In other words, your entire investment accumulates on a tax-free basis until you withdraw money from your annuity account. In the case of variable annuities your principal continues to accumulate on a tax-deferred basis even after you begin making withdrawals. The annuitant agrees to pay the insurance company a single payment or a series of payments, and the insurance company agrees to pay the annuitant an income, starting immediately or at a later date, for a specified time period. Under current tax law, money put into an annuity grows on a tax-deferred basis until the annuitant begins receiving his accumulated fund as an income. The Rate Of Return Professional Investment Management Investment Choices Fixed vs. Variable Rates of Return Surrender Charges Tax-Deferred Growth .
Money invested in an annuity grows on a tax-deferred basis.
Your investment profits are taxed only when you begin to receive an income from your annuity. Lifetime Income . An annuity can provide you with a guaranteed lifetime income, regardless of how long you live. No other investment instrument can provide this guarantee. Guarantee of Principal .