You can, with the Split Annuity strategy, you purchase two annuities1 – an “immediate annuity” to provide regular income payments and a “deferred annuity” to rebuild your value to the original premium amount. The Split Annuity may be a means to avoid the 10 percent IRS penalty tax for early distributions if the funds are withdrawn prior to age 59½. Here’s how the Split Annuity strategy works:
You determine the duration for which you want to receive income. Based on that duration and current rates available, an exact split is determined for purposes for funding two annuity contracts.
Confidence Income AnnuityTM converts a portion of your total premium into a guaranteed stream of tax-advantaged income for the duration you choose (5, 6, 8 or 10 years).
Certainty SelectTM annuity is guaranteed to grow – tax deferred – to your original total premium, assuming no withdrawals or surrenders.
Certainty Select is a single premium deferred annuity offering guaranteed rates for 5, 6, 8 and 10 years. Certain withdrawal provisions apply. Accounts grow tax deferred until withdrawn.
Confidence Income is a single premium immediate annuity designed to provide income for a specific period of time. When used as a part of the Split Annuity strategy, the annuity provides income for a period that matches your Certainty Select duration. Payments can be received monthly, quarterly, semiannually, or annually. Current tax laws define immediate annuity payments as partially a return of principal.
A Split Annuity may not be appropriate for qualified assets, which are already tax deferred.
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(Source: EquiTrust Life )