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Basic Fees for Variable Annuity Investment

As a unique investment opportunity, Variable Annuity attracts some charges. You need to know more about them before you think of investing. Several insurance companies in the US have come into the business. There’s every need for you to be properly enlightened before you sign any kind of annuity contract with any of the insurance companies.

In most cases the charges reduce the value of your account in the Variable Annuity plan. They can also reduce the value of your investment returns. You need to know more about such charges.  Let’s examine   them now.

•             Surrender Charge

This is the fee you pay when you want to withdraw money from a Variable annuity within a certain period of time. In most cases, the charge comes after purchase payment has been made up to 6 to 10 years.  Your insurance company issues surrender charge as part of commission they require. It’s also known as sales charge. It’s normally used to pay a commission to your financial professional for selling the Variable annuity to you.

The Surrender Charge is simply a percentage of the amount you withdraw. It normally comes down as the years roll by. The declining period is usually known as “surrender period”.

•            Mortality And Expense Risk Charge

This is a kind of charge that amounts to a certain percentage of your account value. Your insurance company uses the charge to compensate itself for the insurance risks it passed through while the annuity lasts. The gain made from this charge is also used in paying your insurer’s cost of selling the annuity. This may include the commission paid to your financial professional for selling the annuity to you.

•             Administrative Fees

This can also be known as handling fees. Your insurer deducts the fees to cover the period of record-keeping while the Variable annuity lasts. The fees also cover any other expenses made   during the period of administration. In most cases, the charge may be a flat maintenance fee for your account.  It’s not much. It ranges as from $25 to $30 per annum.

The above charges are the basic fees you’ll always come in contact with when you go for a Variable annuity. However, there may be other underlying fund charges which may spring up. They are part of the charges that come with some mutual funds which you may be interested in. Such fees are usually deducted indirectly.

There are also other special charges that come with various features of Variable annuity.  Some of the charges may be attached to death benefits, guaranteed minimum benefit, and longer-term care insurance and so on. They are likely to attract some fees based on the prevailing condition that may apply.

In any case, there’s always the need to work with reliable insurance company when searching for variable annuities. Some of the insurance companies in the US that offer annuity packages do have hidden fees which you may never know at the initial states. You have to take your time to make proper inquiries before you agree to sign any contract deal. If you’re confused, always make sure you consult a reliable financial adviser.

Ways to Increase Retirement Income

The retirement period can be very enjoyable if you take time to plan it very well. It’s very possible to enjoy steady flow of income during retirement if you pay the price while you’re still in the active case. There are various ways you can use in increasing your retirement income without cracking your brain. Let’s take a look at some of them.

•             Annuities

You can invest in a profitable annuity for retirement in order to enjoy steady flow of income when you retire.  Annuities are usually sold by insurance companies to people who want to invest their money for their future retirement.  You can safeguard your retirement period with the annual income that flows from annuity.  However, this depends on the kind of annuity you go for.  Annuities are of various types. Among them include immediate annuities, deferred annuities, fixed annuities, variable annuities life annuities and so on. You can always enjoy the best of annuity for retirement when you locate a reliable insurance company that offers the profitable options.

•             Part Time Work

You can also increase your retirement income by engaging in a part time work. The fact that you’ve retired from active service doesn’t mean you’re tired of living. There are numerous part time jobs you can still engage in for the sake of raising extra income. Such part time works can also help you to maintain healthy living since you’ll be exercising your body in the process.

•             Real Estate

It’s very possible to increase your retirement income if you invest in real estate.  You can invest the money you earn from annuity for retirement into a profitable real estate opportunity. You can buy properties with the lump sum of cash you receive from annuity. In most cases, real estate investment allows your money to work for you while you rest. It’s indeed a sure fire way of enjoying steady flow of income during retirement.

•             Reverse Mortgage

You can tap into home equity through a profitable reverse mortgage.  In most case, the amount you’re permitted to borrow depends on several factors such as the interest rates, your life expectancy, and market value and so on.

•             Avoid Retirement Account Distributions

You can increase your retirement income by avoiding early retirement account distributions.  This usually comes with regular income tax and 10% tax penalty on the amount you withdraw.  On the other hand, you can be tapping into your IRA accounts without penalties when you reach the age of 59.

•             Invest in the Stock Market early

You can increase your retirement income by investing in the stock market early enough.  If you happen to purchase lots of stocks while you’re still in the active service, you’re sure to reap the harvest when you retire. It’s always very important for you to diversify your investments for better results.

