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Tag Archive: what is an immediate annuity

Taxation of Deferred and Immediate Annuities Explained

John L. Olsen

In the workshops and classes I teach, I often remark that “one good thing about deferred annuities is that they get tax deferral (that the interest earned is not taxed until it is distributed in a withdrawal or surrender); one bad thing about them is that they get tax deferral”. That’s not merely a lame joke. It’s a recognition that tax advantages always come with a cost. In the case of deferred annuities, the “cost” of tax deferral is twofold: All distributions from any annuity,...

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What Is The Purpose Of An Immediate Annuity?

Stan The Annuity Man

Question: Why would anyone buy an immediate annuity?  What’s the purpose of it?  Isn’t it just getting your money back? from Taylor G. in Los Gatos, California Answer: Interesting questions Taylor, but very good ones.  An immediate annuity is formally called a Single Premium Immediate Annuity, and also known as an income annuity.  It is the original annuity product and was first introduced in Roman times. People buy immediate annuities because they are looking for a pension type income stream.  They want to make sure...

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