Fixed Indexed Annuity
A Fixed Indexed Annuity (FIA) is a useful financial planning tool for tax-deferred growth of money and retirement income planning.
An FIA is a contract between an individual or married couple with an insurance company stating that, in exchange for a single premium payment or a series of payments, the insurance company promises to pay the annuity owner the sum of the premium payments and any growth in the future.
Guaranteed Lifetime Income
The FIA will guarantee a specified lifetime monthly income for the remainder of your life, starting at a certain age, as early as 60, by adding an Income Rider
Choose Your Withdrawal Options
Full and/or Partial Surrender of Annuity
No surrender charges will be incurred after the surrender period is over
Periodic Payments for Life
Annuity payments are made until the annuity holder’s death
Joint Life with Last Survivor
Annuity payments continue until the death of the surviving spouse
Annuity payments will be made for a specific period of time
Some FIAs will allow annuity owner access to the annuity money for nursing home or terminal illness financial needs.
Taxes and Fees
Tax deferral of interest income until money is withdrawn. No annual taxable income to report.
IRS Penalty (10 percent) will apply to early withdrawals prior to age 59 ½.
Surrender Charges (fees) will occur for withdrawing money before a predetermined lockdown (usually 7-10 years) of the principal. Generally, 10 percent of the principal can be withdrawn every year (starting in the second year) without any surrender charges.
An FIA pays a rate that is tied to a market index. A market index (Dow, S&P 500, Euronext100, etc.) is a hypothetical portfolio of investment holdings that represents a segment of the financial market.
The annuity will not pay the full positive return of the index, but there is a guaranteed minimum interest rate of return, and the principal is protected, even if the index return is negative. There is a potential growth of principal from any positive market returns. There is a death benefit which will fluctuate yearly depending on the amount of withdrawals.