SoCali4niaInsurance- Brian J Stidham

Fixed Annuities

fixed indexed annuity

Predictable Investment Returns and Guaranteed Minimum Rates

Fixed Annuities promise a specific, guaranteed rate of return on the money in the account

Fixed annuities promise to pay a guaranteed interest rate on the investor’s contributions. The contract also guarantees that it will pay no less than a minimum rate of interest.

Investors can buy a fixed annuity with either a lump sum of money or a series of payments over time. This period is known as the accumulation phase. During the accumulation phase, the account grows tax-deferred.

The account holder annuitizes the contract following the end of the contract term period.

Distributions are taxed based on an exclusion ratio. This is the ratio of the account holder’s premium payments to the amount accumulated in the account that is based on gains from the interest earned during the accumulation phase.

The premiums paid are excluded and the portion attributable to gains is taxed. This is often expressed as a percentage.

This situation applies to non-qualified annuities, which are those not held in a qualified retirement plan. In the case of a qualified annuity, the entire payment would be subject to taxes.

Questions or Comments

I welcome your questions or comments. Thank you!


(951) 204-2745