Everything in an annuity is tax deferred, but when you withdraw it, it is taxed at regular income rates..maybe 23 to 33% of the gain simply disappears.

The same gain in an index fund would be taxed at cap gains rates....20% maximum . If you want a 'guaranteed' floor, buy a balanced fund, or do your own Couch Potato portfolio ( www.scottburns.com ).

If you are near retirement, most likely you don't want any money put into an annuity..it locks it up for years, with high surrender charges (to pay the salesman's up front commission).

The only time to think about an annuity is if you are taking your pension, and your company annuitizes your pension through a 3rd party to provide you monthly income checks. Some company pension plans work that way.

If you are in retirement, often you don't need 'tax deferral' while retired.

There are few cases where annuities should ever been considered, and as an investment vehicle, they are always going to be hindered by the loads associated with them, and high expense ratios.

The only people who should consider annuities are those unable or unwillng to manage their money, and want 'monthly income for life' from a lump sum payment (cash value pension , or separation pay, or whatever). They will pay a few percent a year in fees for that privilege.

Before you buy an annutiy, read the latest Suze Orman book...borrow from the library...


t.