Tax Deferral

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Tax Deferral and Retirement Income

A tax-deferred annuity is a retirement strategy that grows cash value over time to provide a steady income.

Benefits of a Tax-Deferred Annuity

Can retirement money be tax-deferred? Your retirement income can be tax-deferred if you have the right strategy. For example, retirement income can be protected with index universal life insurance (IUL). This kind of insurance doesn’t tax its cash value. It can provide both tax-deferred income and death benefits.  Our goal is to help retirees feel confident about their retirement strategy. At Flying Eagle Financial, we help clients prevent their money from losing its value.

Taxes On Withdrawals

A fixed index annuity (FIA) purchased with after-tax dollars may offer tax benefits. An FIA consists of two main phases: accumulation and distribution. FIA qualifies for a tax advantage during the accumulation phase. Earnings are tax-deferred. Taxes are only due when you withdraw the funds. Fixed index annuities usually only tax ordinary income, not capital gains. You might be able to earn more in retirement by reducing your liabilities. We can assist you with tax strategies for retirement.

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Deferred Annuities vs. IRAs, and 401(k)s

  • Fixed index annuities provide greater flexibility and have fewer restrictions. 
  • The contributions to the FIA are unlimited. 
  • You can also roll over 401(k)s and IRAs into index annuities in certain situations. 
  • Each year, the money you earn compounds tax-free*.
  • Contributions that are tax-free* allow you to keep everything you earn.

Tax-Deferral and Early Retirement

How do annuity taxes affect early retirees? If you qualify, you may receive a bonus tax benefit. 

  1.  Must be under 59 1/2 years old.
  2. A 401(k) plan with lump-sum payments.
  3. You must have received either retirement or a severance package that included a lump sum payment.

If you meet all three requirements, you may qualify. Also, taxes may not apply if you roll over your money into an annuity policy.

Connect with our team

We can help you decide whether a tax-deferred annuity is right for you.

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