What to Do with Lump-Sum Gains, Avoiding 1099s and Other End of Year Tax Tips for Savvy Investors

Annuities Increasingly a Popular Choice For Squirreling Away a Portion of Annual Bonuses

Marina Del Rey, California, UNITED STATES


MARINA DEL REY, Calif., Dec. 19, 2000 (PRIMEZONE) -- December is a month for holiday cheer but also a time to reflect on one's financial gains or losses for the year -- changes that might have tax implications.

If you suffered losses on taxable investments, you might consider selling the losers, and reporting the loss on Schedule D of the tax return to minimize taxes due. Such losses are generally available to offset gains and up to $3,000 of ordinary income. However, some investors who lost value in a mutual fund might still owe the I.R.S. for realized gains since capital gains are distributed to all shareholders, regardless of how long they have held the fund. This is because fund managers sold stocks bought in previous years to secure gains and reshuffle their portfolios, and as a result take capital gains and distribute them to shareholders.

The practice of restructuring a portfolio and locking in capital gains also occurs within a variable annuity's sub-account, which puts its funds in public equity markets. But annuities offer tax-deferred protection, and therefore no 1099s are issued to their owners.

"Moving forward, consider a variable annuity to defer taxes. Unfettered from annual taxes, the investment together with potential gains works harder. Variable annuities offer an opportunity to participate in public equity markets, without worrying about annual 1099s," said Gregory G. Yost, chairman and CEO of AnnuityScout. Yost is a noted expert on tax-deferred investing and his company has been featured in such media outlets as Bloomberg's Money Wise, BusinessWeek, Dow Jones News Service and The Wall Street Journal.

If you made gains, you've learned that paying taxes might be the most painful part of investing for retirement. Again, consider an annuity to defer taxes and make your money potentially grow faster with the effects of compounding tax-deferred gains. If you have a lump sum cash inflow from a source such as an employment related bonus, consider investing a portion of it in an annuity, particularly if you have already maxed out your 401(k) and IRA accounts.

December is also a time investors donate to charity before year end and get a tax deduction. Consider giving an annuity as a lifetime gift to your favorite non-profit organization. A fixed annuity can guarantee an immediate lifetime stream of income to a charity of your choice (and, depending on the annuity you choose, a guaranteed sum upon your death) without worries about changes needed in a will.

While some may consider choosing an annuity a difficult task, AnnuityScout makes comparing and shopping for annuities easy. Rated by Online Investor Magazine (October 2000) as a top personal finance Web site, AnnuityScout.com is the leading no-load annuity marketplace representing more than 50 highly rated insurance companies. Unlike single-carrier, single-product sites, AnnuityScout maintains its independence from any one company, placing its priorities on the needs of clients. The company has a state-of-the-art call center fully staffed with licensed Annuity Specialists. AnnuityScout encourages consumers to call its toll-free number at 1-800 TAX-CUTS with any questions.

The above tips and scenarios are based on generalities. Naturally, you should consult your tax advisor for advice best suited to your individual tax situation.

About the Annuities Industry

LIMRA International (an independent service that monitors the Insurance Industry) reports that overall annuity sales (combined variable and fixed annuities) grew from $98.5 billion in 1995 to (an estimated) $155 billion in 1999. This represents an average annual growth rate of 12%. Variable annuity sales have shown even greater growth. According to The VARDS Report (an independent service that monitors the variable annuity sales), the variable annuity market has grown from $51 billion in 1995 to $121 billion in 1999, a compound annual growth rate of 19%. Through third quarter 2000, sales for variable annuities reached $105.9 billion, a trend that could make 2000 a record year for variable annuity sales and could push the overall market past $200 billion.

About AnnuityScout

AnnuityScout is an independent annuity service for both consumers and the company's business-to-business alliances. Rated by Online Investor Magazine (October 2000) as a top personal finance Web site, AnnuityScout.com is the leading online marketplace for no-load annuities. Representing more than 50 insurance companies, the comprehensive AnnuityScout "supermarket" is designed to offer products direct to those consumers who want more value from their annuities. AnnuityScout's proprietary technological platform enables the company to efficiently service the needs of its business-to-consumer clients and its business-to-business alliances both on and offline. The state-of-the-art AnnuityScout call center is staffed with licensed Annuity Specialists. AnnuityScout is a free service of Independent Advantage Financial and Insurance Services, Inc. (IAF). Founded in 1987, IAF has facilitated the purchase of more than $1 billion in annuities and high-end life insurance direct to the consumer through marketing alliances and other endorsements. AnnuityScout is headquartered in Marina Del Rey, California and can be reached at 1 (800) TAX-CUTS (829-2887).

Licensed employees of Independent Advantage Financial and Insurance Services, Inc. dba AnnuityScout.com, are registered representatives of, and securities are sold through, Sentra Securities Corporation, a registered broker-dealer, member NASD/SIPC. Independent Advantage is located at 330 Washington Blvd., Suite 800, Marina Del Rey, CA 90292-5149.

Variable annuities are sold only by prospectus, which contains complete information on charges, expenses and risk factors. Prospective investors may obtain a free prospectus by contacting AnnuityScout.com at 1 (800) TAX CUTS. The prospectus should be read carefully before investing or sending money.

Variable annuities involve investment risks including the possible loss of principal. An investor's contract, when redeemed, may be worth more or less than the original investment amount.

Annuities are designed as long-term retirement savings vehicles. Earnings withdrawn prior to age 59 1/2 may be subject to a 10% federal tax penalty. Individuals should consult their tax advisor for questions regarding their particular situation.



        

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