What Is a Split-Funded Annuity?

With a split-funded annuity you use part of your money to purchase an immediate annuity while the rest goes toward a deferred annuity. This allows you to receive payments from the annuity right away and collect bigger payments starting at some point in the future after the money has accumulated tax deferred. Some call this strategy a split annuity or combination annuity.

Is a Split-Funded Annuity Right for you?

Many people look for ways to not only create the retirement income they need but also to preserve their principal. Relying on bank savings often falls short, and having your retirement savings exposed to the ups and downs of the market can be nerve-racking. Fortunately, there is a solution that does provide guaranteed tax-advantaged income, tax-deferral, and principal preservation. If you are currently living off of interest from your brokerage account or other investments, then a split annuity could be a strategy for you to consider.

A split annuity is a funding combination of two annuities: an immediate annuity and a tax-deferred annuity. The immediate annuity will give you monthly income, which means the amount deposited in the immediate annuity will experience minimal growth due to the immediate or almost immediate payout, but the remaining funds can grow deferred in a tax-deferred annuity at a minimum rate of at least 3% and as high as 7%. The two-annuities-in-one strategy allows you to receive a reliable income from one account while saving and growing tax-deferred funds in a separate account with principal protection. So, you can receive the income you need and reinvest the tax-deferred funds, all while preserving your initial principal balance.

A split annuity strategy is structured in such a way to produce immediate tax-advantaged income for a promised period of time so it can restore your original principal at the end of that time period. Is a split annuity right for you? That depends on your retirement objectives. If you are looking for a dependable source of income, tax-deferral, and principal preservation, then the split annuity concept may be worth exploring, especially if you are currently living off of interest from a brokerage account or similar investment account. It is a strategy that may help alleviate the concerns of daily market volatility and allow you to enjoy the finer things in life.

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Financial 411, Robert Goldsmith, and Deanna Goldsmith are representatives of Financial Fitness & Insurance Servcies, LLC, a Nevada Corporation.  Robert has been a licensed insurance and financial professional since 1982 and is a member of the National Ethics Association and National Association of Professional Agents.  Deanna Goldsmith is also a member of the National Association of Professional agents and has earned her certificate as a National Social Security Advisor. Deanna Goldsmith has been a licensed insurance professional since 2003. Financial Fitness & Insurance Services, LLC, Robert Goldsmith, and Deanna Goldsmith do not provide legal or tax advice, any information perceived as legal or tax advice is purely consequential.  For legal or tax advice you should always consult a licensed tax advisor or attorney.