annuities-explained

Fixed Indexed Annuities Part 2

Fri, 22 Oct 2010 19:03:57 +0100

In this second part of this video series we will discuss more deeply what these Fixed Indexed Annuities are and how they can help. Also I answer some commonly asked questions about them.

Fixed Indexed Annuities Explained part 1

Fri, 22 Oct 2010 19:00:43 +0100

In this 2 part video series we will discuss what Fixed Indexed Annuities are, and how they work. This can help out if you are not happy with your IRA or your CD or money market. It is also a very good option for anyone who has money invested in the stock market, or has a variable annuity. Enjoy!

IMAX

Thu, 30 Sep 2010 20:37:36 +0100

This is a video I made of a service I offer free to all my clients. This video will explain what this product can and will do for you. It is a wonderful service and it only take a few minutes for complete. I do post my videos here but I post here first. So if you want to get a first look at some of the videos click: http://www.youtube.com/user/powersinsurance1

Individual Retirement Accounts (IRA)

Wed, 10 Feb 2010 01:38:10 +0100

Individual Retirement Accounts (IRA’S) are tax-advantaged accounts intended to supplement income after retirement. Tax law provides guidelines of use and maximum contributions to sway people from using the account as a simple savings account.

Why would I choose to open an IRA?
An IRA is a great tool to provide for income after retirement. With some features similar to a 401k (like you would set up at work), tax-deferred earnings make your funds grow quickly until you take “distributions” after retirement. Anybody who reports taxable earnings on income is eligible to open an IRA account, and can choose to make yearly contributions to said account (with tax advantages) until retirement age.

Are there different kinds of IRA accounts?
The simple answer is, Yes. There are a few different types of IRA accounts, all of which have slightly varying rules or regulations.

Roth IRA-Contributions to a Roth IRA are made after taxes have been levied, therefore, all account transactions are tax-free and withdrawals are usually not taxable.
Traditional IRA-Unlike the Roth, contributions to a traditional IRA are tax deductible and taxes are paid on withdrawals after retirement.
Simple IRA-A simple IRA allows both individual and employer contributions. It is similar to a 401k or pension plan, and often acts as one for employers who do not offer 401k’s but want to offer retirement benefits. Although it is called an IRA, the contribution limits are lower than other types of IRA accounts and administration of the Simple IRA is easier than other IRA accounts.
Self-Directed IRA-This account is more complicated than other IRA accounts, as the individual allocates the investments in the account. A self-directed IRA is intended for those who want to maintain all of their portfolio. A trustee or custodian holds the assets of the account on behalf of the owner. Tax reporting and maintenance of the Self-Directed IRA can get complicated and is usually reserved for those with a deep knowledge of markets and tax laws.
SEP IRA-For the self-employed or small business, the SEP IRA (Simplified Employee Pension) is a variation of other IRA accounts by allowing small business owners to offer plans for both themselves and their employees.

There are a few other types of IRA accounts such as spousal or educational IRA’s that may be a viable option. Do some research on each type to discover which will work best for you and your family.

Where can I open an IRA?
Most banks, brokerage firms and credit unions offer IRA products. Finding the best fit for you requires some research and shopping. In many cases, brokerage firms have the most competitive offers relating to maintenance and transaction fees. Obviously, you want an IRA that will yield the most and cost the least, but keep in mind that if a firm offers you the flexibility of changing investments with minimal fees, this could mean a difference of thousands of dollars in the long term. Because fees for account features vary, shop very carefully for your IRA to find the ideal fee structure for your situation.

Can I open more than one IRA account?
Yes.

No matter how many IRA accounts you have, total annual contributions to all IRAs cannot exceed the maximum annual contribution limit. So, if you have 3 separate IRA accounts, for the 2009 tax year, the maximum you can contribute between ALL of the accounts combined is $5000, NOT $5000 per account.Can children have IRA’s?
Yes, and no…the account owner must have reportable taxable income in order to open an IRA, and the maximum contribution can not be more than the reportable income for the year.