Well, apart from other avenue discussed above, annuity for retirement remains one   sure fire way you can always explore if you really want to increase your retirement income. It’s always very necessary for you to be properly guided when choosing the options. Locate a good financial adviser to help you out.

The Normal Retirement Age To Start Receiving Social Security

Retirement age may vary though the most normal age to retire is between 65 years and 67 years of age. The exact retirement age depends on the year that you were actually born and to the Social Security regulations that covered your birth year. However, some can already receive their retirement benefit when they reach the age of 62.

Other factors where the Social Security benefits are based is on the exact amount of money that you have probably earned during your whole employment and the exact age which you wanted to receive your retirement benefits.

Accordingly, the social security administration has set a definite ruling on each retirement age for each year that you might have been born. If you were born in 1937 and earlier, the normal retirement age is sixty-five years old.  Moreover, if you were born in 1938, your retirement age should be probably sixty-five and two months.

Typically, two months are added to the retirement age for each birth year. If you were born in 1941, the right retiring age for you is 65 and 8 months and if you were born in 1942, the retiring age will be 65 years and 10 months. Meanwhile if you were born in 1960 and later, the right retiring age is 67 years of age.

One might wonder if how the age does affects the amount of retirement pay received. Are the benefits the same if you retire at your retirement age or will you receive lower? As mentioned earlier, you can resign at the age of 62 years old. However, if you retire early the amount will be reduced proportionately until you reach the normal retirement age for your birth year.

If you were born later than 1960s, the right retirement age for you is 67 but for some reason, you decide to retire early at age 62, the reduction is 30% and 25% if ever you decide to retire on the age of 63.

Likewise, the reduction will get lower when you are near to your retirement age. If ever you decide to retire at age 66, the reduction will only be between 6 to 7 percent. However, you will finally reach the full benefits when you reach your retiring age.

Retiring early or retiring late has both pros and cons. Early retirement will mean that your monthly benefits will be smaller and you will receive them on longer period. If you retire late, you will receive higher benefit but for shorter time. Depending on your needs and demands, both have the same pros and cons.

Keep in mind that it is important that aside from social security benefits, you still need to invest in other forms of retirement plans. The less risk and guarantees high yields are annuities. Annuity for retirement is an insurance product which is reinvested to bonds and securities. Money invested here is sure to have great value since it is tax deferred and principal protected. Your money is safe and secured with annuity.

With the right annuity, you will not be bothered whether you received less of your retirement benefit since annuities can offer the monthly paycheck that you need. Therefore, whether you received less or more, annuity may give you the right alternative for your financial needs and long-term care.

If you are looking for other retirement plans that will be the answer to your new life after retirement, you may start now by entering your ZIP at the top of this page and answer some basic questions to receive FREE & IMMEDIATE annuity quotes from our trusted partners.

Qualified Retirement Plan Eligibility Requirements

A qualified retirement plan should pass the Internal Revenue Code. If the provisions of your retirement plans or annuities do not meet the requirements of the Code, then, problems may arise.

It is the job of IRS to administer a determination letter program, which will allow plan sponsors to know beforehand the assurances that the retirement plan is stable and acceptable.

On the part of the employers, it is their role to make sure that they follow all the rules and processes that involves the retirement plans. It is the obligation of the employer to see to it that all participants and beneficiaries are all taken care of without facing problems.

Normally, problems arise due to some common reasons. Some common problems in retirement plans involve in change of staff, change in procedural requirements and change of existing service providers like attorneys and accountants.

On the part of the participants and beneficiaries, it is their obligation to see that the plans and documents that they are holding are up to date to avoid any possible conflicts. If there are any changes that you have observed, it is important that you let your insurance company know this. However, aside from retirement plans rules there are also some basic requirements that you need to memorize by heart.

For one, the Internal Revenue Code requires all participants to be at least twenty-one years of age. The day he or she had attain twenty-one years will be the date reflected on the contract or provided that the employee had completed at least one year of service to the company.

Next, your plan should describe well classification of your covered plan. In order to make it eligible, the plan should emphasis all the names of the people covered on the plan including you as the employee as well as your beneficiaries. Your rights from the contribution and all the benefits that is included in the plan.

If there are changes in some part of the plan, it is important that all participants adhere to the changes made to the plan to avoid dispute. Amendments or changes in the plan are not a reason to cut any monetary value to the plan. The value should stay the same regardless of any amendments or changes.

