|
|
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
|
About Us
|
News
|
Alerts
|
Articles
|
Caveat Emptor
|
SNSFE News
|
Contact
|
Search
Register
|
Free Opinion
Sponsored by James J. Eccleston, an attorney representing stockbrokers, financial planners and
investors nationwide in arbitration, litigation and regulatory matters, and a shareholder with the law firm
Shaheen, Novoselsky, Staat, Filipowski & Eccleston
P.C.(www.snsfe-law.com). 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 advisor when building and protecting your wealth.
All content Copyright © 2008 Advocate Capital Management, Inc. except where noted. All rights reserved.
20 North Wacker Drive, Suite 2900, Chicago, Illinois 60606
Telephone: 312-621-4400 | Fax: 312-621-0268
|
|
|
|
