Deferred Annuities

We continually invest in innovation. Please ask about our future product offerings.

Important Information about Deferred Annuities

Tax Status of Annuities

Qualified – Qualified Annuities are purchased with before-tax dollars through tax-qualified retirement plans, including the following:

• IRAs
• TSA (403-b)
• SEPs (Simplified Employee Pension Plan)
• Pension Plans (Defined Contribution and Defined Benefit)

Non-Qualified – Non-Qualified Annuities are purchased with after-tax dollars and the premiums are not tax deductible. Some important things to know include the following:

• Income taxes have been paid on the principal.
• Funds may be in a checking or savings account.
• These annuities are often funded with transfers from CDs, mutual funds, stocks, or money market funds.
• There are no tax deferrals on corporate-owned annuity earnings.
• Life insurance proceeds are often placed in annuities, to be held tax deferred until payment at a later time and to provide immediate income for beneficiary’s lifetime or for a certain period.

*Qualified and Non-Qualified Money cannot be deposited into a single annuity.

Just Say NO to 1099’s

Nothing beats the power of tax-deferred growth. If you are just reinvesting the interest from your CD, you’re losing out on 33% of your growth.

Unlike a bank CD, an annuity offers interest that grows tax-deferred. No income taxes are due until the funds are withdrawn. The graph below shows the difference this tax-deferred advantage can make. If you are still paying taxes on your interest, you’ll be pleased to know that there is a sensible alternative.

When does 3% = 4.48%? When you’re in a GILICO tax-deferred annuity!

This table shows you at a glance the interest rate a bank CD (or other taxable savings product) would have to generate to equal the net earnings of a tax-deferred annuity. Unless your CD is an IRA, the interest is taxable even if it is left on deposit with the bank.

Table of “Equivalent After Tax Yields”

Formula for After Tax Yields:

GILICO Annuity Rate
1 – tax rate
= Equivalent After Tax Yield

Example:
3% Annuity Rate
1 – .33 = .67
= 4.48% Equivalent Yield

Are you Tired of Paying Taxes on Your Social Security Benefits?

Did you know that you could be paying taxes on up to 85% of your Social Security benefits?

If your combined income (50% of your Social Security payments, plus all other income (including tax-exempt interest)) is between:

Married filing jointly:
$0 – $32,000: None of your Social Security benefits are taxed
$32,001 – $44,000: Up to 50% of your Social Security benefits are taxed
$44,001 and over: Up to 85% of your Social Security benefits are taxed

Case Study:

*Optional Income

In the above example, the total income of $50,000 exceeds the $44,000 limit for married couples, and therefore this family is paying tax on 85% of their Social Security benefits. If they aren’t living off their investments, a GILICO annuity is a much better place for their money.

Do You Want Your Heirs to Get More of Their Fair Share

Another important benefit of an annuity becomes apparent should the annuitant or owner pass away. At death, the value of a GILICO annuity (with properly designated beneficiary other than the annuitant’s estate) is passed on to heirs without the expense, delay, and frustrations of probate.

Proceeds from a non-IRA bank CD, on the other hand, can be subject to:

• Loss of Money – probate administrations fees up to 10%
• Time & Frustration – delays up to two years while the courts settle the estate, and
• No Privacy – potential public inspection because a decedent’s assets are public record

What Happens to My Money If I Die?

When Owner and Annuitant are the same person, the money goes directly to the BENEFICIARY

Options if HUSBAND or WIFE is Sole Beneficiary:

• • Change Name of Owner – Annuity Continues – No Tax Due (Spousal Continuation)
  • Cash Annuity In – May have a Company Penalty – Taxes Are Due
  • Periodic Pay Out – No Company Penalty – Tax Due As Received

Options if Any OTHER PERSON or ENTITY (Estate,Trust, etc.) is beneficiary:

• Cash in – May have a Company Penalty – Taxes are Due
• Periodic Pay Out – No Company Penalty – Tax Due as Received
  • Payout Period May Not Exceed Life Expectancy of Individual Beneficiary
  • The Decision Must Be Made Within 60 Days After Death of Annuitant or Owner
  • Payments Must Begin Within 1 Year of Death

IMPORTANT INFORMATION FOR ANNUITY DEATH BENEFITS

• Annuities Avoid PROBATE Costs and Delays
• Annuity Value is Includable for Estate and Inheritance Taxes.
• Interest Income is Received as “Income in Respect of Decedent.”
• Deduction is Allowed Against Income for Estate and Inheritance Taxes.
• The Only Way to Get An Asset Out of An Estate Is to Give It Away.
• The Decision is one of “Control & Pay Tax” or “No Control & No Tax.”

How Annuities Compare to “the Competition”