With the help of a tax-deferred annuity, you can save loads for your retirement with the benefit of pre-tax contributions. These contributions are generally extracted from the salaries of employees that actually cut down the present taxable income. Till the funds are being withdrawn, the investors usually do not pay taxes on their earnings.
Being one of the lucrative long-term investment plans, a tax-deferred annuity assures you a steady income throughout. One of the advantages of these long-term plans is that the assets keep on increasing over time and therefore you are guaranteed a solid income for almost a lifetime. Moreover, the principal and the interest rates are guaranteed for a particular time period set by the insurance company.
A prime feature of a tax-deferred annuity is that it remains free of tax when the annual interest compounds. Moreover, tax payments are often negotiated and even the death benefit provision is given to beneficiaries. Although it’s a long term investment, you can still access funds if required. There are two types of tax deferred annuity – Fixed Tax Deferred Annuity and Variable Tax Deferred Annuity. Whichever policy you are willing to choose, its better you do it after discussing with one of the online agents. Annuities are not those typical retirement polices and therefore should be handled carefully.