SPDA Home Compare SPDA Calculator Is a SPDA right for me? Links & Resources About us

What Are the Tax Ramifications of a Deferred Annuity?

SPDA investments (and the resultant appreciation) grow tax-deferred. They are not taxed until distributions are taken.

When money is withdrawn, only the income portion – not the principle – gets taxed.
And, SPDAs are taxed as income, not capital gains.

Investors looking for low-risk and long-term growth may find that over time, a SPDA will out-perform several other types of investments. Unlike other investment vehicles, they do not expose an investor to extreme market risk.
  Proceeds are taxed only when distributions are taken.

In contrast to an IRA, there is no limit to the amount that may be invested in a SPDA. Like the IRA, there is a tax penalty for withdrawals before 59 1/2.