FREQUENTLY ASKED QUESTIONS
Can I take penalty-free withdrawals if I get sick? Some contracts include provisions that will allow you to withdraw some or all of your annuity’s contract value without paying surrender charges if a qualifying event occurs, for example if you were to suffer from a terminal illness. Can I change my mind after I have purchased a MYGA? You will have at least 10 days (varies by state) to review the contract for your multi- year guaranteed annuity after you buy it. If you decide during that time that you don’t want it, you can return the annuity and get all of your premium back, less any prior withdrawals. Read the cover page of your annuity contract as soon as you receive it to understand how many days you have to decide if you don’t want to keep it. Who gets the money if I die? For a single owner, the beneficiary (or beneficiaries) that the owner named on the application will receive the death benefit. For joint owners, the benefit will be paid to the surviving owner. The Internal Revenue Code has distribution at death requirements. These are described in your annuity contract and are based on the death of the owner unless the contract is owned by a trust. If the spouse of a deceased owner is the designated beneficiary, the surviving spouse can continue the contract as the new owner in lieu of receiving the death benefit. What if I die before the maturity date of the contract? A death benefit will be paid upon the death of a contract owner, or annuitant if the contract is owned by a trust, following the date the company receives a certified death certificate or an order of a court of competent jurisdiction. The death benefit is equal to the greater of the contract value or the guaranteed value as of the date of death. Generally no surrender charge or market value adjustment will apply. How does this affect my taxes? In general, annuities are tax-deferred, which means you don’t pay taxes on the in- terest earned until you receive a distribution. When you take a withdrawal or begin receiving income, the distributions are subject to ordinary income tax. Earnings on your contract are taxed at ordinary income tax rates when you withdraw them, and you may have to pay a penalty if you take a withdrawal before age 59½. Buying an annuity within an IRA, 401(k) or other tax-deferred retirement plan doesn’t give you any extra tax benefit. In general, any death benefits paid will be taxable to beneficiaries. Choose the annuity based on its other features and bene- fits as well as its risks and costs, not its tax benefits. This is only a summary based on current laws and and is not intended as tax advice. Please consult a tax profes- sional regarding your unique situation and for complete tax information.
Are there age restrictions to buy a MYGA?
What happens at the end of the guarantee period? At the end of the guarantee period, you usually have the flexibility to continue for another period, based on the original guarantee period, or choose a new period with a different time line. At the end of each guarantee period, the carrier will typically declare a new interest rate for each new guarantee period. If the carrier receives no direction from you, the carrier will usually automatically renew your annuity for the same period at the then-current interest rate. If you would prefer to withdraw some or all of your contract value at the end of any guarantee period, you will generally have a 30-day window to do so, free of any surrender charge or market value adjustment. Are there age restrictions to buy a MYGA? Yes, carriers will generally issue MYGAs to individuals up to age 85.
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