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Shvoong Home>How To>Writing >Does Annuity Subaccounts Offer Any Dividend? Review

Does Annuity Subaccounts Offer Any Dividend?

Article Review   by:russarmstrong     Original Author: Russell Armstrong
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The fixed annuities ask policyholders to pay flat premium each month to an insurance company in order to avail lump sum payments at defined date. On the other hand, the variable annuities let a policyholder to decide the way insurance company invests his premium. Insurers create subaccounts which include basket of equities from which a policyholder can choose his assets. However, policyholders can’t obtain dividend directly from such investments. Go through following points to know about does annuity subaccounts offer any form of dividend.

Things to know –

The variable annuity holders can receive the dividend indirectly as insurers prefer to reinvest the dividend and any appreciation in price in the subaccount. As a result of that the policyholders are rewarded with higher payments when they begin withdrawing funds from their policy.

Tax considerations –

Policyholders who have annuity subaccounts usually save substantial amount of money on taxes owed as compared to the stocks or mutual funds.

Other Benefits –

According to the guidelines mentioned by the Internal Revenue Service, annuity holders can swap out their annuity contract with other insurers. Though investors may run out of funds at the time of their retirement, annuity subaccount holders can avail regular monthly payout after retirement.

Limitations –

Variable annuity holders may have limited benefits with subaccounts as compared to the investors who may choose from bunch of funds in US that pays dividends. The policyholders will not only face difficulty in withdrawing their funds before the age of 59 ½ but they also have to bear tax penalty of 10%.

If you want to avail more information on retirement savings plan such as Thrift Savings Plan, then click on http://governmentbenefitadvisors.com/. It is dedicated source which helps all Federal Employees to understand their benefits. Government Benefit Advisors like Russell Armstrong advises hundreds of Federal employees every year on their individual benefit options and guides them on how to manage their benefits for retirement purpose. So, get in touch with Russell to know every single detail about TSP.

Published: December 14, 2013   
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