A Fixed Index Annuity Offers Tax Advantages
During the accumulation phase of your contract, any interest growth is tax-deferred. As the team at Bothfeld Financial will explain, if you purchase your fixed index annuity with after-tax dollars, you will only pay ordinary income taxes on your earnings – not on your premium payments – when you begin withdrawing money. Tax-deferred growth, compounded over time, may increase the amount of savings and income your fixed index annuity generates for your retirement.
We can explain what this means exactly in dollars and cents with your specific investment goals, and explain how much it will save you.
Tax deferral is also a benefit of traditional IRAs and 401(k)s. However, annuities don’t have any government-imposed contribution limits. Because of that, they can often be a good choice if you want to save more than IRAs and 401(k)s allow and still enjoy tax-deferred growth potential.
Purchasing an annuity within a retirement plan that already provides tax deferral results in no additional tax benefit. So use an annuity to fund a qualified plan based upon features other than tax deferral, such as lifetime income options or the guaranteed death benefit.
Tax-deferred growth, which can compound over time, may increase the amount of savings and income your fixed index annuity generates for your retirement