Learning Center

A fixed annuity is a straightforward insurance contract offering a guaranteed fixed interest rate on your investment. By putting your money into a fixed annuity, you lock in a stable return with insurance companies committing to pay back your principal plus interest over the contract term. This retirement savings product stands out for its simplicity and reliability, ensuring predictable financial growth without the complexities of other annuity types. Fixed annuities are also known as MYGAs or multi-year guaranteed annuities. Interest is typically compound interest calculated based on the latest account value, but there are a few MYGAs with “simple” interest calculated based on initial principal value. Also, the tax-deferred growth benefits of MYGAs are powerful.

A fixed index annuity combines the safety of guaranteed returns with the potential for higher gains linked to a stock market index, without direct market exposure. The gains linked to a stock market index are called “interest credits,” which actually compound on the annuity owner’s beginning of the crediting period account value. This product offers a balanced approach, securing and guaranteeing your principal while allowing for growth opportunities based on equity market performance, providing a strategic blend of security and potential upside. Interest credits also compound on the FIA owner’s account value in a tax-deferred manner. When an FIA’s reference equity index declines, the interest credit is zero, causing no decline in the annuity owner’s account value, hence the principal is always guaranteed.

MYGA and FIA annuities offer a tax-deferred growth advantage, allowing your interest to accumulate without immediate tax implications until funds are withdrawn. Unlike savings accounts or CDs, which require annual tax reporting of gains, fixed annuities delay these tax obligations. This feature benefits all investors by enabling interest to compound over time. It`s particularly advantageous for those in a higher tax bracket upon investment who anticipate being in a lower tax bracket upon withdrawal, such as during retirement.

PlanEasy offers fixed annuities known as MYGAs and fixed index annuities known as FIAs.

White Glove Service: Annuity customers interact directly with PlanEasy principals, who offer industry-leading white glove service by answering any and all questions and executing the entire annuity application and funding process on the customers behalf - we go to bat for you. Ask for references. Our customers have come away extremely impressed.

Unmatched Expertise: PlanEasy principals are annuity industry veterans that founded and ran a top annuity carrier called American Life, where PlanEasy team members designed and manufactured some of the best MYGA and FIA annuity products in the market today. Thus, they understand these annuity products better than any agent in the country.

Customer First: Also, PlanEasy’s customer ethos always puts the customer first. Learn more.

PlanEasy is a national insurance agency contracted with dozens of top life & annuity insurance carriers to sell their MYGA and FIA products. Almost every insurance carrier sells a significant portion of their MYGA and FIA annuities through the agency channel, which consists of agents like PlanEasy. PlanEasy and its individual agents are licensed in almost every state in the U.S. This is important because MYGA and FIA annuities are regulated as insurance products by the state, in which the annuity buyer lives.

MYGAs stand out as a preferred choice for those looking to mitigate risk and ensure a stable financial future. MYGAs grow in a tax-deferred manner, which means more of your money grows and compounds without paying taxes along the way. MYGAs are technically insurance products that offer a guaranteed interest rate, shielding investors from the unpredictability of the stock market, as well as guaranteed principal protection. This makes MYGAs a more secure savings option, appealing to individuals seeking peace of mind regarding their retirement savings. MYGAs are typically categorized into two main types: accumulation-focused and annuitization-focused. Accumulation-focused fixed annuities, such as MYGAs sold by PlanEasy, are designed to offer competitive interest rates. This feature enables investors to grow their savings more efficiently, making it an excellent strategy for building wealth over time. By choosing a fixed annuity, investors can enjoy the dual benefits of financial security and the potential for attractive account growth, all while avoiding the risks associated with market fluctuations.

