Fixed Annuity

Utilize fixed annuity contracts to guarantee fixed rates of growth.

A fixed annuity is a popular retirement and savings vehicle that was created for long term investors who want the stability of a guaranteed fixed interest rate with no risk that they will ever lose any of their principal. A fixed annuity contract lets the insurance company invest your lump sum or accumulated contributions into low-risk assets, providing a guaranteed return traditionally higher than that of a CD product.

While a fixed annuity provides steady, guaranteed, and worry free growth, the real advantage is the tax-deferred benefits that a fixed annuity funded with qualified (pre-tax) money presents. A tax-deferred fixed annuity lets you defer all tax on earnings and principal into the future, providing exceptional growth due to the compounding process on earnings. While the interest on a certificate of deposit is taxed yearly (reducing your total accumulated value), the fixed annuity is designed to encourage real retirement savings by providing a long term tax deference incentive for you to grow your investment.

A fixed annuity is typically structured and planned out in two phases. The first phase includes the accumulation phase where long term growth and compounding happens on a tax deferred basis. The second phase is typically the payout phase, whereby a fixed annuity can be converted into a monthly fixed income and paid on a guaranteed basis over a lifetime or set number of payments. Alternatively a fixed annuity can be rolled over into a new annuity with prevailing interest rates through a 1035 exchange, with no tax liabilities incurred if processed correctly.