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Aug 28, 2018 by |

California and Alameda County Financial Elder Abuse and Annuity Attorney: Annuities in 401(k) Plans


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=””></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.

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