In addition, the limitations of the benefits and contributions that are provided in the Code section should also be implemented. For the year of 2011, the annual defined benefit plan is one hundred ninety-five thousand dollars while two hundred thousand dollars is needed for 2012. Meanwhile the limitation of annual contributions to around $49000 in 2011 and $50000 in 2012

After the accumulation period, it is now time for distribution. All the money that were invested in the plans is now ripe for pay out. Payout is given depending on your terms. If you preferred to receive it on monthly basis or semiannual basis, as an owner, that is your decision.  A plan must directly specify that the distribution process will start not later on the beginning date, or when the employee reaches the age of seventy years old or if it will be based on the calendar year in which the employee retires.

In the end, there are several qualified retirement plans that are available in the market. You may choose on which one will be best for you depending on your future goal. One of the popular retirement plans is annuity. Annuities are tax deferred and principal protected that offers security and stability for retirees.

There are several types of annuities that you may consider. In order to do that, simply enter your ZIP on the top of this page and answer some basic questions to know which type of annuity will be excellent for your future needs.

Fees To Be Paid For Variable Annuity Investment

A variable annuity has a lot of benefits and it usually has a significant rate of return depending on the performance of an individual’s preferred investment options. However, the amount of money left on your account can be determined by the various fees that the insurance company will charge you for various benefits. The most common charges that an insurance company deducts from an account for various services or benefits include:

FindAnnuities1.            Administration fees

The insurance company will charge the investor some fees for services such as the keeping of records or other expenses that have to do with managing and maintaining the account. These fees vary from one insurance company, and may be a flat rate or a percentage of the value of the account.

2.            Expense risk and mortality fees

This is usually a yearly fee and it is typically a certain percentage of the value of your account that is meant to reimburse the company for any risks that it takes up for your variable annuity. It sometimes compensates them for any costs incurred while dealing with your variable annuity. These charges also vary from one insurance company to another, and the individual investor must find out what the rate of their insurance company is.

3.            Fees charged on expenses imposed by underlying funds

The insurance company will indirectly impose the fees or any other expenses that are incurred by mutual funds in your variable annuity.

4.            Surrender charges

When entering into a contract with an insurance company to purchase a variable annuity, there is usually a set period of time in which you agree not to withdraw the funds in the account. However, if you are faced with a circumstance in which you have to take out some or all of the funds in the account before the said date, the insurance company will charge you for the withdrawal. The ‘surrender charge’ is a type of sales charge. The insurance agent is in essence selling you the variable annuity. It is usually in the form of a certain percentage of the total amount that you withdraw and it may decline as the surrender period goes by. Therefore, if you were supposed to withdraw the funds after eight years, and you start withdrawing after two years, you will be charged a declining surrender charge until after the eight years are up, and then this charge will not apply any more.

5.            Fees charged on benefits

Variable annuities has several benefits but it is important to note that there is usually a charge on each benefit, and the individual must read the terms carefully before choosing any particular benefit.

The charges imposed on a variable annuity will affect the value of your account and since the charges differ from one insurance company to another, it is important for the investor to carefully compare quotes before deciding which insurance company to purchase a variable annuity from. It is also important for the investor to carefully study the prospectus of an insurance company in order to know every single charge and to determine how these charges will affect the value of their variable annuity account.

How Variable Annuities Work In Its Accumulation Phase

A variable annuity is an investment tool in which the individual pays a certain amount to an insurance company, who can then invest that money in certain investment options, such as bonds or stock, and at the end of a particular period of time, pay the individual back their money periodically.

There are two phases in a variable annuity, and the first one is the accumulation phase of the variable annuity, while the second one is its payout phase.

The accumulation phase involves payments by the individual to the insurance company. In this phase, the individual makes either a lump-sum payment or a series of individual purchases to the insurance company, and then chooses where the money should be invested. For example, the individual can decide that about 20% of their money should go to the purchasing of stock; 20% of their money should go to the purchase of bonds, while the remaining 60% could go to the purchase of other money market instruments.

Since all these investment options change with time, your investment will also go up and down with time and this will be judged by the performance of the option you choose. You, however, do not have to invest all your money as you can choose to leave some of it in a fixed account and this amount will not change at all. This means that the money in the fixed account will always pay the individual a fixed interest though the rate may be changed by the insurance company from time to time.

The prospectus provided to you by the insurance company is your most vital information source as it will give you details about all the investment options as well as any fees charged by the insurance company and all the expenses that you will incur as well as all the risks involved.

