Taxes can have a big impact on long-term investment returns. While the S&P 500 Index had an average annual return of 10.4% from 1926 through 2007, the after-tax return was 8.2%.* Like most investors, you’re probably familiar with the benefits of investing tax-deferred through IRAs and 401(k) plans, but did you know that variable annuities can also offer tax advantages when investing for retirement?
Variable annuities can help your money work harder for you with tax deferral
With a tax deferred investment like a variable annuity, your earnings are only taxed when you withdraw them. That means every dollar of your investment can work harder for you, helping to generate potentially more earnings over time. And that can mean greater spending power at retirement.
When you invest for retirement through a variable annuity, you can benefit from five tax advantages. Keep in mind however, that tax deferral is a benefit that the Internal Revenue Service (IRS) extends to encourage long-term savings. If you make a withdrawal before age 59½, a 10% federal tax penalty may apply.
Annuities are designed for long-term retirement investing. Early withdrawals may be subject to withdrawal charges. Partial withdrawals may reduce benefits available under the contract as well as the amount available upon a full surrender. Withdrawals are subject to ordinary income tax, and if taken prior to age 59½, an additional 10% federal tax may apply. An investment in a variable annuity involves investment risk, including possible loss of principal. The contract, when redeemed, may be worth more or less than the total amount invested.
Variable annuities are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges, expenses and other information regarding the contract and underlying funds, which should be considered carefully before investing. A prospectus may be obtained from your financial advisor or by calling 1-800-445-7862. Please read the prospectus carefully before investing.
Variable annuities are issued by American General Life Insurance Company (American General Life), except in New York, where they are issued by The United States Life Insurance Company in the City of New York (US Life). Products are marketed by SunAmerica, The Retirement Specialist. All products may not be available in all states. The purchase of a variable annuity is not required for, and is not a term of, the provision of any banking service or activity. Neither American General Life, US Life, nor their representatives provide tax, accounting or legal advice. You should contact your own tax advisor or attorney regarding your particular situation.
Distributed by SunAmerica Capital Services, Inc., 21650 Oxnard St., Suite 750, Woodland Hills, CA 91367-4997, 1-800-445-7862.
Not FDIC or NCUA/NCUSIF Insured
May Lose Value ● No Bank or Credit Union Guarantee
Not a Deposit ● Not Insured by any Federal Government Agency