Under The Sun With An Annuity

If there is “a time under the sun for everything,” then surely there is a time in your life when you can look in the mirror and rightfully tell yourself, “I’ve worked hard all my life.  I’ve met every challenge life has thrown me.  It’s time to stop working and to start living life my own way.  These are the years that belong to me.”

In a way, retiring is like going on a trip abroad.  You wouldn’t just pack a suitcase and board a plane.  You try to prepare for your journey.  You’d read guidebooks about the places you plan to visit, study currency rate, and find out what kind of weather to expect. And of course you’d prepare a itinerary so you’d know where you are going and when. 

Similarly, if your journey into retirement is to be successful, you must equip yourself with the information you’ll need on your journey into the world of Social Security, Medicare, medigap, long term care, pensions and 401(k) plans. 

Today retirees must decide how and where to roll over their retirement assets, when to begin taking Social Security benefits and how to allocate their investments so that their financial needs are met.

Now that you have saved bit of money, think about how you can diversify your investments.  While a retiree maybe reasonably secure financially today, some still have to worry about whether they could run out of money during retirement. Retirees today face a complex financial and emotional landscape that can stretch out for 30 years or more in some cases.

It’s never a good idea to put all your “eggs in one basket.” A small amount of money must always be in your bank where you can withdraw for emergencies.  The rest of the money should be in various investments such as bonds and money market funds and annuities. Annuities appeal to people who want a predictable monthly income.

Annuities can play a useful part in the retirement asset allocation process by providing additional income streams. Many of those that invest in annuities will do so once they have reached their limits on other retirement savings options (i.e. when maximum contributions have been made to 401(k)s and IRAs).

Annuities can play a useful part in retirement planning for some. Those looking for a guaranteed income, for example, might use these products to form their base income and use savings with less predictable returns as an add-on.

There are various advantages to annuity investment. These products can, for example, give the following benefits:

• Income guarantees: Annuities can give a guaranteed income. A fixed annuity, for example, will give a secure income for the contracted period.
• Payment flexibility: Annuities can be purchased with a lump sum payment, regular payments or periodic payments. This allows individuals to use them at various life stages. Some will buy early in life; others will buy just before retirement.
• Annual contributions: There are no pre-set annual contribution limits for annuities.
• Payout flexibility: An annuity can be set up to make a one-off payment or regular payments (i.e. monthly or annually) for a number of years or for life.
• Tax status: Any profit made on an annuity will be tax-deferred until it is paid out. In some cases tax will only be applied to interest earned and not to the principal investment.
• Death benefits: If the investor dies before the annuity pays out then their next of kin will usually receive at least what they have paid in. In some cases, if they have a pre-determined payment schedule, they may also receive the income.

For many, the primary advantage to using annuities is the fact that they can be used for guaranteed income that does not have to be dependent on stock market returns. To make money in equities, we must be very expert in market trends and politics.

Even the weather can affect the stocks! When you are investing for your future, you need to realize that the best route is to risk a little for a little gain; otherwise, the odds will quickly catch up to you. It’s your future; play it safe, and you actually will have one.

Choosing whether an annuity is a suitable retirement investment tool also involves looking at the disadvantages. These include:

• Tax status: At least part of annuity payments may be liable for taxation. In some cases (i.e. a lump sum payment) the entire annuity payout may be taxed. Tax rates are set at income tax levels which are higher than the dividend rates charged for other investments such as mutual funds.
• Age limits: An annuity cannot pay out until the investor reaches the age of 59½ without penalties. Closing down an account inside a specific timescale can incur additional early settlement fees and costs.
• Inflation: The set payout that is given may look good when buying the annuity but the effects of inflation over the years could reduce the real value of the payout when it happens.
• Lack of flexibility: Annuities offer fixed benefits and once a contract has been signed it may not be able to be changed. If changes can be made, there are likely to be costs involved.
• Death: Although an annuity will pay back payments made or continue paying out (depending on the product stage) those inheriting this cash will have to pay income tax on it.

What is an Equity Indexed Annuity?

With an Equity-Indexed Annuity, your return is tied to the increase in one of several stock market indexes, such as the S&P 500. However, if the stock market goes down, you do not lose any of your money. In fact, most Equity-Indexed Annuities will even GUARANTEE you a minimum annual return (typically 3%), even if the index you invested in goes down the entire time you are invested.

An Equity-Indexed Annuity is a great place to protect the money you’ve saved in your CDs, money market accounts, IRA accounts, etc. Or perhaps as an alternative for the money you currently have invested in stocks and mutual funds. Equity-Indexed Annuities can greatly improve your earnings potential, while at the same time keep your principal safe from market fluctuation.

Additionally, Equity-Indexed Annuities are a good option for people who already own annuities and have seen their interest rates drop substantially. Many people do not realize that you can easily trade-in an older, possibly under-performing annuity for one that better suits your needs. This exchange can be accomplished with no out-of-pocket expense or current taxes to pay!