While your money is in the first phase, the accumulation phase of the variable annuity, you can move your funds around the different investment options without any tax being charged on the investment income or on any of the interest you gain. However, different insurance companies may charge you a certain amount of money as transfer charges. Money should not be withdrawn during this phase as you are likely to be charged ‘surrender charges’ by the insurance company. Most companies charge ‘surrender charges’ for withdrawal before 6 years, though some require as long as ten years before any money is withdrawn from your account. Money should also not be withdrawn before the individual reaches the age of 59 and a half as the federal government will charge a tax penalty of 10% for this withdrawal.

There are other types of variable annuities which do not have an accumulation period as they are immediate variable annuities. This means that the individual starts getting payment immediately after the purchase.

It is important for the investor to understand all the terms of the accumulation phase of the variable annuity, as well as any risks and the potential benefits of each investment option so that they can be able to make the best investment choice.

Preventing The IRS From Affecting Your Benefits

Using an annuity for retirement purposes may be a very good way to prevent the Internal Revenue Service from taking large chunks of your retirement benefits or large amounts of income due to you in lump sums. This can save you thousands in tax dollars, while increasing the value of the original amount you have invested. Learn how to do this by reading through to the end of this article.

Shielding the IRS from your Retirement Benefits

Most states within the United States levy a tax on pension income or other types of retirement benefits. In some cases, these rates are almost 20% or more leaving the retiree feeling cheated. While some states have retirement income friendly laws, some have tax levies of between 20% and 30% for such incomes. Do not think of moving to the friendly states yet, as annuities can still be of help in your current location.

These tax dollars could be prevented by directing the overall retirement income into an annuity plan, which will also generate money for you in the coming years. One type of annuity that can help in this regard is an immediate annuity as this plan allows retirees to access payouts soon after the lump sum payment is made. The other great thing about annuities is the fact that the principal invested is not subject to any form of taxation, except the interest earned on the actual investment.

Tax Benefits of Annuities Compared to Other Investment Plans

If we take a look at annuities in comparison to other financial investments, we will notice that annuities offer income increase while also deferring tax payments for long periods of time. In addition, they also offer the lower risk since the principal investment and a specified amount of income is usually guaranteed for certain number of years. For instance, stocks and bonds are bound to fluctuate in line with market prices while the dividends accrued are also taxed.

Also, annuities are the only type of investment plan that is easily converted or used as a retirement savings plan, whereby you get fixed or variable payouts for a number of years or over your entire lifetime.

However, great care must be taken before you conclude on using an annuity for retirement plan, especially in a bid to reduce your tax exposure. It is important that you look through the different deals available on the market from different annuity plan providers. Also, you have to compare rates and read the attached terms and conditions before making a decision on the type of annuity and particular provider.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

Key Terms To Know To Effectively Use Fixed Annuity Calculator For Your Annuity For Retirement

A fixed annuity calculator is a computer tool, mostly in form of a spreadsheet that helps an investor calculate his returns from his fixed annuity for retirement plan after a period of time. If you are keen about knowing exactly how much you can or will make from your investment, then a fixed annuity calculator is the right tool you need. By using a fixed annuity calculator, you can be properly guided in your decision as to which financial product best suits your needs or fits into your plans for your annuity for retirement.

Thanks to the calculator, financial decisions have become clearer and more comprehensive. Licensed insurance agents are now able to convince potential customers to buy their products with the use of the calculator as they can quickly demonstrate the benefits of their financial products to them. It should be noted however that even though annuity calculators are very useful and important, they should never take the place of an investor’s good judgment and discretion.

Some very important variables must be provided to enable the calculator compute the values that will help you with making the best decision. These include the investor’s age, the initial principal amount invested, the interest rate, the length of time between investment and first payment, and the amount paid monthly etc. We have outlined below some of the key terms that you need to understand in order to effectively use a fixed annuity calculator.

•             Annuity: is a product obtainable from an insurance company that gives investors an opportunity to invest a particular sum of money to be withdrawn at a later date after a period of time.

•             Fixed annuity: is a type of annuity in which the investor has the option of getting payments or making withdrawals after a relatively short period of time, say one month or, making a lump sum withdrawal at the end of a longer time period.

•             Current Tax Rate: is the tax rate that is applicable if you were to make withdrawals now, as compared to taking payouts at a later date.

•             Retirement Tax Rate: is the expected tax rate that would be applicable when you make withdrawals at retirement.

•             Surrender Charge: is the percentage of your annuity value that you would be charged if you make withdrawals earlier than expected.

