Fixed Annuity definition -fixed annuities provide for a fixed sum of money to be paid to policyholders over a specific period of time, and/or lifetime.

Annuities are contracts sold by insurance companies designed to provide payments to policyholders at specified intervals. Policyholders are taxed only when they start taking distributions or if they withdraw funds from their accounts.

Annuities are tax-deferred vehicles. Typically the earnings from investments in these accounts grow tax-deferred until withdrawal. However if an annuity is owned by a non-natural person, such as a trust or business, then earnings may not be deferred.

Withdrawals made prior to age 59 ½ may have penalties. Specific distribution options can eliminate these penalties. Ask us about Substantially Equal Periodic Payments.

Fixed annuities guarantee a certain payment amount and are a relatively safe investment. You may choose to have payments made over your life, over a specified period of time, a combination of life and a specified period, a specific amount, or even over your life and your spouse's life.

Some annuities have death benefits equivalent to the higher of the current value of the annuity or the premiums paid into it. If owners die during the accumulation phase, the heirs will receive the accumulated amount in the annuity. This money is subject to ordinary income taxes in addition to estate taxes. Some annuities offer supplemental benefits that can help to minimize tax consequences. Ask us how these policies may help you eliminate taxes at death.