Making Retirement More Comfortable with an Immediate Annuity

One who is near to retirement for him an immediate annuity may be a good option to invest the lump sum amount of money accumulated through a deferred annuity, a retirement plan or other savings options. Immediate annuity is an annuity that provides security and a stream of income payments starting with immediate effect for rest of your life or for a specific period of time that you select.

The fixed immediate annuity provides the feature that you will get fixed income payments or the payments you will receive will never change. The series of fixed payments are based on the amount you contribute and the interest rate at the time of purchase. To purchase an immediate annuity you have to make a one- time payment and distribution typically starts within a month and at a maximum can be delayed for up to 1 year.

Under current tax law, a portion of each payment received from a non-qualified immediate annuity is tax free until your total premium is recovered. The remainder of each payment will be taxed as ordinary income in the year received.

There are also various ways or sources to purchase an immediate annuity like a certificate of deposit (CD), funds from a tax-qualified defined benefit, 401k or IRA account or monies accumulated in a deferred annuity account.

Many investors and retirement planners have benefited from immediate annuity products, although selection of the right insurance company and plan based on your unique requirements is very important.

A single premium immediate Annuity is a very flexible annuity and is also suitable for various income needs. Mostly they are used to fund income requirements while in retirement. The single premium annuity can also be used to provide a source of income to dependents after the death of annuitant or to provide specific child support to consolidate assets and turn them into an income stream or to fund specialized education for a disabled child.