Annuities
What is the tax feature that makes annuities attractive for retirement saving?
Answer and explanation
Answer: C. An annuity's growth is not taxed while it remains inside the contract, which lets the value compound untaxed until it is taken. Purchase payments to a non-qualified annuity are not deductible, income payments carry a taxable portion, and no estate tax exemption arises from the contract form.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, tax-deferred growth and retirement income
More annuities questions
- During which annuity phase does the contract value grow before scheduled income payments begin?
- How are accumulation units converted in a variable annuity when the contract owner chooses to annuitize?
- How does a fixed indexed annuity credit interest?
- In an annuity contract, whose life measures the income payments?
- The index referenced by a fixed indexed annuity falls sharply in a year. What ordinarily happens to the contract value?
- What benchmark rate is used in variable annuity payout calculations to determine whether monthly annuity payment amounts increase or decrease?
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