Why Are Annuities Tax Deferred? 
Remember that America had annuities before it had income or investment taxation . Over the years as the internal revenue code evolved the service seems to ignore the tax advantages in lieu of the societal benefit of people saving and protecting themselves . Keep in mind there has been an uneasy alliance between the government and the insurance industry . After all the insurance industry buys government bonds for their portfolio that helps float the US debt . Recently , the cash deferred build up inside annuities and life insurance has been under scrutiny as the government seeks sources of revenue to offset the US debt . 