Do you know which investment option is right for you?
FIXED ANNUITY-provides a guaranteed minimum rate of interest to be credited to the purchase payments. Income (annuity) payments don't vary from one payment to the next, and the insurance company guarantees the specified dollar amount for each payment and the length of the period of payments determined by the settlement option chosen by you.
VARIABLE ANNUITY-the annuitant may receive variable rates of return on the funds that are paid into the annuity. Variable annuity premiums are invested in securities. Premiums paid during the accumulation period are placed in the insurer's separate account that is usually invested in common stock. This means that the investment will vary according to the fluctuation in stock prices.
MUTUAL FUNDS-Mutual funds are pools of money invested in many different securities and are managed according to set objectives. They are similar to the investments underlying variable annuities, but do not have the associated insurance fees of an annuity. With mutual funds, you can choose among aggressive funds for growth to more conservative funds for stability similar to that of a fixed annuity.
EQUITY INDEXED ANNUITIES-Are not securities, but they invest on an aggressive basis to aim for higher returns. They have a guaranteed minimum interest rate and are less risky than a variable annuity or mutual fund but are expected to earn a higher interest rate than a fixed annuity.
What is a 403(b)?
The 403(b) is a tax deferred retirement plan available to employees of educational institutions and certain non-profit organizations as determined by section 501(c)(3) of the Internal Revenue Code. Contributions and investment earnings in a 403(b) grow tax deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income.
Why Contribute to a 403(b)?
A Healthy Retirement - Most employees of educational institutions and other non-profit organizations are provided with a pension upon retirement. Few pension plans, however, provide an amount equal to salary. A 403(b) plan can provide a healthy supplement to a pension.
Lower Taxes - 403(b) contributions are made on a pre-tax basis which can greatly reduce your tax bill. The tax savings are magnified as your 403(b) contribution increases.
More Tax Savings - all dividends, interest and capital gains accumulate in a 403(b) account on a tax-deferred basis. This means your earnings will grow tax-free until time of withdrawal.