MYGA buyer checklist

Most customers evaluate the following features of a MYGA, often in this order:

• Availability in Customer’s Home State (Annuity insurer/issuer must be licensed in owner’s home state to sell the annuity to that customer)
• Guaranteed Interest Rate % (Typically compounded; rate can vary by customer’s home state or by purchase amount)
• Issuer/Carrier Rating (AM Best rating denotes the financial strength of the insurance company issuing the annuity; typically lower-rated insurers offer higher rates)
• Product Term (1-10, 20 years earning the guaranteed rate; this term also aligns with the surrender charge period)
• Penalty-Free Withdrawals (Withdraw interest only, some % of account value or none; typically for the same product, having free withdrawals reduces the interest rate)

Other Features:

• Ownership Type (Natural Person, Company, Trust, Pension; Single vs. Joint)
• Tax Status (Qualified Before-Tax or Non-Qualified After-Tax)
• Funding Source (Bank Account, Replacing an Existing Annuity (1035 Exchange for Non-Qualified), Brokerage Account, 401(k), IRA, Roth IRA, Pension, Money Purchase Plan, etc.)
• Max Owner Age (Available to customers of this age or younger; also, remember the 59½ early-withdrawal 10% IRS penalty which applies to all annuities)
• Death Benefit (Typically account value to beneficiary, but be aware some death benefits are surrender value)
• Beneficiaries (Typically a spouse or non-spouse natural person(s) or corporation; primary and contingent)
• Rate Lock / Funding Timing Guidelines (Typically the rate on the day of app submission is honored as long as funds received within a certain period thereafter)
• Free Look Period (Certain number of days after issuance during which you can still cancel your annuity policy; can vary by state)
• Surrender Charge Schedule
• MVA (Market Value Adjustment on withdrawals above the penalty-free withdrawal amounts, if any, that also incur surrender charges; typical in most MYGAs)
• End of Term Options (Typically within X-day window before maturity, you decide to: withdraw proceeds, annuitize into income, transfer to another annuity or do nothing / auto renew same product at new rate)
• Any Fees (Typically none)
• Any Optional Riders & Their Costs (Additional features you can add with a cost/reduction in rate)
• Agent Commission (Paid by carrier to agent / PlanEasy)
• Principal Guaranteed (Always)
• Tax-Deferred Growth (Yes, unless annuity is owned by a company)

FIAs are a preferred choice for those looking to mitigate risk via guaranteed principal protection while having exposure to upside via participation in the increase (but not decline) of a stock market index, such as the S&P 500. Fixed index annuities are a favored solution in retirement planning, offering a strategic balance between safeguarding investments and fostering growth potential. Key advantages include ensuring your principal is safeguarded against market volatility, securing your savings from losses. Relative to MYGAs, FIAs offer the opportunity for higher returns linked to stock market indices like the S&P 500, without the risk of direct market exposure. Owners of FIAs avoid losses tied to declines in the reference equity index, ensuring their principal is always guaranteed. FIA funds grow tax-deferred without immediate tax implications, deferring taxes until withdrawals, which may lower your overall tax burden and enhance compounding. FIAs also provide different riders, such as lifetime income riders that can provide options to convert your balance into a consistent, guaranteed income stream, offering stability in retirement. FIAs offer various interest crediting methods, withdrawal options, and additional riders for a personalized financial strategy; PlanEasy recommends starting with the basic S&P 500 index annual point to point cap rate strategy, as that’s the base strategy for most FIAs; then you can compare performance illustrations of other strategies versus that one.

A qualified annuity refers to an annuity that is funded with pre-tax dollars as part of a retirement plan, such as an IRA or 401(k). Just like these retirement accounts mentioned, qualified annuities are subject to Required Minimum Distribution (RMD) withdrawal rules, where mandatory distributions must be taken by a certain age. The taxation of qualified annuities is distinct in that the money invested in these annuities has not yet been subjected to income taxes. When you start receiving distributions from a qualified annuity, all distributions (of funds including both principal and interest earned) are fully taxable as ordinary income at your income tax rate. This is because the contributions were made with pre-tax dollars, and the principle of tax deferral means that taxes are paid upon withdrawal and distribution of funds rather than at the time of contribution.

