With advisory annuities, taxes are generally deferred until clients begin making withdrawals. This helps optimize earnings by allowing their money to potentially grow and accumulate faster than it could in many taxable accounts. And, when clients begin withdrawing retirement income, they may be in a lower income-tax bracket, which would reduce the tax burden during their retirement years. In addition, annual contribution limits in tax-deferred retirement accounts such as 401(k)s and IRAs can be an obstacle for those who need to catch up on saving for retirement. Advisory annuities have no annual contribution limits, giving clients the opportunity to save more tax-deferred money for the future.

It’s crucial in today’s environment to look beyond tax rates to understand how lesser-known taxes, often referred to as "stealth taxes" can potentially have an unforeseen impact on clients' assets during retirement. Taxation of Social Security retirement benefits and the Net Investment Income Tax (NIIT) are examples of stealth taxes. Additionally, distribution activity that increases adjusted gross income (AGI) may move clients into a different income tax bracket and cause an increase in Medicare premiums. These are just a few considerations that if not properly planned for, can increase income-tax liability, and reduce lifetime after-tax retirement income for your clients. Encourage your clients to consult with an independent tax advisor and perhaps consider adding an advisory annuity to their overall financial plans. Advisory annuities offer features that provide clients with growth potential and tax deferral to help accumulate retirement savings and address some of the stealth tax hits clients may take in retirement.

Many clients know they can expect to pay capital-gains taxes on the growth of the equities portion of their portfolios. However, they can be surprised to find out that some of their equity investments generate annual income taxed at ordinary income-tax rates—regardless of whether the client wants or needs that income. Paying more in taxes during years of accumulation can significantly impact the growth of clients’ portfolios, which over time, can potentially reduce the amount of money they keep.

Locating a portion of your clients’ portfolios into our advisory annuities allows them to tap into the power of tax deferral, which can be an important wealth accumulation tool when saving for retirement.