An annuity is a contract between you and an insurance company, which is designed to increase and protect your money without risk of loss at the end of the chosen term, and offer a guaranteed stream of income for a specific period or for life.

• Fixed Annuity – your investment grows based on a guaranteed interest rate for a specific term.
• Indexed Annuity – offers an interest rate tied to the behavior of stock market indexes and the potential to increase earnings based on index growth, and with market downturn protection.

• Contribution deferral – profits earned are not taxable until the moment when withdrawals or distributions are made.
• Death Benefits – contributions are generally protected against risk in the event of death.
• Available as an Individual Retirement Annuity
  • Contributions may be deductible from the income tax return, up to a maximum established by law. *
  • Allows transfers from other IRAs or pension plans. *

• Partial withdrawals – you can withdraw up to 10% of the premium paid annually, with no fees for early withdrawal or market value adjustment. Subject to a maximum of 50 % in 7 and 10 year annuities.
• Total distribution – you must wait for the expiration of the contract, depending on the term selected. If you cancel before maturity, you are subject to a penalty and a market value adjustment, whether positive or negative.
• Guaranteed income benefit for life – endorsement to secure guaranteed lifetime income.
• To purchase the endorsement, you must be 45 years old; to activate it, you must be 55 years old.

• The IRA (or Individual Retirement Annuity) is designed to encourage the taxpayer to save and establish a retirement fund.
• Contributions may be deductible from the income tax return and earnings are not taxed until withdrawals from the account or contract begin.
• If an IRA withdrawal is made before age 60, you may be subject to a penalty from the Treasury Department of 10 % of the amount of the withdrawal.

• Any person who receives income from salary, professional services or is self-employed, including any person who participates in another eligible retirement plan.
• Any person who has not reached the age of 75.
• Resident of Puerto Rico.

• You can make annual contributions of up to $5,000 or 100 % of income generated, whichever is lower.
• Up to $10,000 can be contributed if the return is filed jointly by a married couple (a separate account must be established for each spouse).
• The contribution limit also applies to the ROTH IRA (non-deductible IRA) and generates exempt interest or profits.

• After reaching 60 years of age.
• If the taxpayer has not reached 60 years of age, there is a penalty from the Treasury Department of 10 % of the amount of the withdrawal, except if the taxpayer withdraws for the following reasons:
  • disability
  • job loss
  • payment for children’s university education
  • purchase of the first residence
  • repairs of damage to the main residence caused by hurricane, earthquake, fire or other fortuitous causes
  • computer purchase (limitations apply)
  • terminal illness

Deductible (IRA):

• maximum contribution of $5,000 per taxpayer
• the tax advantage is at the moment
• profits increase by postponing contributions
• taxpayers who are in higher tax rate benefit more

Non-deducible (ROTH):

• maximum contribution of $5,000
• the tax advantage is at the time of retirement
• withdrawals are exempt from contributions including the principal

• Yes, it is allowed to transfer funds from a qualified plan to an IRA and from one IRA to another IRA.
• Example: 401K, 1165e, pension plans, Keogh
• to consolidate IRAs