrender charges, or income needs?