Deferred annuities act like other retirement funds. You contribute a set amount each month on a tax-deferred basis. When you reach the age of 59.5, you can start making withdrawals. If you try to take money out of an annuity before that age, you’ll face a 10 percent withdrawal tax penalty in addition to the income tax.
You also can’t borrow against an annuity. You can take a loan from a 401(k) without damaging your credit score. But funds that you put into an annuity remain locked up until the age of 59.5. So when you’re considering buying an annuity, do make sure that you’re packing away money that you know you won’t need except in future installments. In the meantime, you should have access to other liquid assets.
Chapters - Retirement
- The Four Stages of Retirement
- When Can You Retire?
- How Much Will You Need to Save Before You Can Retire?
- How to Create a Retirement Savings Habit
- The Benefits and Costs of a Pension
- Retiring with a 401(k)
- The Benefits of a 401(k) Plan
- The Costs of a 401(k) Plan
- Vesting a 401(k) Plan
- 4 Types of 401(k)
- Rolling Over Your 401k
- Leave Your Old 401(k) with Your Old Employer
- How to Rollover Your 401(k)
- Individual Retirement Accounts—IRAs
- How an IRA Works
- Working Your IRA With Your 401(k)
- 3 Types of IRAs
- SEP IRA Limits
- Annuities
- The Benefits of an Annuity
- Deferred Annuities
- Immediate Payment Annuities
- Fixed Index Annuities and Variable Rate Annuities
- Qualified and Non-Qualified Annuities
- Changing Your Annuity—The Section 1035 Exchange
- The Limits of a 1035 Exchange
- How to Plan for Your Retirement
- How to Start Planning Your Retirement