How do I fund my IRA?
As you can see from the above table, in 2009 the most you will be able to contribute to an IRA is $5000. With most institutions or brokerages, you can set up automatic withdrawals to fund your IRA or make contributions at your own discretion with deposits to the account. You may also want to rollover an old 401k account from a previous employer. Luckily, there are NO RESTRICTIONS as to how much you can rollover into your IRA account. The annual contribution limit does not apply, because the funds are already “tied up” in a retirement vehicle.

If I already have a 401k with my employer, can I also open an IRA?
Absolutely. 401k’s have similarities to IRA’s, but do not affect the contribution amounts related to IRA’s. The more tax deferred retirement money you have set aside, the better off you will be come retirement.

What if I can’t contribute to my IRA this year?
IRA accounts do not require regular investment. Although it is in your best interest to “max out” your account, if you are unable to contribute to the account, there is no penalty (besides hurting your retirement fund).

There is much to consider when it comes to IRA accounts and many complicated issues that come up when choosing the right account for you. The most important thing you can do to make sure you are doing the right thing for your finances is research and ask questions. I hope some of these questions have helped clarify IRA’s for you.

Immediate Annuities

Wed, 10 Feb 2010 01:33:15 +0100

Regular Income Now And For Life

With an immediate annuity you can turn your assets into regular payments beginning now and lasting for the rest of your life or for a specified period of time. At retirement, you can use distributions from defined contribution plans, 401(k)s or IRAs to fund an immediate annuity and create a personal pension.

By definition, immediate annuities are single-payment annuities. Any large sum of cash – from an inheritance, legal settlement, sale of a business or home – can be converted into an income stream for the duration you specify. Immediate Annuities are not intended to offer liquidity or growth potential.

Immediate Annuities feature:

Regular Payments: Can be received on a monthly, quarterly, semiannual or annual basis.
Distribution Options: Depending on your particular needs, you can choose from distribution options: your lifetime, lifetime for you and your spouse, for a specified time (with your beneficiary receiving payments if you die during that period).
Choice of Contract Types: Fixed immediate annuities guarantee level payments regardless of market performance. Variable immediate annuities provide regular fluctuating payments reflecting the performance of the equities in which they are invested.
Tax Benefits: For immediate annuities funded with non-qualified assets, the payment of principal is tax-free; only interest is taxable.
Postponement of Taxes: For immediate annuities funded with qualified assets (i.e., from IRA’s or other tax-deferred accounts), earnings you have accrued are fully taxable. However, taxation is postponed by being spread out through the entire length of the annuity distribution.
No Withdrawals: Once purchased, immediate annuities have no cash value, so no payments other than the scheduled payments guaranteed under the contract are available.

Fixed Annuites

Wed, 10 Feb 2010 01:31:09 +0100

Safety, Stability and Guarantees

Choose a fixed annuity for defined growth of principal and interest, free from taxes until your money is withdrawn. Fixed annuities generally guarantee a fixed amount of interest for several years; others guarantee rates from one to three years, and renew at the option of the insurance company.

Product Features

Tax-Deferred Growth: Taxes are deferred on the interest you earn until it is withdrawn.
Guaranteed Interest Rate
Guaranteed Principal: Assets are not subject to market fluctuations. Your principal can never decline in value.
Guaranteed Renewal Rate
Benefits to Heirs: Death benefits paid directly to a named beneficiary are not subject to probate.
Benefits to Spouses: Spousal beneficiaries may continue tax deferral if so desired.

Variable Annuities

Wed, 10 Feb 2010 01:29:36 +0100

Variable annuities provide the opportunity for market appreciation—through a variety of investment options—with tax-deferred accumulation and future income.

Variable annuities are designed for people willing to take more risk with their money in exchange for greater growth potential. While there is more risk associated with a variable annuity, many variable annuities offer guarantees of principal and downside protection at an additional cost (depending on contract rider availability). However, these guarantees do not apply to the investment performance or safety of amounts held in the variable investment options.

Variable annuities offer:

Tax-deferred Growth: Taxes are deferred on earnings until money is withdrawn.
The opportunity for market appreciation: A variety of investment options are available.
Liquidity: Most variable annuities allow withdrawal of a portion of your account value without penalty. Withdrawals may be subject to a contingent deferred sales charge within the first several years of any contribution, and if taken prior to age 59½, will be subject to a 10 percent IRS penalty.
Benefits to Heirs: Death benefits paid directly to a named beneficiary are not subject to probate.
Benefits to Spouses: Spousal beneficiaries may continue the contract and its tax deferral, if this option is chosen.

