News // Tax Deferred Annuities

Tax deferred annuities should be considered as part of one's overall financial plan, especially as one approaches retirement. Interest on certificates of deposit (CDs) and income on mutual funds are taxed annually. The owner receives a 1099 at each year's end. However, with a tax deferred annuity, there is no annual income tax. Money in a tax deferred annuity compounds faster because interest is earned on the initial deposit, interest is earned on the interest paid on the annuity and interest is earned on the amount that would have been paid in taxes to the federal government.  Basically, you pay no taxes on the amount in your tax deferred annuity while the funds are compounding. You may pay lower taxes on occasional withdrawals because you decide when to take such withdrawals from a tax deferred annuity and in what tax year.