New York - You generally should not purchase a variable annuity unless all of the following conditions apply:
- You expect to be in a 15% tax bracket when you withdraw your money
- You can no longer contribute to your 401(K), 403(B) and IRA contributions
- You have sufficient liquidity that you will not need this money for approximately 15 years
If you already own a variable annuity and are considering purchasing a new one - beware that some life insurance companies try to entice you to purchase a second annuity with your existing annuity. If you do this, you generate a commission for the agent and eat into the returns of your first policy.
Also, beware of any attempts to convert your current policy to a new one. Old policies may come with large surrender charges of up to 7% of your original annuity's principal while your salesperson makes a new commission.
Tax law and issues are every changing and is extremely complicated. Even if you are considering purchasing an annuity, you should consult with an independent Fee-Only financial adviser.
Founded in 1998, The Independent Adviser Corporation has assisted thousands of individuals, families, and businesses. We are 100% independent and objective and offer free private consultations to our clients. Our company publishes free investment research and educational materials, and when specific financial or legal advice is needed, we connect clients with a network of FEE-ONLY professionals. For more information, become a member or to schedule a free consultation, please visit our website at TheAdviser.com or 1800ADVISER.COM.