Fixed Annuity

Fixed Annuity = Safe Money GrowthFixed Annuity = Safe Money Growth

Fixed annuities are also commonly known as CD Annuities. However it is officialy referred to as a MYGA (Multi Year Guaranteed Annuity).

A fixed annuity provides a long-term guarantee d interest rate. This is a major advantage if you want to diversify and protect some of your money from declining interest rates. Interest earned on a fixed annuity is tax-deferred until it is withdrawn. Interest accumulates 3 ways: interest on your principal, interest on interest, and interest on the dollars that you would normally send to the government as income taxes.

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Key Benefits
  • Safety and Security
  • Income tax advantages
  • Probate advantages
  • Liquidity
  • Guaranteed long term interest

You do have to pay income taxes when interest earnings are withdrawn. Fortunately there are a variety of ways to withdraw your money:

  • You can withdraw a percentage of your money each year to potentially decrease income tax.
  • You can elect a guaranteed monthly income for as long as you live, and a percentage of the income you receive can be considered a return of principal and income tax free.
  • You can surrender your annuity at any time and pay income taxes on interest earnings at a time when you are in a lower tax bracket, especially during retirement.

Just like bank CDs, there are interest penalties when you withdraw too much money before investin is complete. These are called surrender charges. Many annuities will waive surrender charges for a variety of reasons. Annuities normally have no surrender charges for payout due to death, small annual withdrawals of 10% of the annuity value, election of periodic monthly or annual income, terminal illness, hospitialization or long-term care.

Learn about other types of annuities:

  • Indexed Annuity
  • Immediate Annuity