A non-qualified annuity is an annuity that is purchased with after-tax dollars. Unlike qualified annuities, which are bought within retirement accounts like IRAs or 401(k)s using pre-tax dollars, non-qualified annuities do not have the same contribution limits or Required Minimum Distribution (RMD) withdrawal rules dictated by retirement account regulations. The primary distinction lies in the source of funding: Non-qualified annuities are funded with money that has already been subjected to income taxes. The taxation of non-qualified annuities focuses on the earnings or interest component of the withdrawal. Since the principal amount invested in a non-qualified annuity was already taxed before it was contributed, only the earnings part of the annuity is taxable at your ordinary income tax rate when withdrawn; distribution of the principal portion is not taxed. This tax treatment is known as "LIFO" (Last In, First Out), meaning the most recently earned interest earnings are withdrawn and taxed first; after all the earned interest has been withdrawn, then the principal component of the withdrawal occurs and is not taxed. Note, an annuity bought within a Roth IRA is typically considered non-qualified, as such funds have already been taxed.

Withdrawing from an annuity before age 59½ often triggers a 10% early withdrawal penalty tax. This penalty affects the entire distribution for pre-tax qualified annuities. For non-qualified annuities, the penalty typically applies only to earnings and interest component of your withdrawal using the “LIFO” (Last In, First Out) approach, where all interest earned is considered withdrawn first before the principal component is considered withdrawn. Note that some exceptions may exist; please consult with a tax advisor to verify.

A will, or a "last will and testament," is a legal document that outlines how a person`s assets and responsibilities should be handled after their death. It serves several key purposes:

Asset Distribution: It specifies how the individual`s assets, including money, property, and personal items, are to be distributed among designated beneficiaries.

Executor Appointment: It appoints an executor responsible for carrying out the will`s instructions, managing the estate, and distributing assets.

Guardianship for Minors: For those with minor children, it names guardians to care for them if the parents pass away prematurely.

Debt and Tax Management: The will can direct the payment of any outstanding debts and taxes from the estate before other distributions are made.

Funeral Wishes: Although not always included, some wills detail the individual`s preferences for their funeral arrangements.

Charitable Donations: It can specify donations to charities or causes, reflecting the individual`s philanthropic desires.

Probate Avoidance: Properly structured wills can sometimes expedite the legal process, potentially avoiding a lengthy probate.

Without a will, you die "intestate," meaning state laws will determine how your assets are distributed, which might not align with your wishes. This can complicate and prolong the legal process for your heirs. Creating a will is crucial for ensuring your wishes are respected and can make the administrative process smoother for your loved ones after your passing.

Yes. You can refer to this list from PlanEasy: Estate Planning Checklist

An Advance Healthcare Directive, also known as a living will, is a legal document that outlines your medical care preferences in case you are unable to make decisions for yourself. This includes your wishes regarding treatments, life-sustaining measures, and end-of-life care. This document also appoints a healthcare proxy, which is the person who will have the authority to make healthcare decisions for you if you`re unable to do so, ensuring decisions are made by someone who understands your wishes.

A Durable Financial Power of Attorney is a legal document that authorizes someone you choose to manage your financial affairs. This can include handling banking transactions, paying bills, managing investments, and dealing with real estate matters. It remains effective even if you become incapacitated.

trust is a legal arrangement where one party, known as the trustor or settlor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. One type of trust is a revocable trust (living trust), which is a trust that you can amend or revoke during your lifetime; it becomes irrevocable upon your death. Often paired with a “pour-over” will, a living trust’s purpose is to manage and protect assets while you`re alive and distribute assets after death, often used to avoid probate. Another type of trust is an irrevocable trust, which once established, cannot easily be amended or revoked. An irrevocable trust’s purpose is to provide asset protection, reduce estate taxes, and potentially protect eligibility for government benefits.

