Index Annuities

If you want to increase your tax-deferred savings for retirement, consider a fixed index annuity. Compare Annuities.

Overview

An index annuity is a fixed annuity that provides protection against market loss with the potential for tax-deferred growth. It may be appropriate for you if:

  • You are planning for retirement and seeking an opportunity for your money to grow tax-free while you are guaranteed not to lose your initial investment.
  • You expect to be in a lower income tax bracket after you retire.
  • You are in your 50s or 60s and preparing for retirement.

How it works

Your investment is tied to a specific index or a selection of indexes. If the index return is positive, you will receive a portion of that return up to a specific percentage.

In the event that the index has a negative performance, your account will not decrease.

Key benefits

  • Return of principal with opportunity for growth.
  • Earnings are tax-deferred.

Fees

Considerations

  • May include a CDSC for early withdrawal.
  • Potential tax penalties for withdrawals before age 59½.
  • Consult your tax advisor about other possible tax implications.
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Contingent deferred sales charge (CDSC)

If you withdraw money from an annuity contract or surrender the contract within a certain period of time after investing, the insurance company may assess a contingent deferred sales charge (CDSC). Usually, the CDSC is a percentage of the purchase payment withdrawn, and it declines gradually over the CDSC period.

For example, a seven year CDSC may decline over the first seven years of your contract: 7%, 6%, 5%, 4%, 3%, 2%, 1%, 0%.