The tax rates will differ for qualified and non-qualified plans. An annuity that is tax-qualified is one that funds a qualified retirement plan. When this qualified annuity is used it follows the same tax laws as these retirement vehicles, such as: Tax deferral during the gestation period The earnings will not be taxed until withdrawal A non-qualified annuity is bought with after-tax dollars, but the benefit of tax deferred savings still applies.

Annuity payments to beneficiaries are subject to the same taxes that would have been collected from you.

Commissions. Check the broker commissions – even though the insurer is the one who gives you the annuity, the broker may make anywhere from 3 to 8% which can substantially cut into your money. The Company. Make sure that the company that you are buying the annuity from has a good track record. There is no agency (such as the SEC) that checks the procedures of these companies, so the reputation of the company is of the utmost importance. Compare and Contrast. Check the amount of payments that you will receive from different companies. This may vary greatly from company to company – however, do…

Commissions. If the commission is paid in a front-end load, this can reduce the amount of your initial investment. A no or low-load annuity contract is preferable. Penalties. The surrender charges usually only apply for the first 7 years, starting at 7% the first year, declining 1% per year until after the 7th year, when these surrender charges no longer apply.

Maintenance Fees Mortality Fees Investment Advisory Fees These fees should be stated plainly in the prospectus.