Fixed Index Annuity

Tax Savings

Fixed Index Annuity

Fixed Index Annuities
Benefits of Fixed Index

Fixed Index Annuity

This type of tax deferral can be a lucrative tool to boost your savings since it allows the capital in your retirement accounts to accumulate more quickly. This is where Fixed Index Annuities can have greater financial strength than Fixed Annuities.

The key difference between Fixed Annuities and Fixed Index Annuities is that the latter gives you additional returns when the underlying index performs well. This gives you the potential to enjoy higher returns compared with a standard Fixed Annuity. Thanks to the compounding effect, your overall annuity pot grows tax deferred and will provide extra income for your retirement. A Fixed Index Annuity can help you to grow your savings at a faster rate compared with a Fixed Annuity when the markets perform well.

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20 Year Historical Example

Annual changes to the S&P 500 Index Index annuity value for a 1-year point-to-point strategy with a 5.0% annual cap rate Minimum Guaranteed Surrender Value Fixed Index Annuity
Fixed Index Annuity

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Our Fixed Index Annuity


A $100,000 initial investment compounded at a 4% annual rate would grow to a pre-tax value of $219,112 over a 20 year term. This same investment would then be worth $179,805 after tax assuming an ordinary income tax rate of 33% at the end of the term. To understand how a Fixed Index Annuity could benefit you, it is recommendable to speak to a financial professional about your investing options.

No Annual Contribution Limits

Interest accumulates at a fixed rate over a set period of time with a fixed annuity.

Fixed Index Annuity

While a Fixed Index Annuity might seem similar to a standard IRA or 401(k) due to the tax deferral benefit, a big advantage of a FIA is there are no contribution limits imposed by the government. While IRAs and 401(k)s have annual limits set by the IRS, with a Fixed Index Annuity you have the freedom to invest as much as you want.

This means with a Fixed Index Annuity you can benefit from the unlimited potential of compounded tax-deferred growth. Fixed index annuities thus give you an exponentially higher earning potential compared with traditional IRAs and workplace 401(k)s.

Fixed Index Annuity

When Should You Buy A FIA?

It can be well worth retirement savers opting for a deferred income and a longterm investment from your annuity product to harness the full power of compounding. Investment professionals can help you select the best investment product for you.

No Capital Gains Tax

Once you start withdrawing income from your Fixed Index Annuity, this will usually be taxed as ordinary income rather than capital gains. Income from a Fixed Index Annuity is usually paid as regular payouts spread over your lifetime.Your income payments are a combination of the interest earned and your principal.

If you purchased your annuity with pre-tax funds, your income payments will be fully taxed as income. For example, if you rolled over money from a 401(k) or IRA then your full withdrawals will be subject to ordinary income tax.

If you purchased your annuity with after-tax dollars, you usually only need to pay tax on the earnings. In this case your principal will not be subject to tax during your retirement.

If you're planning to earn an income from your FIA at an earlier age different rules may apply. If you do decide to start withdrawing an income from your Fixed Index Annuity before the age of 59½ you may have to pay an additional 10% federal tax. We recommend you check with your investment manager or a financial professional to understand if this applies to your personal circumstances.

Tax Savings Investor is here to assist with your annuity purchase. Call us today at (619) 322-1404 for a free consultation.


Fixed Index Annuity

Tax Deferral

When you invest in a fixed index annuity, you can either choose to start receiving an immediate annuity income shortly after your initial investment or after a longer period of accumulation. In both cases your annuity grows taxdeferred and you only start to pay tax on interest earned when you begin receiving an income from the annuity product.

Damian Gerry -

NPN: 19473448 License: 4038677

Tax Savings Investor

 Fixed Index Annuity

Fixed Index Annuity

Damian Gerry
NPN: 19473448
License: 4038677

(619) 322-1404

When Should You Buy A FIA?

Fixed Index Annuities (FIAs) are essentially hybrids of other types of annuities and utilize the beneficial elements of each.

Fixed Index Annuities (FIAs) give you the protection of Fixed Annuities with the opportunity for significant growth utilizing different strategies, also known as Index Annuities.

An FIA is also tied to major stock market indices, such as the S&P 500 and NASDAQ, although your money is not invested in or exposed to the stock market. When the related index performs well, so does the annuity. When the market starts to decline, you do not have to worry about losing share value like investors in the market; with a Fixed Index Annuity, you're completely protected from market losses.

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