•             Initial interest rate: is the guaranteed interest rate that you can receive for the annuity at the beginning of the plan.

•             Current Age: is the investor’s current age.

•             Withdrawal Age: is the age at which you are allowed to start withdrawing funds according to the contractual agreement.

•             Number of pay periods: is the number of times you can make withdrawals.

Our fixed calculators can compute and compare values obtainable from investing in annuities to that of other investment plans. Prospective investors can find fixed annuity calculators online as provided on the links below.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

How Annuity for Retirement Can Help You Avoid Taxes

It is always wiser to make plans for retirement much earlier in life. The earlier it is the better it can be. Most employees in the US have a traditional 401k retirement account with their employers into which they save a particular percentage of their income monthly. There are different plans under which the employer deposits money into your account too. After many years an employee would have undoubtedly have saved a huge sum of money in his company’s retirement account. All the time the money is accumulating, it is tax free and most of the time, it cannot be withdrawn until one attains the age of 59 ½ years, at least not without penalties.  The big day finally comes, you are retired. Then you can begin to think of using the money in your retirement account saved over the years.

Another scenario is that you have to change jobs. In this case, you have two options. Its either you leave all the money you have saved with your previous employer to keep growing while you create another account with your new employer, or you transfer the lump sum to a new account. If you change jobs frequently, that means you will have to manage several 401k accounts.

The question of what to do with the lump sum in your company retirement account arises. Money withdrawn from the account attracts a tax deduction by the United States IRS. Lump sum withdrawals attract a deduction of 20% in taxes. Another 10% is also deductible as state income tax. If you are leaving the money behind for your loved ones, it will also attract tax deductions that might be burdensome to them. If you are making withdrawals from your account before you attain the age of 59 ½ yrs, it attracts a penalty charge of 10%.

The question then arises. Is there any way to avoid the inevitable tax deductions applicable to your company retirement account when you make withdrawals from it? The answer is yes! You can evade the tax deductions applicable to your company retirement account by either moving the funds into an annuity for retirement account or establishing a direct rollover IRA account. You can deposit the lump sum check from your company’s retirement account into these accounts. This way, your savings will keep growing and the good part is none of it will be taxed! An annuity retirement plan professional will be of great help to you when making this move!

Some companies now offer their employees a Roth 401k retirement account instead of the traditional 401k account. The major difference is that in the 401k account, the money you save has not been taxed but will be taxed in the future when you finally make withdrawals from the account. The Roth 401k account on the other hand allows you to save a part of your income after the taxes have been deducted. That way, the money will not be taxed again when you make withdrawals at retirement.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity for retirement plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

How Annuity Calculators Can Help You Determine Your Annuity for Retirement

As you look forward to an enjoyable retirement, it is important that you invest in a financial product that will grant you the best retirement income protection. An annuity for retirement purpose may be a very good option and we can offer you tools that will assist you with calculating how much retirement income you would require or how much you will need to invest to achieve certain payouts later.

AnnuityForRetirementLIFETIME ANNUITY CALCULATOR

A lifetime annuity calculator is a very good tool that may assist you with planning and investing in the type of annuity that will meet you personal needs in addition to comparing rates from different annuity providers. To begin with, you will need to provide some basic personal information including your age, proposed investment amount, minimum payout expected, and minimum length of payout period etc. After inserting these figures into the calculator, depending on the type in use, you will get near accurate information as to how much you can receive from a specific principal over a specific number of years.

On some occasions and with your consent, an annuity expert might contact you to request more personalized information regarding your actual circumstances. For instance, a retiree with additional social security benefits might qualify for higher rates in comparison to a retiree without any additional benefits. Based on the results from the calculator, and any discussions with experts and other users, you will have a good understanding of how much you need to invest to meet your desired post-retirement needs.

BENEFITS OF THE ANNUITY CALCULATOR

The annuity calculator is a very good tool that assists young workers and intending retirees due to the fact that its results are quite reliable and aids with planning for the future. These results are also backed up by the fact that payouts from annuities are mostly guaranteed, and not affected by the kind of swings experienced in the stock market.

To compensate for inflation over time, it is also possible to invest in an annuity that has an integrated Cost of Living Adjustment (COLA) index. With this type of annuity, your future payouts will be adjusted in line with your proposed living expenses. The annuity calculator can also assist with getting the impact of COLA on your required investment amount.

In conclusion, when considering an annuity for retirement protection, you should consider consulting a free calculator online or an expert in order to get a good grasp of how much investment is required in line with your individual circumstance.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.