Annuity Taxes
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Surrender Charge
A charge to annuity contract owners who withdraw funds during the “surrender charge period” or the first several years of the contract. Surrender charges are also referred to as surrender fees and early withdrawal fees. The specific terms will vary among insurance companies and contracts, but surrender charges are typically assessed as a percentage of the contract value for withdrawals that exceed a certain percentage of the contract value. For example, an annuity may have a 7% surrender charge for any withdrawal in excess of 10% of the premiums paid. Assume that a person paid $100,000 in premiums and withdraws $50,000 during the first year. In this case, the surrender charge would be $3,500 ($50,000 x 7%). The surrender charge will often reduce a certain percent each year—typically 1% each year—until it disappears. The expenses are significant, so it is critical to ask about and understand surrender charges before entering into a new annuity contract or considering a 1035 exchange.
Annuity Fees and Expenses
Expenses should be a top priority for any financial services consumer. Many people have been conditioned to be aware of expenses when it comes to investment products. Indexed-bases investment management companies such as
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Financial Advisor Compensation
Retail financial advisors are generally compensated through fees, commissions, or a combination of fees and commissions.
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What is the difference between cash value and date of death value?
With regard to an annuity, it will completely depend on the structure of the annuity contract and any additional riders that might be attached to that contract. At a basic level, the death value can be the initial deposit amount, less any withdrawals and market performance. Most of the bigger companies provide a somewhat enhanced death benefit. This usually is the initial
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New Retirement Income Annuity from Fidelity and MetLife
Two leading companies are partnering to provide a new annuity offering. MetLife has developed the "MetLife Growth and Guaranteed Income (MGGI)" product that will be distributed exclusively through Fidelity . The MGGI is a deferred variable annuity that contains a guaranteed lifetime withdrawal benefit ( GLWB ) that, depending on the age of the client, ranges between 4 and 6 percent of the initial single premium. Fidelity will manage a relatively simply fund offering and the M&E fees on the...
