Montana Life Group firmly believes that annuities are for two things: retirement savings and retirement income. Annuities receive special tax treatment from the IRS as a “tax deferred savings vehicle.” This can be a major advantage for growth potential but there is also a catch. The IRS imposes a 10% penalty on a portion or all of the funds in an annuity if a person accesses them before age 59 1/2. There are some complex exceptions to this rule, but for the most part you should only consider putting money into an annuity that you plan on using after turning age 59 1/2. If you are older than or close to age 59 1/2 then annuities can offer tax deferred growth, a guaranteed growth rate, and guaranteed income for life without a 10% tax penalty from the IRS. If you wish to learn more about annuities give us a call or request more information.
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