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This is financial adviser Patrick Munro. We're going to talk about tax sheltered annuities.
What are they? Can you be sheltered from taxes? The only vehicle that you really can be sheltered
from taxes is a annuity product that is qualified. The word is qualified versus non-qualified.
If it's qualified that means that the government allows you to put money into your annuity
and not pay taxes on the growth inside the annuity. Therefore the name, tax sheltered
annuity. This works in your favor when you're young because you have more time to put money
into the financial instrument. And then once you receive, get to the age of retirement
and you start to take money out of the annuity, then you have to pay taxes on it. There is
a time when if you were of an older age and you didn't ever want to take money out of
the annuity, the government shows up and they make you take money out and therefore, have
to pay taxes. That's called required minimum distribution. RMD. When you've hit 70 1/2.
Well, by that time, you want to be fully retired and enjoying your retirement life. And so
tax sheltered annuity is the way to go to accumulate your money. And once you get to
age 70 1/2, the government will then force you to spend down some of it so that they
can get the taxes that they have been so generous in allowing you not to have to pay over the
years. That's the benefit of tax sheltered annuities. I'm financial adviser Patrick Munro.