{"id":232,"date":"2014-06-28T21:25:49","date_gmt":"2014-06-29T01:25:49","guid":{"rendered":"https:\/\/project-011.com\/?page_id=232"},"modified":"2015-02-27T14:45:56","modified_gmt":"2015-02-27T18:45:56","slug":"ira-annuity","status":"publish","type":"page","link":"https:\/\/project-011.com\/?page_id=232","title":{"rendered":"IRA Annuity"},"content":{"rendered":"\"IRA<\/a>\n

IRA\u00a0Annuity Is A Qualified Retirement Plan<\/h1>\n

An IRA\u00a0Annuity is a qualified retirement plan that is a great way to accumulate money for retirement.\u00a0 The Tax Gods bestow upon them tax-deferred status during the accumulation phase of your annuity plan and\u00a0most of us\u00a0can also deduct our contributions (up\u00a0to certain limits)\u00a0made to the plan prior to calculation of our taxes.\u00a0 This is\u00a0what makes the\u00a0IRA Annuity a “qualified” annuity and is what sets the IRA annuity apart from non-qualified annuities and Roth IRA’s.\u00a0 The great benefit that the Tax Gods have provides is that over an extended period of time the interest accumulations should be much greater when protected from\u00a0tax during our accumulation years.\u00a0 Also, because of the deduction from our income the effective return is higher during the accumulation years than it would be in an CD, Money Market Account,\u00a0or\u00a0most other savings vehicles. Quite simply, an IRA Annuity, like all annuities, is a systematic method of accumulating retirement funds and at a certain point, it is a systematic method of dispersing funds in retirement on or after the age of 70.5.\u00a0 The government establishes the maximum age you can hold the funds without distribution because they have postponed taxation for many years and they want to impose your taxation.\u00a0 The nice thing is that most of us enjoy\u00a0a lower effective tax rate in retirement than we did during our working years.\u00a0 An IRA Annuity is a tax favored account where the interest gained is deferred from taxation during the accumulation phase of your life.\u00a0 This singular feature enables annuities to significantly impact the rate of return that you can realized over many years.\u00a0 Let’s look at the interest first.\u00a0 Let’s say that you can get 5% interest on your non-qualified annuity on a $100,000 balance.\u00a0 Let’s also assume you are in a 28% tax bracket with Uncle Sam.\u00a0 In a bank your $100,000 would earn $5,000 over a year on a simple interest basis.\u00a0 However, at the end of the year your bank is going to send you form 1099-Misc to report the interest to you as income and you will need to report the income to the IRS and pay taxes on the money.\u00a0 If you’re in a 28% tax bracket you gain is really $3,600 after taxes.\u00a0 The same annuity would earn $5,000 but would not be subject to taxation until later in your life when your income tax rate is likely much lower.\u00a0 The effect of the deferral of the tax, without considering the lower future potential tax bracket, is\u00a0 that your effective interest rate in an\u00a0IRA annuity is more like 6.94% interest during the year.\u00a0 If you qualify for a lower income tax bracket when you take the money from the account in retirement it is possible that the effective rate of interest is even greater than shown in the latter. IRA Annuities and non-qualified annuities are basically the same thing except that an IRA annuity is qualified money and it gets treated differently during the disbursement period.\u00a0 During the accumulation phase an IRA Annuity may be deducted from income before your taxes are calculated making the money “before tax”.\u00a0 Before tax money makes the tax on disbursements different.\u00a0 A non-qualified annuity is taxed only on the gain, the interest, and not the original deposits made by you.\u00a0 There is no tax because these are considered “after tax” monies.\u00a0 That then is the reason why IRA annuities are not subject to an “exclusion ratio”.\u00a0 Since all of the money was considered pre-tax, all of the disbursements are taxed as orginary income.\u00a0 Almost everything else about annuities are the same otherwise. An annuity of any kind is a great mechanism to defer tax on the interest gain on your savings.\u00a0 In order to get this tax-preference the federal government does establish rules on the time disbursements must begin, they establish a penalty surtax for early withdrawal or surrender, but they also give you certain ways to avoid the sanctions in the laws.\u00a0 All in all, annuities are a great way to get a great effective rate of interest on your savings and retirement funds.<\/p>\n","protected":false},"excerpt":{"rendered":"

IRA\u00a0Annuity Is A Qualified Retirement Plan An IRA\u00a0Annuity is a qualified retirement plan that is a great way to accumulate money for retirement.\u00a0 The Tax Gods bestow upon them tax-deferred status during the accumulation phase of your annuity plan and\u00a0most of us\u00a0can also deduct our contributions (up\u00a0to certain limits)\u00a0made to the plan prior to calculation […]<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":179,"menu_order":0,"comment_status":"open","ping_status":"open","template":"tpl-personal-retirement.php","meta":{"footnotes":""},"class_list":["post-232","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/pages\/232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/project-011.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=232"}],"version-history":[{"count":5,"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/pages\/232\/revisions"}],"predecessor-version":[{"id":706,"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/pages\/232\/revisions\/706"}],"up":[{"embeddable":true,"href":"https:\/\/project-011.com\/index.php?rest_route=\/wp\/v2\/pages\/179"}],"wp:attachment":[{"href":"https:\/\/project-011.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}