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Types of Annuity Plans

It is important to understand the types of annuity choices you have. This is especially true if you’re looking to keep your money safe for the long term. Variable annuities, for example, change when the markets do. As such, those types of annuity plans do not protect your principal. However, if you have a fixed annuity or a fixed index annuity (FIA), your money is safe. In addition, an FIA has the benefit of possible higher rates of return than a fixed annuity. With an FIA, an insurance company promises to keep your initial investment safe. Yet, you also the ability to earn interest. In other words, you may gain earnings without risking your money in the market.

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Play It Safe

Fixed and fixed index annuities offer protection of your investment. First, the insurance company providing the annuity keeps your initial money safe. In fact, it is a requirement that these companies set aside enough assets to cover any claims made. Therefore, the financial stability and legal aspects of annuities are well understood. Another important point: insurance companies have ratings. This means retirees can research each company. At Cornerstone Wealth and Tax Advisory Group, we focus on partnerships with insurance companies that have excellent ratings and long-term, sound businesses.
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Types of

Annuity Benefits

With a savings account, certificate of deposit (CD), or money market account, you pay tax on annual gains. But, an annuity can grow each year without paying taxes right now. In fact, taxes are only paid when money is taken out. In addition, some retirees may be able to buy an annuity via an IRA or other tax-qualified plan. This strategy may be useful for your overall retirement plan.

Another benefit of an annuity: early retirement rollover. If you retire under age 59 1/2 due to early retirement, a rollover may save you in taxes. Early retirement or severance which includes a lump-sum distribution from a 401(k) or pension plan is usually subject to large taxes if taken before age 59 1/2. However, you may be able to roll that money into an annuity. By doing so, you'd defer your taxes until you start making money from it. Indeed, FIAs can have tax benefits for some retirees.

Fixed index annuities are also a way to earn reasonable rates of return without counting the earnings as income. For instance, if you collect social security, any gains in your annuity do not count towards your income until you withdraw it. This allows you the flexibility to defer taxable income. So, your reportable income, therefore, doesn't affect your social security benefits.

Why Choose An FIA?

One advantage of this option: reasonable rates of return. Unlike CD’s or typical bank rates, (FIA) rates have a link to the markets. Although you do not have the risk of loss with an FIA, you can see some earnings. In other words, when the market index goes up, you gain. But, when the market index goes down, you don’t lose. If you want to add more than your 401(k) allows each year, an FIA may also be attractive. With an FIA, there is no limit on the amount of money you can put in. As long as you meet certain criteria (such as enough liquid cash), you can put as much as you want in an FIA. If you want more retirement savings but max out your 401(k), an FIA might be for you. Another reason FIAs may be a good option: minimum distributions requirements. At age 70 1/2, current laws require you to take a certain amount of money out of some retirement plans. Penalties for not doing so are very high (up to 50%). However, if you roll your retirement account into an FIA, the insurance company does the math for you.
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income for your life

FIAs may give you income for life. With an FIA, retirees can make sure their wealth lasts. Also, FIAs have many options and benefits to select from. Contact us today. Let’s help you enjoy your wealth and your retirement.

“GREEN LINE” FIXED INDEX ANNUITIES:​

Why Selecting The Right Annuity Matters
The stock market (red) is constantly changing. It may go up or down, but that’s just its nature. In contrast, the right type of annuity (green) can be much more consistent. There is stable growth and no loss. With the right type of annuity, you can protect your money, knowing it will always be there for you when you need it most. Sometimes slow and steady wins the race when it comes to the “green line” of an annuity.

Doug Clancy DBA CSWTA Insurance Solutions • CA Ins Lic # 0G20617

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*Backed by the claims paying ability of the carrier.
**Our products offer a reasonable rate of return, over time.

Investment advisory services are offered through Gibbs Wealth Management, LLC (DBA Cornerstone Wealth & Tax Advisory Group), a SEC Registered Investment Advisor. Insurance products and services are offered through: Douglas A. Clancy Jr. DBA CSWTA Insurance Solutions, CA Ins. Lic. # 0G20617 . Gibbs Wealth Management, LLC (DBA Cornerstone Wealth & Tax Advisory Group) and Cornerstone Wealth & Tax Advisory Group, are unaffiliated companies.

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