What are Split Annuities?

Answer:
Split annuities are a type of annuity that uses

two different products to accomplish the annuity’s goal of monthly income and re-building the principal. A typical split annuity is usually composed of both a single premium immediate annuity and a single premium deferred annuity.

This strategy offers tax efficiency and immediate income. The immediate annuity is designed to provide a specific income each month for a specific time period while the deferred annuity is left alone to grow on a fixed interest, tax-deferred basis.

The idea behind split annuities is that by the time the monthly payments end, the deferred annuity will have grown back to your original starting principal amount.

Split annuities have different limits and ranges depending on different factors including whether the funds are qualified funds or non-qualified funds as well as current rates, the amount of your single premium, the insurance carrier your choose, and the split annuity’s goals.

This strategy can be used to ensure a fixed income for a set period of time while also rebuilding principal. You can use a split annuity to provide immediate retirement income right away as well as preserve an income in the future.

When the income from the immediate annuity dries up, you can begin withdrawing income on the deferred annuity.


	more Q&A sessions like this
	What are Qualified Annuities? What are Retirement Annuities? What is a Qualified Retirement Plan? What is a Rollover? What are Tax Sheltered Annuities? What is a SIMPLE IRA?