Annuities

An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time. 

People typically buy annuities to help manage their income in retirement. Annuities provide three things:

• Periodic payments for a specific amount of time. This may be for the rest of your life, or the life of your spouse or another person.
• Death benefits. If you die before you start receiving payments, the person you name as your beneficiary receives a specific payment.
• Tax-deferred growth. You pay no taxes on the income and investment gains from your annuity until you withdraw the money.

Qualified plans have tax-deferred contributions from the employee, and employers may deduct amounts they contribute to the plan. 

Qualified Annuity Types:
The most common is the 401(k), 403(b) Retirement Plan, and an Individual Retirement Account (IRA).  

Non-Qualified plans use after-tax dollars to fund them, and in most cases employers cannot claim their contributions as a tax deduction.

 Non-Qualified Accounts include:

• Checking Account
• Savings Account
• Brokerage Account (which can also be called a Taxable or Individual Account)