There are two types of deferred fixed annuities. Those purchased with a onetime premium are called single-premium deferred annuities. Annuities funded by ongoing contributions over a period of time are called flexible-premium deferred annuities.

What are the advantages of an annuity?
There are several, but the most important are:
Tax-deferred interest accumulation.  The interest earned on an annuity premium is not subject to current taxation until it's withdrawn from the Contract.* This allows for a potentially greater cash buildup than if income taxes were payable on accumulating interest as earned.
Competitive current interest. Current annuity interest rates generally are competitive with those from other fixed-interest vehicles.
Safety/guarantees. The value of your annuity is backed by the assets of the insurance company. And all fixed annuities offer a minimum interest rate guarantee.

Is the current interest rate the most important consideration in selecting an annuity?

No. Because an annuity is a long-term retirement vehicle, the initial interest rate is not nearly as important as the long-term rate of return. Of course, that's not easy to predict, as the rate will fluctuate over time with changes in economic conditions. But, to know what might happen in the future, it's worth looking at what has happened in the past.

What other things should I look for?

Avoid annuity Contracts that charge front-end Contract fees and sales loads, or excessive annual maintenance fees or charges. They reduce the amount of money that actually goes to work for you. The length of the surrender charge may be important for you, although annuities should be considered as a long-term retirement vehicle. Some companies, waive the surrender charge in the event of premature death or annuitization; see your Reinholdt & O'Harra Representative for details.

What's the difference between qualified and nonqualified annuities?

A qualified annuity is used to fund a tax-qualified retirement plan such as a traditional IRA or an HR-10. In most cases, premiums paid to a qualified annuity are tax-deductible. A nonqualified annuity is used to fund a cash accumulation program which does not qualify for a front-end tax deduction. But whether an annuity is qualified or nonqualified, its premiums always accumulate interest that is free of current income tax until withdrawn.

Is there anything else I should know?

Only an annuity can provide you with an income you can never outlive1, and the most tried-and-true annuities are available only through life insurance companies. By funding a deferred fixed annuity today, you lock in income guarantees for your future.

Remember, this information is designed only to provide a general overview of deferred fixed annuities. Interested persons are encouraged to consult their Representative, lawyer, accountant, or tax counsel for answers to questions regarding their specific situation.

Please remember that an annuity is intended to be a long-term, tax deferred investment vehicle designed for retirement purposes. Earnings are taxable as ordinary income when withdrawn and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Withdrawals may be subject to withdrawal charges and an excess interest adjustment. During the withdrawal charge period, the annuity's cash value may be worth less that the principal allocation.

Annuity Contracts have limitations and terms for continuing coverage, including withdrawal charges. For costs and complete details of the coverage, call your Representative or the Company.

Equity- Linked Indexed Annuities

Equity-Linked Indexed Annuities are innovative fixed annuities designed to help you reach your retirement goals. Equity-Linked Indexed Annuities combine the attractive features of tax deferral with returns linked to the percentage growth, if any, in a stock index, while offering a minimum guarantee.

Upside Potential. Downside Protection

Each has unique product features including different minimum guarantees, withdrawal privileges, contract options, index options, and index participation rates.

Reinholdt & O'Harra offers competitive Equity-Linked Indexed Annuities to meet the demanding needs of today's investors.