An Overlooked Benefit of Annuities—Tax Planning

Rumblings from Washington about potential changes to the tax code have prompted renewed investor focus on tax efficiency. While a growing number of advisors are talking to clients about the benefits of annuities—especially newer commission-free products—as a wealth accumulation and retirement income tool, many still write them off (tax pun intended!) in the context of tax planning because of their “last-in, first-out” treatment. However, annuities can be beneficial in tax planning, particularly as they provide virtually unlimited tax deferral.

“Tax-deferred growth can significantly boost long-term accumulation by eliminating the drag of annual taxes,” the article notes. “And provisions like the non-qualified stretch can help mitigate legacy taxes for beneficiaries.”

David Lau, Founder & CEO of DPL Financial Partners, and Rob Saag, DPL’s Director of Product Marketing, emphasized that advisors have a fiduciary duty to understand annuities’ role in both retirement planning and tax efficiency.

READ THE ARTICLE HERE