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Frequently Asked Questions

Is a fixed annuity a good choice for you?

Only you and your financial professional can decide that for sure.  But here are a couple of questions that might give you an idea…

  • Are you looking for safety of principal?
  • Do you worry when the stock market falls?
  • Are you comfortable giving up some growth potential for a guaranteed return?
What is a Fixed annuity?

Fixed annuities pay guaranteed rates of interest, which makes them appealing to investors wary of the stock market’s ups and downs. What also makes them appealing is the fact that the interest they pay escapes taxation until you pull it out. They also avoid probate upon death when you name a beneficiary of your choice. Fixed annuities may also provide a lifetime income if you desire.

What do annuities do?

While life insurance provides financial protection against dying too soon, annuities provide financial protection against living too long. They do this by guaranteeing a stream of income for life. Some annuities also use the power of tax deferral — earnings aren’t taxed until they’re withdrawn — so your money can grow faster.

What is a Multi Year Guaranteed Annuity (MYGA)?

An MYGA is a contract with an insurance company that guarantees a specific fixed interest rate on your investment over a set period of time — generally three to ten years. A deferred fixed annuity is particularly geared to investors looking for additional retirement savings at a competitive rate of return without market volatility.

What are some benefits of a Multi Year Guaranteed  Annuity (MYGA)?

  • Typically offer higher interest rates than Bank CD’s for the same term
  • Interest earnings are tax-deferred when compounded (Grow Your Money)
  • Can be purchased with both non-qualified as well as tax-qualified IRA funds
  • Lifetime income options available (If Desired)
  • Principal guaranteed…free from market risk and price fluctuations
  • Avoids probate, passing to named beneficiaries at death
  • No fees, loads or sales charges
  • Provides a fixed rate so you can have both safety and predictability.
Who may benefit most from a deferred fixed annuity?

A deferred fixed annuity is often best suited to investors who are interested in a tax-deferred fixed rate of return over a set period of time, are at or near retirement, are subject to high federal or state income tax rates or will likely utilize the funds after age 59 ½.

How can I fund my Annuity?
  • Replace a fixed investment such as a maturing bond, CD, or stable value fund
  • Use money from a retirement account [401(k), IRA] via a transfer of assets; a tax-free event
  • Use current savings, bonus, inheritance, etc.
  • Exchange an existing annuity to a deferred fixed annuity tax free with a 1035 Exchange7
What Happens to the Annuity Assets if you die?

If you die, assets (including earned interest) from your Annuity go to your designated beneficiary or beneficiaries. Your beneficiaries can generally choose to receive their portion of the balance in a lump sum or as an income stream. If your spouse is the beneficiary, he or she may elect to simply assume ownership of the contract.

What fees are associated with an annuity?

Fixed annuities have fees for early withdrawals over a certain amount (generally you can withdraw 10% per year with no fee). These fees, known as surrender charges, help discourage premature withdrawals. This results in a more stable investment portfolio for the issuing insurance company and higher interest rates. Fixed annuities do not charge a fee on initial purchase.

Some Fixed annuities may have a nominal annual administration fee. It is generally waived if your balance is above a certain amount. Other types of annuities such as Variable annuities do have fees in addition to the surrender charges.

Can I transfer my IRA into an Annuity?

There are many investment options in which you can transfer your IRA, Annuities are certainly one of them.

Can I transfer my existing Annuity into a new Annuity without having to pay taxes?

Yes, if the annuity is still in the accumulation phase. The IRS allows a few different ways for you to transfer your money from one annuity to another without paying taxes. Remember, that although the IRS allows tax free transfers, your current company may charge surrender fees. You should always check your contract before transferring from one annuity to another

Can I withdraw the interest earned every year to help provide income?

It depends on the insurance carrier, but generally the answer is yes. Withdrawals from your annuity are taxable and withdrawals prior to age 59 ½ could be subject to additional IRS penalties. Always consult with your advisor to understand what taxes and penalties may apply.

Where can I read more about my state's coverage?

If you want to learn more about the coverage offered in your state, click your state’s link below (which opens into a new tab or window) or call the phone number listed for your state’s fund.

State Guaranty Associations
State Web Site Phone Number
Alabama allifega.org (205) 879-2202
Alaska aklifega.org (907) 243-2311
Arizona id.state.az.us (602) 364-3863
Arkansas arlifega.org (501) 375-9151
California califega.org (323) 782-0182
Colorado colorado.lhiga (303) 292-5022
Connecticut ctlifega.org (860) 647-1054
Delaware delifega.org (302) 456-3656
Dist. of Col. dclifega.org (202) 434-8771
Florida flahiga.org (904) 398-3644
Georgia gaiga.org (770) 621-9835
Hawaii hilifega.org (808) 528-5400
Idaho idlifega.org (208) 378-9510
Illinois ilhiga.org (773) 714-8050
Indiana inlifega.org (317) 692-0574
Iowa ialifega.org (515) 248-5712
Kansas kslifega.org (785) 271-1199
Kentucky klhiga.org (502) 895-5915
Louisiana lalifega.org (225) 381-0656
Maine melifega.org (207) 633-1090
Maryland mdlifega.org (410) 998-3907
Massachusetts malifega.org (413) 744-8483
Michigan milifega.org (517) 339-1755
Minnesota mnlifega.org (651) 407-3149
Mississippi mslifega.org (601) 981-0755
Missouri mo-iga.org (573) 634-8455
Montana mtlifega.org (262) 965-5761
Nebraska nelifega.org (402) 474-6900
Nevada nvlifega.org (702) 368-0607
New Hampshire nhlifega.org (603) 472-3734
New Jersey njlifega.org (732) 345-5200
New Mexico nmlifega.org (505) 820-7355
New York nylifega.org (212)202-4243
No. Carolina nclifega.org (877) 833-6831
North Dakota ndlifega.org (701) 235-4108
Ohio olhiga.org (614) 442-6601
Oklahoma oklifega.org (405) 272-9221
Oregon orlifega.org (855) 378-9510
Pennsylvania palifega.org (610) 975-0572
Rhode Island rilifega.org (401) 273-2921
So. Carolina sclifega.org (803) 276-0271
South Dakota sdlifega.org (605) 336-0177
Tennessee tnlifega.org (615) 242-8758
Texas txlifega.org (512) 476-5101
Utah utlifega.org (801) 320-9955
Vermont vtlifega.org (802) 249-0284
Virginia valifega.org (804) 282-2240
Washington walifega.org (360) 426-6744
West Virginia wvlifega.org (304) 733-6904
Wisconsin wilifega.org (608) 242-9473
Wyoming wyiga.org (303) 292-5022

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