Why Are Annuities Tax Deferred?
0 POINTSContact Meview profileDavid RacichPROFountain Hills, ArizonaRemember that America had annuities before it had income or investment taxation. Over the years as the internal revenue code evolved the service seems to ignore the tax advantages in lieu of the societal benefit of people saving and protecting themselves. Keep in mind there has been an uneasy alliance between the government and the insurance industry. After all the insurance industry buys government bonds for their portfolio that helps float the US debt. Recently, the cash deferred build up inside annuities and life insurance has been under scrutiny as the government seeks sources of revenue to offset the US debt.Answered on June 8, 2013+01+1 this answer
0flag this answerview more answers by David Racich
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaThe Internal Revenue Code reflects the will of Congress. The underlying laws consider saving for retirement to be a worthwhile endeavor. The deferral granted to an annuity means that the taxes will be paid when the money is withdrawn. However, the effect of the deferral accelerates the growth of the annuity. There are ways to not only defer taxes but also not have to pay them when you withdraw them.Answered on September 3, 2014flag this answer
21750 POINTSview profileJim WinklerCEO/Owner, Winkler Financial Group, Houston, TexasThat is a great question! There are a couple of reasons why the taxes are deferred on your annuity. The first is that by putting the taxes off until you take the payments, you have an incentive to save for your retirement. That helps everybody, as there is theoretically less need for public assistance programs, and so less need for Government funding of them. So the laws were written to give you that incentive. The second reason is that you haven't accessed the money, and therefore shouldn't have to pay tax on what you haven't gotten paid from. Like a capital gain tax, you don't pay it, until you've realized and capitalized on, the gain. I hope that helps, thanks for asking!Answered on September 3, 2014flag this answer
Did you find these answers helpful?
Yes
No
Go!
Add Your Answer To This Question
You must be logged in to add your answer.
.JPG){kind=avatar}
