Monday, November 24, 2008
Tax Deferred Fixed Annuities www.legacyannuities.com
COMBINING THE SAFETY OF FIXED ANNUITIES WITH THE ADVANTAGE OF TAX-DEFERRED GROWTH PROVIDES MANY CONSERVATIVE INVESTORS WITH A WAY TO INCREASE THE NET AFTER-TAX GROWTH OF THEIR EARNINGS WITHOUT EXPOSING THEIR PRINCIPAL TO MARKET RISK. TO ILLUSTRATE THIS ADVANTAGE CONSIDER TWO $50,000 SUMS COMPOUNDING AT THE HYPOTHETICAL RATE OF 6%. (PLEASE NOTE THAT WE ARE SELECTING 6% TO ILLUSTRATE THE EFFECT OF TAXATION ON GROWTH ONLY. ACTUAL INTEREST EARNINGS OF FIXED ANNUITIES OR OTHER INVESTMENTS COULD BE LOWER OR HIGHER THEN THIS RATE.)
WITH TAXES BEING PAID EACH YEAR THE CURRENTLY TAXED SUM WOULD GROW TO $76,322 AFTER 10 YEARS. BUT IF THE TAXES ARE DEFERRED THE EFFECT OF COMPOUNDING IS MORE PRONOUNCED SO THE TOTAL AT THE END OF 10 YEARS IS $89,542. EVEN IF ALL OF THE TAXES WERE PAID AT THIS TIME, $78,470 WOULD REMAIN. THE NET EFFECT IS THAT AFTER TAXES OVER $2,000 MORE IS LEFT WHEN INCOME TAXES WERE DEFERRED FOR 10 YEARS.
INSTEAD OF 10 YEARS LETS ASSUME THAT THE ENTIRE $89,542 SUM CONTINUES TO GROW TAX-DEFERRED FOR 20 YEARS. NOW THE TOTAL WOULD BE $160,355. IF ALL OF THE TAXES WERE PAID AT THE END OF THIS PERIOD, $129,456 WOULD REMAIN. THAT’S ALMOST $13,000 MORE THEN IF THE INCOME TAXES WERE PAID EACH YEAR.
WHAT IF THE TAXES WERE DEFERRED FOR A TOTAL OF 30 YEARS? THE ORIGINAL SUM OF $50,000 WOULD HAVE GROWN TO $287,175. EVEN AFTER PAYING ALL OF THE INCOME TAX ON THIS GAIN, THERE WOULD STILL BE A TOTAL OF $220,765 DOLLARS REMAINING. CONTRAST THIS TO THE $177,830 THAT IS LEFT WHEN TAXES ARE PAID EACH YEAR. OVER THIRTY YEARS, TAX DEFERRAL GENERATES ALMOST $43,000 MORE AFTER ALL OF THE INCOME TAXES ARE PAID!
REMEMBER, WITH AN ANNUITY YOU PAY THE INCOME TAX ON YOUR INTEREST EARNINGS ONLY WHEN YOU CHOOSE TO ACCESS YOUR SAVINGS. SO YOU HAVE THE ADVANTAGE OF CONTROLLING WHEN THE TAXES WILL BE PAID.
COMBINING THE SAFETY OF FIXED ANNUITIES WITH THE ADVANTAGE OF TAX-DEFERRED GROWTH PROVIDES MANY CONSERVATIVE INVESTORS WITH A WAY TO INCREASE THE NET AFTER-TAX GROWTH OF THEIR EARNINGS WITHOUT EXPOSING THEIR PRINCIPAL TO MARKET RISK. TO ILLUSTRATE THIS ADVANTAGE CONSIDER TWO $50,000 SUMS COMPOUNDING AT THE HYPOTHETICAL RATE OF 6%. (PLEASE NOTE THAT WE ARE SELECTING 6% TO ILLUSTRATE THE EFFECT OF TAXATION ON GROWTH ONLY. ACTUAL INTEREST EARNINGS OF FIXED ANNUITIES OR OTHER INVESTMENTS COULD BE LOWER OR HIGHER THEN THIS RATE.)
WITH TAXES BEING PAID EACH YEAR THE CURRENTLY TAXED SUM WOULD GROW TO $76,322 AFTER 10 YEARS. BUT IF THE TAXES ARE DEFERRED THE EFFECT OF COMPOUNDING IS MORE PRONOUNCED SO THE TOTAL AT THE END OF 10 YEARS IS $89,542. EVEN IF ALL OF THE TAXES WERE PAID AT THIS TIME, $78,470 WOULD REMAIN. THE NET EFFECT IS THAT AFTER TAXES OVER $2,000 MORE IS LEFT WHEN INCOME TAXES WERE DEFERRED FOR 10 YEARS.
INSTEAD OF 10 YEARS LETS ASSUME THAT THE ENTIRE $89,542 SUM CONTINUES TO GROW TAX-DEFERRED FOR 20 YEARS. NOW THE TOTAL WOULD BE $160,355. IF ALL OF THE TAXES WERE PAID AT THE END OF THIS PERIOD, $129,456 WOULD REMAIN. THAT’S ALMOST $13,000 MORE THEN IF THE INCOME TAXES WERE PAID EACH YEAR.
WHAT IF THE TAXES WERE DEFERRED FOR A TOTAL OF 30 YEARS? THE ORIGINAL SUM OF $50,000 WOULD HAVE GROWN TO $287,175. EVEN AFTER PAYING ALL OF THE INCOME TAX ON THIS GAIN, THERE WOULD STILL BE A TOTAL OF $220,765 DOLLARS REMAINING. CONTRAST THIS TO THE $177,830 THAT IS LEFT WHEN TAXES ARE PAID EACH YEAR. OVER THIRTY YEARS, TAX DEFERRAL GENERATES ALMOST $43,000 MORE AFTER ALL OF THE INCOME TAXES ARE PAID!
REMEMBER, WITH AN ANNUITY YOU PAY THE INCOME TAX ON YOUR INTEREST EARNINGS ONLY WHEN YOU CHOOSE TO ACCESS YOUR SAVINGS. SO YOU HAVE THE ADVANTAGE OF CONTROLLING WHEN THE TAXES WILL BE PAID.
Labels: www.legacyannuities.com
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