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Author: peppermintpatty Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Re: Variable Annuity Date: 9/3/1998 2:09 PM
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Dear Galleta: A Tax Deferred Annuity is an "insurance" product, and enjoys some special tax benefits - virtually unlimited premium contributions are allowed (some providers may set limits), and tax-deferred growth. Because the premiums are after-tax, only the gains will be taxable when you withdraw (typically gains before principle) after the age of 59.5 (to avoid the 10% penalty from IRS). In summary, I like it for people who've made full use of other tools, like 401k, 403b, Roth/IRA, IRA, etc., and still have additional monies to lock 'till retirement with tax-deferred growth opportunity. Of course, most annuities have some schedule of surrender charges... Best wishes! PP
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