Are You Taking Advantage of the Benefits of Tax Deferral?
The Power of Tax Deferral
One of the benefits of an annuity is tax deferral, because you don't pay taxes on your earnings until you withdraw your funds. Tax-deferred annuities make your money work harder with triple-compounding by:
- Earning interest on your principal
- Earning interest on your interest
- Earning interest on your tax savings because your interest is not subject to current income tax in an annuity until it’s withdrawn, 100% of your interest can continue to compound instead of being withdrawn currently for tax payments.
Taking advantage of tax deferral may increase your earning power. For example, if your federal tax bracket is 25%, and you earn 2.50% on your investment in your tax-deferred annuity, you would need to earn a rate of 3.33% in a taxable investment to match the earnings of your annuity.
Ask how a tax-deferred annuity from The Standard can help make your money work for you.
| If your federal tax rate is: | 15.00% | 25.00% | 28.00% | 33.00% | 35.00% |
|---|---|---|---|---|---|
| And your tax-deferred rate is: | You would have to earn this rate in a taxable investment to match the earnings of your fixed annuity: | ||||
| 1.00% | 1.18% | 1.33% | 1.39% | 1.49% | 1.54% |
| 1.50% | 1.76% | 2.00% | 2.08% | 2.24% | 2.31% |
| 2.00% | 2.35% | 2.67% | 2.78% | 2.99% | 3.08% |
| 2.50% | 2.94% | 3.33% | 3.47% | 3.73% | 3.85% |
| 3.00% | 3.53% | 4.00% | 4.17% | 4.48% | 4.62% |
| 3.50% | 4.12% | 4.67% | 4.86% | 5.22% | 5.38% |
| 4.00% | 4.71% | 5.33% | 5.56% | 5.97% | 6.15% |
| 4.50% | 5.29% | 6.00% | 6.25% | 6.72% | 6.92% |
| 5.00% | 5.88% | 6.67% | 6.94% | 7.46% | 7.69% |
For Illustrative purposes only. If you have questions regarding your specific situation, please consult your tax advisor.
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