Annuity products provide structured payments for a designated period of time. Annuities are often used to provide the annuitant lifetime retirement income, but can also be used to provide lottery or legal payments for a fixed number of years. Annuities offer predictable investment returns, tax-deferred growth, and guaranteed income payments provided by an insurance company. Employers can purchase annuities to fund employee bonus or retirement programs and individuals can elect annuity coverage for themselves. Most have no health questions, but placements may be subject to financial suitability underwriting.

Fixed Annuity, Fixed Indexed Annuity, and Variable Annuity products achieve growth differently during the accumulation phase. Fixed Annuities guarantee a specified interest rate, with yields gained from the insurance company’s investment portfolio (typically corporate or government bonds). Fixed Indexed Annuities provide greater gain potential than Fixed Annuities because they use a financial index (such as the S&P 500 or NASDAQ) for a benchmark. This allows some additional growth (cap)  while still providing minimum guarantees (floor).  Both Fixed Annuities and Fixed Indexed Annuities protect and guarantee the initial investment. Variable Annuities permit the owner to select the funds tied to any indexed growth or loss, and they do not have a floor and they do not guarantee the initial investment. United Agent Resources will never risk your client’s assets or your reputation. We only offer carefully vetted Fixed or Fixed Indexed Annuity products that you can rely on.

Income for life, deposit bonuses, survivor or death benefits, Long Term Care and skilled nursing facility riders, whether payments will begin immediately or be deferred… No two annuity policies will be identical.  The deposit size, age of the insured, time before initial withdrawal, the insurance company, selected riders, and source of funds all combine together to create an ongoing payout amount that is tailored to the annuitant. 

The way that retirement dollars have been set aside over time determines the illustrated and future value of funds, so it’s important for agents to learn about the way their clients saved money, not just the amount.  For tax purposes, funds considered “qualified” are treated differently than “non-qualified” funds. 

Qualified Funds

All contributions made to a qualified annuity account grow tax-deferred until disbursement. Funds can be withdrawn from this type of account at the age of 59½ without penalty. Funds withdrawn before that time will be subject to a 10% IRS penalty. Disbursements from a qualified annuity are mandatory at the age of 70½ (this is not mandatory for non-qualified accounts). 

Because a qualified annuity was purchased with pre-tax dollars, all withdrawals are taxable. Qualified annuity earnings can be rolled over into a similar account without causing any excess tax liability.

Common sources of funds for qualified annuities include:

  • IRA accounts
  • 401(k) plans
  • 403(b) plans
  • Simplified Employee Pension (SEP)
  • Tax-exempt savings plans

Non-Qualified Funds

The funds used to buy this account have already been taxed, so the initial investment is not subject to taxes at the time money is disbursed. 

Non-qualified annuity investments grow tax-deferred, and initial investments are allowed to accumulate interest without tax liability. As long as funds remain in this account, any income growth will not be taxed. When distribution begins, any growth beyond the original investment will be taxed. Early withdrawals from a non-qualified annuity (before the age of 59½)  are subject to a 10% IRS penalty, but (unlike qualified annuities) there is no mandatory distribution age. 

Non-qualified annuities allow funds to be transferred from one policy to another without tax consequences. Transferring funds via 1035 exchange is tax-free, and a new annuity product with increased returns could be selected.

Common sources of funds for non-qualified annuities include:

  • Mutual funds
  • Non-IRA accounts
  • Certificates of deposit
  • Inheritance accounts
  • Savings accounts

United Agent Resources has a strong team that is prepared to help you secure your client’s financial future. We can help with fact finders, illustrations, and any additional support you may need. Reach out for help today- we’re here for you. With our support, some extra training, and your life insurance license, you can begin facilitating 401k rollovers for your T-65 clients in no time at all.




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