Annuities specialist in Baltimore, Maryland (MD) - JLR Financial Services. Insurance broker assisting with planning your financial future: tax sheltered annuity, fixed annuities, immediate annuity, equity indexed annuity, more.
Call today for your no obligation appt 443-801-4433 or email us at
JRobertson@marylandannuities.net
A Registered Representative can assist you with your financial future in many ways, such as identifying and setting retirement and investment goals, creating strategies for investments and securities, mutual funds and annuities, Equity Indexed Annuities, Stretch IRAs, developing a tax strategy for Maryland residents, protecting your assets with long term care, life insurance, and creating a financial legacy for your heirs.
When should you buy a fixed annuity?
Want to save money tax deferred
A fixed annuity may be an excellent savings vehicle for individuals who would like to invest money in a vehicle where the earnings will be tax deferred. The earnings on a fixed annuity (as with other types of annuities) are not subject to income tax until the distribution period begins. Thus, the money you invest in an annuity may compound tax deferred for many years.
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Equity Indexed Annuity
What is an equity indexed annuity?
While technically classified as a fixed annuity, an equity indexed annuity (EIA) can be described as a hybrid of a fixed annuity and a variable annuity, having some characteristics of both, and falling in between regarding the potential for return and level of risk.
With a traditional fixed annuity, the annuity issuer guarantees both the rate of return and the payout. Investors in fixed annuities elect safety of principal and guaranteed returns over market risks and the potential for higher returns.
With a variable annuity, on the other hand, the rate of return varies according to the performance of the investments you choose from those offered by the issuer (these investments are often called subaccounts). With the exception of a guaranteed subaccount, variable annuities don't offer any guarantees on the performance of the subaccounts. You assume all the risk related to those investments including the risk that you may lose principal. In return for assuming a greater amount of risk, investors in variable annuities have a greater potential for growth in earnings.
EIAs take the middle ground, offering limited downside risk balanced by limited upside potential for returns. They offer safety of principal, and generally a minimum rate of return (provided the EIA is held for the full term). EIAs also offer the potential for higher returns by tying interest paid to the performance of a stock index. |
After creating your investment plan, a representative can monitor and track your investment choices to evaluate performance and modify the course of action with your investments as needed.
For many, the mere thought of these tasks is as overwhelming as the search for qualified and trustworthy assistance. As qualified professionals, we have over 15 years of experience in handling financial matters, from basic retirement planning to sophisticated and detailed securities investments and insurance matters.
What are the advantages of EIAs
EIAs offer the same benefits as traditional fixed annuities, including:
Tax-deferred growth
No annual contribution limits
Guaranteed death benefits for beneficiaries
No mandatory distributions after age 70�
Option of guaranteed income for life through annuitization
Limited penalty-free annual withdrawal potential
Avoidance of probate
EIAs also offer other benefits, including:
Safety of principal and guaranteed minimum returns (provided the EIA is held for the full term). Combined with
Potential for higher index-linked returns
Caution: Guarantees are subject to the claims-paying ability of the issuer.
Fixed annuity may be good supplement to qualified retirement plan
You may also want to purchase a fixed annuity if you would like to put more money toward your retirement than what you have already contributed to your
qualified retirement plans. If you are saving for your retirement, most financial advisors recommend that you first contribute as much as possible to any qualified retirement plans for which you are eligible. Thus, if your employer offers a 401(k) or other type of qualified retirement plan, you should contribute the maximum amount to that plan. Unlike the purchase of an annuity, contributions to a qualified retirement plan may be tax deductible. However, if you have contributed the maximum amount to your qualified retirement plans and would still like to save more money for your retirement, then an annuity may be an excellent way to invest money whereby the earnings on your savings will be tax deferred.
Annuities are investments for individuals with long investment time horizon
Annuities tend to be good investments only for individuals who are investing money for the long term. One of the tradeoffs to the purchase of an annuity is that the insurance company will usually let you withdraw in the early years only a small percentage (10 percent, usually) of the money you have invested in the annuity without a penalty. If you want to withdraw more than this percentage each year, the annuity issuer will typically charge you a surrender charge. The surrender charge in the early years of the annuity may be as high as 5-10 percent of the amount you withdraw. The surrender penalty will then decline to zero after 5-10 years. (Basically, the annuity issuer does not want you to withdraw any of the invested money in the early years.) Furthermore, any distributions made before the annuity starting date (i.e., cash withdrawals, dividends, etc.) under an annuity contract entered into after August 13, 1982 will be taxable to the extent that the cash value of the contract exceeds the net investment in the contract at the time of the distribution.
Finally, if you withdraw money before the age of 59�, the tax code tacks a penalty of 10 percent onto the withdrawal. There are some very limited exceptions to this early withdrawal penalty tax. Between the surrender charge, the potential income tax liability, and the early withdrawal penalty tax, a substantial part of your investment may be eaten up if you make an early withdrawal from the annuity. Thus, an annuity is usually a good investment only for people who can afford to keep their money in the annuity for a period of 10-15 years and who will not begin withdrawals until after the age of 59�.
What are the strengths of fixed annuities?
Earnings are tax deferred
Like other types of annuities, the earnings on the money you invest in a fixed annuity are tax deferred until you begin withdrawing the money from the annuity. Thus, the interest that the annuity issuer pays on the annuity will accumulate tax free until withdrawals are made or the distribution period begins. Over a long period of time, money that grows tax free can accumulate faster than investments that are taxed each year. This can make an annuity more attractive than other traditional investment vehicles, such as bank savings accounts, certificates of deposit, or money market mutual funds.
Questions About Your Financial Future
Financial planning is a complex field, so it is wise to consult with experts. Here are some questions that you may have pondered:
1. How can you be sure that your IRA beneficiary designations will pass inheritance as you intended?
2. Will re-positioning your assets lower or eliminate tax on your social security?
3. Is there a way to get reasonably high returns without risking your nest egg?
4. Can you pay off your mortgage and get an income from your house, without losing your home?
5. Can you pay for nursing care without sacrificing your children's inheritance and your spouse's lifestyle?
6. How much life insurance is enough?
For the answers to these questions and more, you can discuss your financial options with JLR FINANCIAL SERVICES. Please call 443-801-4433 to arrange a meeting to discuss your estate planning objectives.
We proudly serve Hunt Valley, Sparks, Lutherville, Timonium, Towson, Parkton, and the rest of Baltimore County and the surrounding areas as well as Ocean City and Salisbury. We look forward to working with you.
Please use the glossary to look up the definitions of some of the more complex products.
Annuites, Fixed annuities, Variable annuities, Immediate annuities, Equity Indexed annuities, Long Term Care, Life Insurance, Mutual Funds, Group Benefits, Estate Planning, 401k Rollover, Retirement Planning, Ira's, MD tax free funds. These are just some of the products and services that we offer to Maryland residents.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice to your situtation.
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Annuities specialist in Baltimore, Maryland (MD) - JLR Financial Services. Insurance broker assisting with planning your financial future: tax sheltered annuity, fixed annuities, immediate annuity, equity indexed annuity, more.
Copyright 2008