Tax Deferral in an Annuity Contract

Ever wonder if there’s an advantage to using after-tax dollars within an indexed annuity?

You’re on the right track

Watch below as Lou Aarons explains how using after-tax dollars works for you with regard to tax deferral in an annuity contract.

Transcript:

Hi, it’s Lou Aarons again, I’m one of the partners at Secure Retirement Strategies. I want to talk to you about tax deferral in an annuity contract. That’s one of the benefits that an annuity contract offers. If you’re using after- tax dollars, those non-qualified or dollars you’ve already paid tax on all the growth in your annuity contract is tax deferred until you take distributions.

So while that account is growing, you do not have to worry about getting 1099s that you have to claim on your tax return and pushing your taxable income up. It’s much different than a certificate of deposit, which is going to give you that 1099. So know that that tax deferral exists. Now, if you were using IRA money, qualified money, it’s already tax deferred.

So putting it into an annuity contract is not going to give you additional tax deferral, but it will give you the benefits of utilizing an indexed annuity, with its protection from downside risk and its participation in an index without charging fees. So there are many benefits of the index annuity. Tax deferral on using after tax dollars is one of them.