lifeinsurance

Annuities provide an opportunity to accumulate funds on a tax-deferred basis. An individual fixed annuity is a type of long-term personal retirement account designed to help your assets grow and provide a steady income stream when you retire. Your interest accumulates on a tax-deferred basis with no federal or state income taxes on your earnings until they are withdrawn. The fixed annuity also guarantees the return of principal and there is a guaranteed minimum rate of return.

The fixed annuity offers a competitive earnings rate plus many attractive policy features. The fixed annuity can be used for savings in a non-qualified annuity, or used to fund a tax-qualified retirement plan such as a Traditional IRA, Roth IRA, SEP IRA, or SIMPLE IRA. Because deferred annuities and IRAs are designed specifically for retirement, withdrawals made before age 59 ½ may be subject to a 10% tax penalty.

Traditional IRA

A Traditional IRA is a tax-advantaged arrangement that allows earnings and deductible* or nondeductible contributions to grow tax-deferred. That means you don’t pay income taxes on the earnings and contributions of your IRA until you begin taking withdrawals, which is usually after you retire and possibly are in a lower tax bracket. The Traditional IRA is also a way to establish independence from employer based retirement systems as well as providing the ability to leave your assets directly to the beneficiary of your choice. There are maximum contribution limits defined by the IRS and withdrawals made before age 59 ½ may be subject to a 10% tax penalty.

*Deductibility is determined by modified adjusted gross income (MAGI) and participation in an employer sponsored retirement plan.

Roth IRA

This type of IRA is funded by non-deductible contributions* and offers tax-free growth on your retirement savings if you have had a Roth IRA for 5 years and you are over 59 ½. The money you have set aside for retirement is all your money, with no guessing about how much you will have to pay in taxes. The Roth IRA is also a way to establish independence from employer based retirement systems as well as providing the ability to leave your assets directly to the beneficiary of your choice. There are maximum contribution limits defined by the IRS and withdrawals made before age 59 ½ may be subject to a 10% tax penalty.

*Eligibility for making contributions is determined by Modified Adjusted Gross Income (MAGI)

For personal consultation on how a Farm Bureau Annuity program can benefit you, contact Joshua Schmidt