Variable annuity contracts have limitations, will fluctuate in value and are subject to market risk, including the possibility of loss of principal. Variable annuities generally impose withdrawal charges based on the withdrawal charge schedule. A combination of withdrawals and market declines could reduce a variable annuity’s account value to zero, in which case the contract would terminate.

Key Features of an Annuity

Wed, 10 Feb 2010 01:23:06 +0100

Accumulation Period

The period of time between when the annuity is issued and when the insurance company begins to make income payments to the annuitant. Interest earned or investment results experienced on the accumulated payments during this time are added to the account tax-deferred under current tax laws.

Annuitization

Annuitization involves converting your accumulated retirement assets into a series of periodic payments that last for a period of time of your choosing, in accordance with the provisions of the annuity contract.

Distribution Period

The period of time, either a specified number of years or lifetime, over which distribution payments are made to the annuitant. Earnings become taxable when the annuitant begins to receive payments. The payout during the distribution period can either be fixed or variable.

Premature/Early Withdrawals (Distributions)

Withdrawals are reported as income and are subject to ordinary income tax treatment (as opposed to capital gains or dividend income), and if made prior to age 59½, may be subject to an additional 10% federal income tax penalty. In addition, company imposed surrender charges may apply to certain withdrawals.

Surrender

Termination of the contract by the owner. Most annuity contracts impose surrender charges during the early years of the contract, and each subsequent contribution may have its own surrender charge period. All accumulated interest will usually be taxable to the owner at time of surrender, and tax penalties (10%) will apply if the owner is not yet 59½ years of age (unless an IRS exception applies).

Systematic Withdrawals

With this payout strategy, you can withdraw money from the accumulated value of your contract on a regular schedule – making it an effective way to supplement income either before or after retirement. Systematic withdrawals are also flexible.

Withdrawal Charges

Most annuities will allow a certain percentage of the account value to be withdrawn free of charge in each of the initial contract years. Beyond this “free corridor,” a withdrawal charge, expressed as a percentage of the amount withdrawn, is assessed for a specified number of years after the issue of a deferred annuity or after the date of a subsequent contribution. The charge typically decreases annually until the year specified in the contract, when it reaches zero, and all future withdrawals are without charge.

What is an Annuity?

Wed, 10 Feb 2010 01:17:32 +0100

An annuity is long-term retirement product that can help protect you against the risk of outliving your assets. It is a contract between you and an insurance company: you receive future income in return for your contributions.

Any earnings on contributions are tax-deferred until they are withdrawn, usually at retirement. You may receive income in a number of ways, including payments that will last for as long as you live. Annuities can be a valuable addition to your retirement plan.

Annuities may help you:

Receive retirement income payments for as long as you live
Protect beneficiaries with a death benefit
Diversify your investments
Provide an opportunity for growth on a tax-deferred basis
Avoid outliving your assets

Types	Key Features
Fixed Annuities	Safety, stability and guarantees Tax-Deferred Growth Guaranteed Principal, Interest and Renewal Rates Benefits to Spouses and Beneficiaries
Immediate Annuities	Regular income now and for life Regular Payments Distribution Options Choice of Contract Types Tax Benefits Postponement of Taxes No Withdrawals
Variable Annuities	Growth Potential from Investment Portfolios Tax Benefit to Help Protect Beneficiaries Death Benefit
Employer-Sponsored Retirement Plans	Offered through employers Available for educators and employees of non-profit organizations

Withdrawals from annuities are subject to normal tax treatment and if taken prior to age 59 1/2 may be subject to an additional 10% federal income tax penalty. Withdrawals may also be subject to a contractual withdrawal charge.

Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a variable annuity. For a prospectus containing this and other information, please contact a financial professional. Read it care fully before you invest or send money.

An annuity contract that is purchased to fund an employer-sponsored plan should be done so for the annuity's features and benefits other than tax deferral. For such cases, tax deferral is not an additional benefit for the annuity. You may also want to consider the relative features, benefits and costs of this annuity with any other investment that you may have in connection with your retirement plan or arrangement.