Gaining Tax Benefits Using Fixed Index Annuities

  • Taking advantage of the SECURE Act to save on RMD taxes.
  • Fixed Index Annuities allow you torotect your retirement principle from market downturns and risk.
  • Fixed Index Annuities offer guaranteed income, plus long term care options to help cover increasing health care costs not covered by Medicare.
  • Tax deferred growth offered by fixed and fixed-index annuities = less taxes due next year.

If you want to save your hard earned money, you’ll have to learn how to jump through legal hoops in the tax code. The latest of these is the SECURE Act signed by President Trump. Among the most efficient ways to make the greatest use of your money is fixed index annuities. The SECURE Act, for the first time, lets you roll up your 401(k) and other savings accounts into a tax-free annuity.

Your money is stored in a tax deferred account which allows you to benefit from compounded growth. This means you will not pay any income taxes on it until you withdraw the money from the annuity.

But finding ways to optimize your tax strategy on your own is not advisable since there are many variables and insurance agencies in the market to consider. Make sure to consult with your financial planner to fine-tune your tax strategy in a way that lets you grow a larger retirement plan and generate income when you need it the most.

This is where fixed indexed annuities comes in. It is a long-term savings option that protects your money from taxes while providing further opportunity for growth through compound interest. In fact, most fixed index annuities provide higher interest rates than most banks.

What are the benefits of fixed indexed annuities?

Tax Deferral

Your money is stored in a tax deferred account which allows you to benefit from compounded growth. This means you will not pay any income taxes on it until you withdraw the money from the annuity.

Taking Advantage of the SECURE Act

The SECURE Act, signed by President Trump, now allows you to roll over your 401k, 401b, IRA, or pension payment into an annuity tax-free. Make sure you’re signing up with a qualified life insurance company that can meet your requirements for you.

Annuities Offer Guarantees

This is a great way to protect your principle amount from downturns in the market, unlike bonds which are known to lose their principle value during periods of high interest rates, the value of your index annuity is guaranteed.

Even though your actual returns are based on the performance of an index, such as the NASDAQ Composite, your original deposit will not decline should the index perform negatively. This is a great way to protect your principle amount from downturns in the market, unlike bonds which are known to lose their principle value during periods of high interest rates, the value of your index annuity is guaranteed.

It is worth noting though, that all your guarantees will be subject to the claims-paying ability of the insurance company. Your financial planner will be able to determine the ideal insurance provider for you based on sound financial planning.

Earnings Credited

Once the term comes to an end, all your earnings are credited, at which point they will be affected by negative index performance (your original deposit will not deplete). Your earnings can be limited by cap rates. Some carriers also offer features that let you take advantage of index highs that are placed during your term.

Flexibility

The potential of growth is realized through the performance of a variety of indexes and crediting methods, as well as fixed interest allocation. You can also combine both to get the maximum benefits out of your money.

Before signing up for a fixed annuity, it is essential to know what options are available to you to help you take the best possible advantage of your money.

Jennifer Lang Financial Services is an Independent Agent and  closely monitors the most competitive life insurance carrier rates to help you get the best possible fixed index annuity. Get in touch with us to get a financial plan design that works best for your specific circumstances.

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Jennifer L

Jennifer L is an author, a public speaker, a retirement protection specialist and host of Independent Wealth Planner Strategies.
https://www.jenniferlangfinancialservices.com/

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