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191 Don’t Make Me Say I Told You So

qualified account is taxed as ordinary income. Let’s look at two
different investments made in IRA accounts:

Stock Mutual Fund* Annuity*

Investment $100,000 $100,000

Value 10 Years Later: $200,000 $200,000
Total Withdrawl: $200,000 $200,000

Taxes Due on Withdrawl: $60,000 $60,000

* Assumes a 30% tax bracket on ordinary income.

So while there are no tax benefits from investing in an annuity

in your IRA or other qualified account, there is no drawback either.

Be Sure to Remember Required Minimum

Distributions

After age 70½, you are required to start taking distributions from
your qualified plans and IRA accounts. This amount must be taken

each year, and is calculated using a formula based on your life
expectancy. If you invest money in an annuity in a qualified plan,

be sure that you will have access to the money you need each year
for your required minimum distribution (RMD). Make sure that you

will not be subject to surrender charges, and that the distributions
will not adversely affect the annuity’s guarantees.

Chapter 4: Annuities

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