Choosing between a trust and a will depends on various factors, including your personal, financial, and estate planning goals. Here are reasons where establishing a trust might make more sense than relying solely on a will:

Avoiding Probate: Trusts allow for the direct transfer of assets to beneficiaries without going through the probate process, which can be lengthy, costly, and public. If avoiding probate and maintaining privacy are priorities, a trust is a better option.

Managing Assets for Minor Children: Trusts can be set up to manage and distribute assets to children when they reach a certain age or achieve specific milestones, offering more control than a will, which might require a court-appointed guardian.

Providing for a Special Needs Beneficiary: A special needs trust can help ensure a beneficiary with disabilities receives financial support without jeopardizing their eligibility for government assistance programs.

Privacy Concerns: Unlike wills, which become public record once they enter probate, trusts remain private documents. If privacy is a concern, a trust can keep your estate affairs confidential.

Property in Multiple States: If you own property in different states, a trust can avoid multiple probate proceedings in each state, simplifying the management and distribution of these assets.

Asset Protection: Certain types of trusts can offer protection against creditors or legal judgments for both you during your lifetime and for your beneficiaries after your death.

Tax Planning: Trusts can be structured to minimize estate taxes, especially for larger estates. Techniques like credit shelter trusts (bypass trusts) and irrevocable life insurance trusts are used to reduce the taxable estate.

Long-Term Care for a Beneficiary: If you wish to provide for a beneficiary over a long period, trusts can specify how assets are to be used for their care, education, and living expenses, ensuring the beneficiary is taken care of according to your wishes.

Complex Family Situations: In situations with blended families, a trust can clearly delineate assets to be passed to children from previous marriages, ensuring that your specific distribution wishes are met.

Tax loss harvesting works by selling investments that are at a loss and replacing them with similar investments to maintain the portfolio`s overall investment strategy. The realized losses from these sales can then offset realized capital gains and up to $3,000 ($1,500 if married filing separately) of ordinary income per year, with the ability to carry forward unused losses into future years. The IRS has rules to prevent taxpayers from abusing tax loss harvesting, most notably the "wash sale" rule. A wash sale occurs when you sell a security at a loss and then repurchase the same security, or one substantially identical, within 30 days before or after the sale. Losses from wash sales are not eligible for tax deductions

Here is a list of some investment-related taxes that may be relevant to you (not tax advice):

Capital Gains Tax: Capital gains tax is applied to the profit from the sale of an investment, such as stocks, bonds, or real estate, when it is sold for more than its purchase price. Capital gains are classified as either short-term (for assets held for one year or less) or long-term (for assets held for more than one year), with different tax rates applying to each.

Dividend Tax: Dividends are payments made by a corporation to its shareholders. They can be classified as qualified or non-qualified (ordinary), with qualified dividends taxed at the lower long-term capital gains tax rates and non-qualified dividends taxed as ordinary income.

Interest Income Tax: Interest income, such as that earned from savings accounts, certificates of deposit (CDs), or corporate bonds, is taxed as ordinary income at your marginal tax rate.

Net Investment Income Tax (NIIT): The Net Investment Income Tax is an additional 3.8% tax that applies to certain net investment income of individuals, estates, and trusts that have income above statutory threshold amounts.

Tax on Bond Interest: Interest from government bonds (federal, state, and local) can have different tax implications. Interest on U.S. Treasury bonds is taxable at the federal level but exempt from state and local taxes. Conversely, interest from municipal bonds is often exempt from federal income tax and, in some cases, state and local taxes if you live in the state where the bond was issued.

Taxes on Real Estate Investments: Real estate investments can incur several taxes, including capital gains tax on the sale of the property, property taxes during ownership, and potentially depreciation recapture tax.

Taxes on Retirement Account Withdrawals: Withdrawals from tax-deferred retirement accounts (like 401(k)s and traditional IRAs) are taxed as ordinary income. Contributions to Roth IRAs and Roth 401(k)s are made with after-tax dollars, so withdrawals are tax-free in retirement, assuming certain conditions are met.

