ATTORNEY NEWSLETTER
Be Wary of Annuities in Retirement Accounts
401(k)s and IRAs Are Already Tax-Deferred
Tax deferral is the key to successful retirement savings. 401(k)s, IRAs, SEPs and the like offer tax deferral and retirement savings grow tax-free until it’s time to withdraw without penalty after age 59 ½. Earlier this year legislation was introduced that would make it easier for 401(k) participants to invest in annuities. Whether the bill passes or not, the California annuity lawyers at Evans Law Firm, Inc. recommend against investing 401(k)s in annuities.[1] Our litigators have seen too many policyholders, especially seniors, lose money in commissions, fees, and surrender charges on annuities; these expensive, complex policies tie up your money for a long time and are particularly dangerous for seniors. If you or a loved one have been sold an inappropriate or unsuitable annuity, call the California financial elder abuse and annuities lawyers today at Evans Law Firm, Inc. (415)441-8669 and we may be able to help.
Let’s back up. Understand first that the IRS allows you to grow your 401(k) contributions tax-deferred even if the contributions are invested in stocks, bonds, and money market accounts that otherwise would be subject to immediate taxation if held in your own account outright. Deferred annuities are similarly tax-deferred but that deferral is unnecessary when your 401(k) account already carries that benefit. And while the IRS may penalize you for an early withdrawal (before age 59 ½), you may be eligible for hardship exception for medical expenses and the like. Conversely, annuities always charge surrender penalties for early withdrawals. Early withdrawals will be subject to the carrier’s surrender penalty and the IRS penalty.
Each situation is different, but we caution you against investing retirement savings, including 401(k)s, in annuities. It may not be a winning proposition. Your agent may try to convince you that the returns are higher but be careful. Returns are never guaranteed and commissions and fees may eat up even the best of returns. Long term you’re probably no worse off simply investing your 401(k) in the market and could in fact be much, much better off by avoiding annuities entirely
Contact Us
If you or a loved one been sold an unsuitable annuity please contact the Evans Law Firm financial elder abuse and annuity and life insurance attorneys at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a FINRA arbitration, jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
Some of the leading providers and distributors of life insurance and annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. Rather, the list is provided solely as a reference for our readers.
AIG/American General Life Insurance Company
Allianz Life Insurance Company of North America
American Equity Investment Life Insurance Company
American General Life Insurance Company/AIG
American National Life Insurance Company
Ameriprise Financial/RiverSource Life Insurance Company
Athene Annuity & life Assurance Company
Athene Annuity and Life Company
Athene USA
Aviva Life Insurance Company
AXA Equitable Life Insurance Company/AXA US
Bankers Life Insurance and Casualty Company
Brighthouse Financial, Inc./MetLife
Citigroup Global Markets, Inc.
Crump Life Insurance Services, Inc.
CUNA Mutual Group/CMFG Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company/Global Atlantic Financial Group
Genworth Life Insurance Company
Global Atlantic Financial Group/Forethought Life Insurance Company
Guardian Life Insurance Company
Guggenheim Partners/Security Benefit Life Insurance Company
ING USA Annuity and Life Insurance Company
Jackson National Life Insurance Company
John Hancock Life Insurance Company
Lincoln Benefit Life Company
Massachusetts Mutual Life Insurance Company
Merrill Lynch Life Agency Inc.
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Nationwide Life Insurance Company
New York Life Insurance Company
Northwestern Mutual Life Insurance Company
Pacific Life Insurance Company
Principal Financial Group
Prudential Life Insurance Company
Raymond James Insurance Group
RiverSource Life Insurance Company/Ameriprise Financial
Security Benefit Life Insurance Company/Guggenheim Partners
Symetra Life Insurance Company
Transamerica Life Insurance Company
Unum Life Insurance Company of America
Voya/Reliastar Life Insurance Company
Wells Fargo Advisors
World Financial Group Insurance Agency, Inc.
[1] Evans Law Firm, Inc. does not offer investment or tax advice but we can represent you if you’ve lost money on a cancellation or surrender of a deferred annuity.
