Magazine article The CPA Journal

Are Tax-Deferred Variable Annuities Appropriate for an Investment Portfolio?

Magazine article The CPA Journal

Are Tax-Deferred Variable Annuities Appropriate for an Investment Portfolio?

Article excerpt

A variable annuity is an insurance contract that provides a future income: either a stream of paymenu guaranteed to last a lifetime, some other form of systematic withdrawal, or a lump sum. Because the guarantee of a lifetime income depends on the claimspaying ability of the insurance company that issued the variable annuity contract, planners and their clients should consider only top-rated insurers.

A variable annuity can increase retirement savings, control tax liabilities, manage or limit investment risk, and supplement lifetime income. The decision to purchase a tax-deferred variable annuity should be carefully tailored to the individual's needs, goals, and portfolio. When considering an annuity, planners and consumers should look for programs offering many investment options with little or no surrender charges or other fees.

Investment Options

An appealing feature of variable annuity programs is the variety of investment options, typically ranging from conservative vehicles such as money market or bond subaccounts to aggressive choices such as domestic or international stock subaccounts.

Many popular variable annuities offer dif ferent mutual fund accounts and fund families, giving the owner tremendous flexibility as investment goals and needs change. The owner can switch funds within a fund family, as well as trade between fund families, making transactions at no cost or taxation because they occur under the umbrella of a tax-deferred annuity.

Special features of variable annuities include the following:

Amounts invested grow tax-deferred until withdrawn. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.