Just how good of an investment are Equity-Indexed Annuities? Well, if you had bought one just before the collapse of the stock market instead of investing directly in the stock market itself, you would be a much happier person right now!

Upsides of EIAs
If a deferred annuity is an appropriate part of a person’s overall financial plan, an EIA can be a good way to “share” in the potential gains of the stock market, while at the same time being assured that the principal investment will not go down in value (even if the stock market index to which the EIA is linked goes down). Some EIAs also provide for a guaranteed minimum rate of return. As deferred annuities, EIA earnings are not taxed until funds are withdrawn.

Like other annuities, an equity indexed product allows an individual to buy a form of insurance that can be converted into income at a later date. This is usually used to provide money in retirement. This option is often described as a “best of both worlds” solution that brings both fixed and variable payment components to the table. This may give a better return than a fixed annuity without the risks of a variable option.

So, for example, equity indexed annuities will pay a guaranteed minimum when they mature like a fixed product. But, they may also give an income boost as they incorporate a variable element linked to a stock market index. If this performs well then an annuity may pay out more than the fixed minimum. If performance is low, then the guarantee gives some security.

An individual who worries about having a large enough income to fund later life and who has a cash lump sum available may find that this is an investment solution worth considering.

Annuity Medicaid Benefits

1. Medicaid is a state-operated, federal-and-state-funded health insurance program for qualifying low-income individuals, including the elderly and disabled, pregnant women, and children. In some states, Medicaid also covers women with cervical or breast cancer, individuals with HIV/AIDS, refugees and other at-risk groups.

Dual Eligibility

1. Individuals with both Medicare and Medicaid may qualify for Qualified Medicare Beneficiary (QMB) or related programs. These programs offer recipients the benefit of paying their Medicare co-payments, co-insurance, deductibles and other out-of-pocket costs related to Medicare.

Dental Benefits

1. The Centers for Medicare and Medicaid services mandates that all state Medicaid programs must provide dental services to individuals under age 21. These programs must cover regular exams, X-rays, restoration of teeth and other essential services. States have the option to choose what level of dental coverage, if any, to provide to individuals 21 and over. Coverage of orthodontic braces varies among states.

Prescription Drugs

1. Medicaid offers coverage for most prescription drugs. However, if pill quantity or dosage limits are exceeded, a prior authorization will be required and the claim for coverage may be denied.

Mental Health

1. Medicaid provides comprehensive coverage for the mentally ill, including psychotropic medication management, individual, group and family therapy, case management, partial hospitalization services, inpatient and residential mental health and addictions treatment.

Elderly

1. Medicaid covers the cost of long-term care at nursing facilities, hospice care, in-home health services and other medical services for the elderly.

Medical Transportation

1. Emergency medical transportation is covered under all Medicaid programs. Non-emergency medical transportation coverage varies among states. Contact your local or state Medicaid office to determine the exact coverage.

General Medical Care

1. Medicaid provides coverage for a variety of inpatient and outpatient medical services, including annual checkups, services provided by specialists, physical therapy and more. Consult with your state’s Medicaid program to obtain a more comprehensive listing of covered services.

Annuities

  Annuities are private insurance contracts that guarantee an income to the insured. The insured deposits a lump sum of money, over time or all at once, into the annuity. In exchange, the insurance company promises to pay the insured a steady income to the insured for a set period of time or for the life of the individual. However, if you need long-term care, Medicaid rules mandate that you spend down your assets. This is where owning an annuity could be beneficial for your beneficiaries.

Flexibility

  Your annuity can be a deferred annuity until you need to annuitize the contract. Annuitization makes the deferred annuity an irrevocable contract that cannot be taken away from you. This can be beneficial when you need to enter a nursing home and want to qualify for Medicaid but do not want to spend all of your savings.

Change of Ownership

  Annuities are private insurance contracts and allow you to change ownership of the contract. Due to laws concerning Medicaid qualification, you would need to change ownership of the contract at least five years prior to your entering a nursing home. Medicaid will look back over a period of five years to determine what assets to include in your total savings and income. This, in turn, will determine your eligibility for Medicaid funds.

Preservation of Assets

  By using an annuity, you can preserve your savings for your beneficiaries. This is done by annuitizing the contract. During the time that you are alive, the nursing home will receive the monthly payments from your annuity; but after you pass away, your beneficiaries will receive the remainder of the annuity.

Qualified & Non-Qualified Annuities are Taxed Differently.

Qualified annuities (such as annuities in an employer-sponsored retirement plan or an IRA) are typically purchased with pre-tax money, so withdrawals are fully taxed as ordinary income.

It’s important to understand that purchasing an annuity in an IRA or an employer plan provides no additional tax benefits than those available through the original tax-deferred retirement plan.

