FOR IMMEDIATE RELEASE | July 20, 2004
 

Which Annuity is Right for You?

An annuity is a flexible retirement investment vehicle offering a combination of guaranteed lifetime income payments, other insurance benefits that protect your principal and tax-deferred advantages.  The following are common forms of annuities:

Variable or Fixed

A variable annuity allows individuals to invest in a variety of investment funds that allows you to invest in stocks, bonds and money market portfolios.  The value of the variable annuity and the income payment level are determined by the performance of these investments.  A fixed annuity offers a set rate of return for a defined period of time and the option of regular, fixed income payments.

Deferred or Immediate

A deferred annuity is purchased either with a single payment or with periodic payments, and income payments and taxes on earnings are deferred to a later time.  Deferred annuities have two phases – savings and payout.  An immediate annuity is purchased with a single payment, with income payments beginning shortly after purchase.  Immediate annuities are becoming increasing popular 401(k) rollover options.  Deferred and immediate annuities can be either variable or fixed.

Qualified or Non-Qualified

A qualified annuity is funded with pre-tax dollars and can be used within a tax-qualified retirement plan, such as pension or profit sharing plans, 401(k) or 403(b) plans, and certain government plans.  A non-qualified annuity is purchased with after-tax dollars by individual investors and not used within a qualified retirement plan.  Qualified and non-qualified annuities can be variable or fixed, deferred or immediate.