Aug 13, 2019 by |

California and San Francisco Annuity and Financial Elder Abuse Attorneys: Problems With Advisor Compensation on Fee-Based Annuities

ATTORNEY NEWSLETTER

Fee-Based Annuities Present Tax Issues

Taking Out Advisors’ Fees May Result In Tax To Policy Owner

Our lawyers recommend you always beware when an insurance agent tries to sell you commission-based annuities or life insurance, particularly if you’re a senior. But fee-based annuities present disadvantages as well.  Advisors are selling fee-based annuities at a growing rate, and we advise caution on those products.  The San Francisco annuity attorneys at Evans Law Firm, Inc. represent consumers, often seniors, who have lost money due to commissions and fees, withdrawal charges, and tax bills as a result of the sales and exchanges of inappropriate annuities and life insurance. If you or someone you know is over 60 and lives in San Francisco or elsewhere in California and have suffered a loss on an annuity, call us today at 415-441-8669. 

Fee-based annuities are products meant for registered investment advisers, who are paid a flat, annual advisory fee, often based on assets under management, rather than a commission for each product sale. These annuities don’t come with a sales load to compensate the adviser.  However, this feature may create a tax issue for the contract owner.  Pulling the advisory fee from some annuity products — specifically, nonqualified annuities — is a taxable event for the client, essentially making the financial advice all the more expensive.

A non-qualified annuity is a policy an agent sells a consumer outside of a retirement account, and distributions of gains from the accumulated portion of a non-qualified annuity are taxed at ordinary rates. If a withdrawal is made to pay an advisor’s fee, the amount withdrawn is likely to be taxed since the IRS treats distributions first as gains and not as returns of principal.  Pulling an advisory fee from the annuity could have other adverse effects — if the product has a living-benefit rider of some kind, pulling out too much money from the annuity could dilute or nullify those benefits. In short, whether you’re considering a commission-based or fee-based annuity, proceed with caution and always consult your tax advisor before making any purchase.

Contact Us

If you or a loved one has suffered a loss on an annuity in San Francisco or elsewhere in California, contact Ingrid M. Evans and the other Evans Law Firm annuity 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 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.

Annuities and life insurance produce large sales commissions for brokers but are often inappropriate products for consumers, especially seniors. Leading providers and distributors of life insurance and fixed, variable and fixed indexed deferred annuities in California are listed below.  We are not in any way suggesting that any of these carriers or distributors has done anything wrong or was involved in any way in the case discussed above.  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 International Group, Inc. (AIG)

American National Life Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Ameriprise Financial/Securities America, Inc.

Athene Annuity & Life Assurance Company

Athene Annuity and Life Company

Athene USA

Aviva Life Insurance Company

AXA Equitable Financial Services, LLC

AXA Equitable Life Insurance Company/AXA US

AXA Advisors, LLC

Bankers Life Insurance and Casualty Company

Berkshire Hathaway Group

Berkshire Hathaway Life Insurance Company of Nebraska

Brighthouse Financial, Inc./MetLife

Citigroup Global Markets, Inc.

Crump Life Insurance Services, Inc.

CUNA Mutual Group/CMFG Life Insurance Company

Delaware Life Insurance Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company/Global Atlantic Financial Group

Genworth Financial, Inc.

Genworth Life and Annuity Insurance Company

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

Lincoln Financial Group

Massachusetts Mutual Life Insurance Company

Merrill Lynch Life Agency Inc.

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Minnesota Life Insurance Company

National Life Group

National Life Insurance Company/Equity Services, Inc.

National Western Life Insurance Company

Nationwide Life Insurance Company

New York Life Insurance Company

North American Company for Life and Health Insurance

Northwestern Mutual Investment Services, LLC

Northwestern Mutual Life Insurance Company

Northwestern Mutual Wealth Management Company

Oxford Life Insurance Company

Pacific Life Insurance Company

Principal Financial Group

Prudential Life Insurance Company

Raymond James Insurance Group

Reliance Standard Life Insurance Company/Tokio Marine Group

RiverSource Life Insurance Company/Ameriprise Financial

Securities America, Inc./Ameriprise Financial

Security Benefit Group, Inc.

Security Benefit Life Insurance Company/Guggenheim Partners

Security Investors, LLC

The Standard Life Insurance Company

Symetra Financial Corporation

Symetra Life Insurance Company

Transamerica Life Insurance Company

The United States Life Insurance Company in the City of New York

Unum Life Insurance Company of America

USAA Life Insurance Company

The Variable Annuity Life Insurance Company

Voya/Reliastar Life Insurance Company

Wells Fargo Advisors

Western & Southern Financial Group

The Western & Southern Life Insurance Company

World Financial Group Insurance Agency, Inc.

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