Stock Options Tax: Taxes on stock options depend on the type of option and when the option is exercised. Incentive stock options (ISOs) can receive preferential tax treatment under certain conditions, while non-qualified stock options (NSOs) are taxed as ordinary income upon exercise.

Alternative Minimum Tax (AMT): The Alternative Minimum Tax is a parallel tax system designed to ensure that individuals who benefit from certain deductions and exclusions pay at least a minimum amount of tax. The AMT can affect those with high investment income or large deductions.

In addition to investment-related taxes, a non-comprehensive list of common taxes that retirees pay include (not tax advice):

Taxes on Social Security Benefits: Retirees may pay taxes on their Social Security benefits. The taxation depends on your combined income, which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. If this combined income exceeds certain thresholds, up to 85% of your Social Security benefits may be taxable.

Taxes on Retirement Account Withdrawals: The taxation of retirement account withdrawals depends on the type of account. Withdrawals from traditional IRAs and 401(k)s are typically taxed as ordinary income. However, withdrawals from Roth IRAs and Roth 401(k)s are generally tax-free if certain conditions are met.

Taxes on Pension Income: Pension income is usually taxable at federal income tax rates if you made no after-tax contributions to the pension plan. Some states also tax pension income, although others offer exemptions or credits to retirees.

Taxes on Investment Income: Investment income, such as interest, dividends, and capital gains, can also be taxable in retirement. Long-term capital gains and qualified dividends often benefit from lower tax rates than other types of income.

Property Tax: Retirees still pay property taxes on any real estate they own. However, some states and municipalities offer property tax relief programs for seniors, which may reduce the tax burden.

Inheritance and Gift Taxes: Inheritance taxes vary by state and the relationship to the deceased. Federal estate taxes only apply to very large estates. Gifts may be subject to federal gift tax if they exceed the annual exclusion amount, but there`s also a lifetime exemption limit before any tax is due.

Estimated Taxes on Income Not Subject To Withholding: Retirees with income not subject to withholding, such as investment income, may need to pay estimated taxes quarterly to avoid penalties. Such income can also include income from self-employment, interest, dividends, and capital gains. Estimated taxes also apply to earnings from a business you own as a sole proprietor, partner, or S corporation shareholder.

Impact of Healthcare Premiums on Taxes: Medical expenses, including Medicare premiums, may be deductible if they exceed a certain percentage of your adjusted gross income. Premiums for Medicare Part B and Part D can be higher for retirees with higher incomes due to the Income-Related Monthly Adjustment Amount (IRMAA).

Retirement accounts that offer tax-deferred growth allow you to postpone paying taxes on your earnings until you withdraw the funds, typically in retirement. This feature can be beneficial because it allows your investments to grow without the drag of taxes on your earnings each year. Here are some common types of retirement accounts that offer tax-deferred growth: Traditional IRA, 401(k) plans, SEP IRA, Simple IRA, TSP, and Annuities. Yes, the annuities that we offer (MYGAs and FIAs) grow tax-deferred.

Annuities are viewed by the IRS to be retirement accounts. Like other retirement accounts, such as Traditional IRAs and 401(k) accounts, MYGA and FIA annuities offer a tax-deferred growth advantage, allowing your interest to accumulate without immediate tax implications until funds are withdrawn. Unlike savings accounts or CDs, which require annual tax reporting of gains, fixed annuities delay these tax obligations. This feature benefits all customers by enabling interest to compound over time. It`s particularly advantageous for those in a higher tax bracket upon purchase who anticipate being in a lower tax bracket upon withdrawal, such as during retirement.

No. Annuities are not subject to yearly contribution limits, whereas 401(k) plans and IRA/Roth IRAs have annual limits set by the IRS. This can be a common reason for people who have maxed out or contributed significantly already to their traditional retirement accounts to buy annuities. By buying an annuity, they are getting even more tax-deferred growth for their retirement savings.