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www.ihpadvisors.info An annuity is a contract between you, the purchaser or owner, and an insurance company, the annuity issuer. The Four Parties To An Annuity Contract There are four parties to a contract: the annuity issuer, the owner, the annuitant, and the beneficiary. The owner is the individual or other entity who buys the annuity and makes the contributions to the annuity. Qualified annuities are used in connection with tax- advantaged retirement plans, such as 401(k) plans, Section 403(b) retirement plans, or IRAs. Qualified annuities are subject to the contribution, withdrawal, and tax rules that apply to tax- advantaged retirement plans. One of the attractive aspects of a nonqualified annuity is that its earnings are tax-deferred until you begin to receive payments back from the annuity issuer. Like a qualified retirement plan, a 10 percent tax penalty on the taxable portion of the distribution may be imposed if you begin withdrawals from an annuity before age 59?. Unlike a qualified retirement plan, contributions to a nonqualified annuity are not tax- deductible, and taxes are paid only on the earnings when distributed. Two Distinct Phases To An Annuity There are two distinct phases to an annuity: the accumulation phase and the distribution phase. There is no limit to how much you can invest in a nonqualified annuity, and like other qualified retirement plans, the funds are allowed to grow tax deferred until you begin taking distributions. Contact Us At: https://ihpadvisors.info
