No. of Recommendations: 3
I believe I could choose from most stocks, bonds, and mutual funds to invest the annuity funds.

I'm not up to date on what is available now, but traditionally, variable annuities allow you to select from several investment portfolios. Hence, they are much like mutual funds except for the tax advantages and the extra fees. I am not aware of any self directed annuities that allow you to pick your own stocks and bonds, but perhaps that is something new. Fidelity will tell you what they offer I am sure.

Taxable money would be used to fund an annuity but withdrawals are tax free, is that correct?

The way it usually works is like with an IRA. Part of each distribution from the account is treated as a return of the money you invested. So much depends on how much accumulated investment earnings you have in the account. If your returns are good, the distribution is mostly taxable; if returns are modest, its mostly return of your investment. The gains are taxed at ordinary income tax rates.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement