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.
