PENSIONS & ANNUITIES
Pension is often referred as Individual Retirement Account, known as IRA. It is an investing tool used by individuals to earn and earmark funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.
Traditional and Roth IRAs are established by individual taxpayers, who are allowed to contribute 100% of compensation (self-employment income for sole proprietors and partners) up to a set maximum dollar amount. Contributions to the Traditional IRA may be tax deductible depending on the taxpayer’s income, tax filing status and coverage by an employer-sponsored retirement plan. Roth IRA contributions are not tax-deductible.
An Annuity is a contract between a purchaser and an insurance company in which the insurance company promises to make lifetime periodic payments to the purchaser, starting immediately (Immediate Annuity) or at some time in the future (Deferred Annuity). To set up an annuity, our clients usually use money from their Saving Accounts, Mutual Funds, CDs, Stocks and Bonds. The annuity may also be funded by existing IRA, 401(k), 403(b), Keogh or HR-10.
The greatest single factor that motivates people to buy either deferred or immediate annuities is their need for guaranteed retirement income, which will last for the person lifetime.