|
|
|
|
Variable Annuities' Latest Feature Is To Pay Beneficiaries' Taxes
As compared to other investments, the tax treatment of gains resulting in variable annuities has not been attractive. That is because gains, when paid out, are taxed at ordinary income rates as high a 39.6%, compared to the top capital gains rate for other investments at 20%.
To address this situation, annuity companies have introduced the so-called "Enhanced Earning Benefit". Subject to some material limitations, the contracts provide that the annuity will pay taxes on the gains to the beneficiaries.
Of course, the expenses on variable annuities already are high, and this feature adds between .15% and .40% to the annual cost. Moreover, if there are no earnings, the feature has no value.
Source: Wall Street Journal, April 9, 2001
|
Sponsored by James J. Eccleston. This Web site contains material of general interest. It is neither intended to, nor constitutes, either legal advice or investment advice.
Always consult an attorney and/or investment adviser when building and protecting your wealth.
All content Copyright © 2010 Advocate Compliance Partners, Inc. except where noted. All rights reserved.
One North Franklin Street, Suite 2620, Chicago, IL 60606
Telephone 312-332-0000 | Fax 312-332-0003
|
|
|
|
|
