Annuities
What Are The Annuity's Benefits?
One major benefit of an annuity is that all earnings are tax-deferred until you decide to withdraw them.1
The Power of Tax-Deferred Compounding
Tax-deferred compounding provides the opportunity to defer taxes until withdrawal, giving this additional principal time to work for you in your investments and potentially accumulating a larger pool of assets from which to draw on during retirement. The tax deferral associated with an annuity is already provided by the qualified plan. For an additional fee, the annuity offers death benefit protection, optional living benefits and the ability to receive a lifetime income.The chart below shows the difference between $10,000 invested tax-deferred earning 9% a year versus the same investment with a total annual income tax bite of 33% for 30 years. Even after taxes at withdrawal, the annuity earnings would be 1 1/2 times as much as the fully taxed earnings.
This chart is for illustrative purposes, and does not represent actual or future performance of any investment product. Variable annuities have mortality and expense charges, sales charges, and administrative fees not reflected in this illustration which would result in lower returns if they were included. Please refer to the appropriate prospectus for a detailed description of these charges.
1 Withdrawals of taxable amounts are subject to income tax. Prior to age 59 1/2, withdrawals may be subject to a 10% IRS penalty. A surrender charge may also apply.
Our firm and its affiliates are not in the business of providing tax or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matters(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
Variable annuities are sold by prospectus only, which contains complete information on charges and expenses. Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information and can be obtained by contacting your Financial Advisor advisor. Please read the prospectus carefully before you invest.
Morgan Stanley Smith Barney LLC offers insurance products in conjunction with SBHU Life Agency, Inc. Citi Personal Wealth Management, MyFi, and Citi Private Bank offer insurance products in conjunction with Citigroup Life Agency LLC.
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