Are All Annuities Tax-Deferred?
The Annuity Man
Once again, I need to revisit the uninformed agenda driven "I Hate Annuities" mantra that proliferates TV, internet, and print advertising. There is not just "one annuity." There are many types, and each one has its own unique benefit propositions and limitations. So if you are one of those knee-jerk "annuity haters," please stop lowering your IQ with this ridiculous statement.
There are 3 primary types of annuities that can be classified as "tax-deferred." Multi-Year Guarantee Annuities (MYGAs), Fixed Index Annuities (FIAs), and Variable Annuities (VAs) all can provide internal growth on the money that is tax-deferred. That's a good thing, but you still have to pay taxes on that growth when you eventually take that money out of the annuity policy.
The other 3 types of annuities can be deferred, but there is no actual growth on the money. Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), and Qualified Longevity Annuity Contracts (QLACs) can all be deferred, but there is no internal growth component on the money. In my opinion, true tax-deferral has to do with an actual percentage growth amount annually. That's the reason SPIAs, DIAs, and QLACs are really "annuitized" strategies, not tax-deferred strategies.
The bottom line is that all annuities are contracts. All annuities are issued by life insurance companies. But not all annuities are tax-deferred.
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