Tax Deferred Annuity: Advantages Of Deferred Annuities

By Author: Robert Cook
Total Articles: 111
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Once you have retired what would you want to do with whatever money you have in your savings? Retirement means that you will be left with no steady income for the rest of your life. So how do you intend to pay the taxes? Surely you would love to save on them wouldn’t you? And for that very purpose you can opt for a tax deferred annuity.

While you had a steady income you surely thought of ways to become eligible for tax exemptions. So now that you are retired what exactly have you thought about evading the taxes? Tax deferred annuities will offer you the biggest advantage of tax deferral. Once you invest a lump sum of money, you wouldn’t be required to pay tax on that. Again you can let the interests to pile upon and allow the principal amount to get compounded without having to pay a single tax. This will help you to amass great wealth post retirement.

Going by the traditional definition, a tax deferred annuity is a contract between an insurance company and those individuals who want to save money through tax deferral for many numbers of years before they retire. It is only after they ...
... retire that they would want to transform that money into a payout made at regular intervals. Unlike its immediate annuity counterparts, the tax deferred annuities can be paid only after some years after the initial investments have been made.

Besides the tax deferral (or holding back of taxes), a tax deferred annuity offers other advantages also. Among these advantages is the advantage that the investors enjoy of a guaranteed income on a regular basis that too even after retirement without having to do a single work. If an individual would have invested his money into other areas like share markets, mutual funds, bonds or stocks then that individual wouldn’t have received such a privilege of earning easy money. Another advantage of tax deferred annuity is the advantage of death-benefit. This benefit allows the investor to choose a beneficiary who would receive the entire annuity in case the original investor dies.

Since the tax deferred annuity is becoming so popular, several insurance companies are offering tax deferred annuities to the investors. These are only meant to hold back the taxes and come with various features like competitive interest rate, alternatives to lifetime income, security to the principal and interest.