Tax Deferred Annuity - What are tax deferred annuity plans?

eze ago and everyone my name is derek

ifasi I'm the owner of a Fawcett

Financial Group today's topic I want to

discuss with you deferred annuities are

the different types of deferred

annuities why somebody may want to get

involved with a deferred annuity and

kind of the pros and cons of each

deferred annuities are income for later

it's not it's not immediate income so

what happens as individuals typically go

into deferred annuities if they

understand okay I'm not going to be

retiring right now but maybe in you know

fifteen years ten years five years

however many years out there and they

want to they want some sort of

guaranteed retirement income at a later

date and time so what happens is

essentially the money that you place

within a deferred annuity is going to

have certain gains that will grow

deferred and and meaning that it's think

about it like a bucket of money and

anytime that that bucket of money depend

upon one is tied to whether it's a fixed

rate whether that's a you know an

indexed type rate whatever that is will

grow anytime that you've received gains

when it comes time for that

that's certainly that certain date and

time that you want to retire then you

have certain options to have unlimited

streams of income and it's contractually

guaranteed by the by the terms of the

contract through the through the

insurance company that you choose so

understand that anytime you see a

deferred annuity it's not an immediate

annuity with an immediate annuity

someone places their money in the

immediate annuity understanding that

okay I want to retire exactly in thirty

days and this is the lump sum that I

want to give the insurance company

what's the most amount of income the

insurance company could give me it's

completely different you're you're just

trying to place money within the annuity

realm within some of the very favorable

contractual guarantees out there but

understanding okay it's gonna take some

time for my money to grow and to really

act favorable for me so there's there's

a really there's a couple really cool

types of annuities out there and now as

you see she pulled up on my screen that

I want to show you the difference

between utilizing a deferred annuity or

just a traditional IRA that's involved

with mutual funds so as I said over here

money an account will grow dependent

upon what the account value is tied to

so with the fixed annuity a fixed

annuity it's it's tied to a fixed set of

interest rates it's it's like a Treasury

bond or like a bank CD you have a set

amount a set rate during that and during

that that length of the contracts so if

you have a five year fixed annuity then

and let's say it's paying you two

percent then every year for the next

five years our go to percent is going to

be added into your bucket of money into

that and that initial starting starting

value now somebody might want to go into

a fixed annuity over traditional IRA

with mutual funds is because mutual

funds have a lot of fees involved with

them you have mutual fund related fees

you have advisor fees with an advisor is

managing that account you also have

something known as downward market loss

that could really hinder your retirement

accounts just like in 2008 the average

portfolio lost fifty seven percent so if

you had a traditional IRA versus a fixed

annuity to fix your new 'ti they used to

be these to be very attractive and the

80s the 90s not so much anymore because

why interest rates have hit rock bottom

so just kind of understand fixed annuity

it's just a fixed interest rate there's

nothing sexy nothing attractive about

that but it still gives you more

favorable rates of return than than a

typical Treasury bond that that's

currently paying you know less than 1%

right now now the next the next form of

deferred annuity is variable annuity and

whenever I compare a variable annuity

verse IRA mutual funds I tend to lean

more towards an IRA mutual funds if

you're setting it up you know through

through wealth accumulation specialist I

don't like variable annuities because I

believe that they have a lot of hidden

fees is what I'm just personally seen

with a lot of individuals that I've

called my office I have variable

annuities and you know after after we

find out what the hidden fees are we

would play the game you know let's let's

let's give the company a call and and uh

you know I'm able to ask whole slew of

questions to really open up the clients

mind that understanding variable

annuities it's tied to mutual funds have

an IRA is tied to mutual funds typically

the IRA has less and fees and a higher

potential for you to have gains within

their the variable annuity it's I mean

I'm really because of the fees and you

have the dowered the potential downward

market loss with them that's why I would

recommend that you

within ira mutual funds but you know

that's just speaking in very general

terms obviously it's a case-by-case

situation there are some good variable

annuities out there but just the ones

that I've dealt with on a personal basis

is the reason why I do not like them

then you have the index annuity okay

this is a great deferred annuity they

came out in the early 90s they used to

have very low cap rates what an index

annuity is is it's kind of like a fixed

annuity but rather than paying you a

fixed rate of return year by year the

company will pay you an amount that is

the correlates to upward market

movements so if you have a stock market

index let's say you're tied to an S&P

500 and the S&P 500 gained 10 percent

that one year but your cap rate is let's

say 8% for that given year then you will

be capture will only have seen 8% gain

into your account but if the S&P the

next year loses 20% your you are you

have a floor of 0% so you either going

to be gaining up to the cap or not

gaining anything so you understand your

principal is not at risk with a variable

annuity your principal is at risk so

just kind of understand that so index

annuities used to have very low cap

rates where they weren't that attractive

but then in 2008 there there was a

combination type annuity that involves

the index annuity with a with a sort of

lifetime income that you can never

outlive with with income riders and

that's known as the hybrid annuity

hybrid annuity I that is my favorite

product of them all because your actual

account value if you know that you're 15

years out ten years five years out from

retirement you could essentially take

money roll it over from you know your

IRA your cash accounts 401k you could

roll it over into a hybrid annuity or an

index annuity and have your account

value either gained with upper market

movements flat line whenever the market

does not you know goes down or does not

do anything so your so your principal

your account value staying preserved and

you're only receiving that compound

interest on that account and then when

you're ready to turn on your income

let's say your age 62 and you want to

turn on or turn on age 67 or 65 whatever

that is you have a secondary contractual

guarantee over there known as the income

which gives very very favorable rates of

return could be upwards of you know 7%

compound interest and there there's a

calculation that that is determined with

how you could actually receive lifetime

income without ever losing control of

your money so you know there's there's

some really fascinating things with

these deferred annuities just understand

that you're deferring your money you're

deferring turning on an income for a

later date and time and then there's

some really great contracts out there

you have hundreds of different contracts

per type of annuity so there's hundreds

different contracts for the fixed

annuity hundreds of different contracts

for the hybrid for the index so just you

know kind of understand that you should

not have a one-size-fits-all type

mindset and you need to become educated

and find out what your options are if

you understand what your goals are one

of the things I recommend give our 1-800

number a call we implemented 24/7

customer service where you give us a

call we'll educate you you know we'll

send you some different information if

you're interested in an annuity we have

certain softwares where certain

proprietary relationships where we get

you much higher contractual agreements

than other types of advisors out there

by by just understanding these contracts

understanding how these contracts work

and really knowing how to position you

in a very favorable in a very favorable

way so once again my name is derek

ephah' down this cool-looking cartoon

guy right over there and you know please

give us a call I really hope that you

found some value in this video and be

able to look out for some of my other

videos thanks guys