Fixed Income Deferred Annuity

With it, you can not only earn a guaranteed decent interest rate, but also delay or reschedule your income tax payment for longer period of time. Besides, the interest rate offered by it is much higher than that offered by other short-term investment options, like bonds and CDs. Therefore, fixed income annuities are certainly worth considering.

However, it should not be confused with an immediate fixed annuity that requires the investor to make the initial investment in lump sum to yield fixed monthly income for stipulated period of time. Fixed income deferred annuities can be distinguished based on the following features:

• If the insurance company you are dealing with has a good financial rating, the annuity plan ensures a guaranteed principal amount.
• Although the first year interest rate is generally reduced by the company, you earn a guaranteed minimum rate over time.
• In majority of the cases, you are allowed to withdraw a maximum of 10 percent of total annuity value each year without penalty. This waiting or surrender period usually lasts for 1-10 years. However, any withdrawal made before the age of 59.5 years is subject to a 10 percent IRS penalty.
• In case of your death, the annuity money is given to the assigned beneficiaries.
• The amount of your fixed-income deferred annuity can be converted at any point in time to guaranteed stream of income for a fixed period.
• The minimum amount that can be invested initially usually varies between $2,000 and $100,000.

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