Annuities can provide a business owner and their employees with numerous personal planning opportunities for both asset accumulation and retirement income management.

An annuity is a contract between you and an insurance company in which the company promises to make a series of payments at regular intervals, starting immediately or at some future time. You can buy annuity contracts from life insurance companies. There are two reasons for purchasing a deferred annuity contract. One is to obtain a vehicle for the accumulation of money on a tax-deferred basis*. Secondly, the money accumulated can then provide a lifetime of income.

Annuities do not provide any additional tax advantage when used to fund a qualified plan. Investors should consider buying an annuity to fund a qualified plan for the annuity's additional features such as lifetime income payments and death benefit protection. Guarantees are contingent on the claims-paying ability of the issuing company or companies. Liquidated earnings are subject to ordinary income tax and may be subject to a contingent deferred sales charge or a surrender charge. If taken prior to age 59 ½, a 10% federal income tax penalty may apply.

Also, annuity contracts provide that, if you die before the annuity payments start, the death benefit will be paid to the beneficiary. Some contracts provide that the death benefit will be the total premiums paid, adjusted for withdrawals, if that amount is greater than the value of the contract at death or, if available, enhanced death benefit options that are typically available at an additional cost.

Annuity contracts may be fixed or variable. During the deferred period, or accumulation phase, of a fixed annuity contract, premiums (less charges) are accumulated at rates of interest set by the insurance company. The amount of each fixed annuity payment is determined when payments begin. During the deferred period of a variable annuity, the value of the accumulated premiums (less charges) varies with the performance of the stock, bond and money market based investment options you choose within the contract. The amount of the variable annuity payments also varies with the performance of these investment options.