Not surprisingly, most annuities are purchased with after-tax dollars. You can generally contribute as much money as you want. But any payments you receive or withdrawals you make are taxed as ordinary income. Because annuity payments vary according to the contract. With immediate annuities, investors receive checks almost immediately.
Deferred annuities pay in the future for a set period of time.
Payments can be made to cover all or part of a spouse's or child's life after your death. In this sense, deferred annuities are somewhat like a life-insurance product. He says management fees often hover around 2 percent. The average fees for no-load mutual fund are far less. At the end of the first year, they can be as high as 7 percent of the amount withdrawn.