Annuities purchased with after-tax money are taxable upon withdrawal, but only the earnings are taxed. Funds inside an annuity contract grow on a tax-deferred basis, so the contract holder owes no taxes on the income and investment gains from an annuity until contract withdrawals begin.

Nonqualified annuities are taxed differently from most investments:

• ·A nonqualified annuity grows tax-deferred until withdrawals begin or the policy is annuitized.
• ·A nonqualified annuity does not provide a step-up in cost basis at death, and the deferred earnings will be taxable as ordinary income to a non-spousal beneficiary.
• ·Spousal continuation of the policy may be available to preserve continued tax-deferred growth.
• ·An annuity is included in your estate for estate tax purposes.

Nonqualified annuities bought after August 13, 1982, are taxed on a Last In, First Out (LIFO) basis. This means that as you take withdrawals, the accrued interest will be the first money taken out and taxed as ordinary income. After the interest has been paid, the initial investment amount will then be distributed without any further taxes.

Types of Annuities

Annuities are classified in a number of different ways. For federal tax purposes, annuities are classified as either qualified or nonqualified. A qualified annuity is purchased as part of, or in conjunction with, an employer provided retirement plan or an individual retirement arrangement (such as an Individual Retirement Annuity or a Simplified Employee Pension Plan). If certain requirements are satisfied, contributions made to qualified annuities may be wholly or partially deductible from the taxable income of the individual or employer making the contributions.

A nonqualified annuity is not part of an employer provided retirement program and may be purchased by any individual or entity. Contributions to nonqualified annuities are made with after-tax dollars and are not deductible from gross income for income tax purposes.

Annuities are also classified by type of investment and type of payout. Under a fixed annuity, the owner has both the security of a set rate of return and no investment decisions related to the annuity funds. The title “fixed annuity” does not mean that the earnings rate credited will never change; rather, it means that the earnings rate is set periodically by the issuer and then “fixed” until the rate is changed again.

Non-Natural Owners

Tax Treatment:

Contracts owned by “non-natural” persons are subject to annual tax on the inside buildup in the contract.

Exceptions:

• Held as a trust or other entity as an agent for a natural person
• Immediate Annuities
• Acquired by an estate upon the death of the owner

Not taxable to:

• charitable organizations
• pension plans
• Contracts issued on or before 2/28/86

The owner of a variable annuity has the ability to allocate contributions among underlying mutual funds. The rate of return is dependent upon the performance of those investment options, and there is no guarantee that the investment will not decline. The owner has the potential for earning a greater return than on a fixed annuity, but also assumes the risk of investment decisions.

By law, a variable annuity is considered a security, and the contract must be registered with the Securities and Exchange Commission.

Recently, some companies have begun to market an equity indexed annuity. This annuity is something of a hybrid between fixed and variable annuities. Under an equity indexed annuity, the owner’s principal is usually guaranteed and the rate of return is linked to a stock market index, such as the Standard & Poor’s 500.

Annuities are also classified as immediate or deferred. An immediate annuity is one which is purchased with a single premium and requires payments to begin within one year of purchase of the annuity. A deferred annuity does not have any set payment start date.

Who are the parties to an annuity contract?

The three parties to an annuity contract are the owner, the annuitant, and the beneficiary. In many instances, the owner and the annuitant will be the same.

The owner is usually the purchaser of the annuity and has all the rights under the contract, subject to the rights of any irrevocable beneficiary. The owner is subject to income tax on all payments made from the annuity, regardless of who is named as payee. If applicable, the penalty on any premature distributions is based on the owner’s age. If the owner dies while the contract is in the accumulation phase (discussed later), there is a mandatory distribution of the death benefit.

The owner may be a natural or non-natural person. Some examples of non-natural persons are corporations, partnerships, and trusts. Generally, annuity contracts owned by non-natural persons are not treated as annuity contracts for federal income tax purposes and the earnings on such contracts are taxed annually as ordinary income received or accrued by the owner during the taxable year.

As with many other income taxation rules, there are several exceptions to the non-natural owner rule.

For example, an annuity contract will be treated as owned by a natural person if the owner is a trust or other entity which holds the annuity as an agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a nonqualified deferred compensation arrangement for its employees. Immediate annuities are also excepted from the non-natural owner rule.

The owner names the annuitant and the beneficiary of the annuity contract. The annuitant must be a natural person and serves as the measuring life for purposes of determining the amount and duration of any annuity payments made under the contract. The beneficiary receives the death benefit or any remaining annuity payments upon the death of the owner.

Aggregation Rule

All contracts issued by the same company to the same policyholder during any calendar year will be treated as one contract for purposes of computing taxable distributions. 

Exceptions:

• Annuitized contracts
• Immediate annuities
• Distributions required on death of owner
• Contracts issued prior to 10/21/88
  Note: If a pre-10/21/88 contract is subsequently exchanged or transferred, the new contract becomes subject to aggregation.

Premature Distribution Penalty

10% of taxable amount.

Exceptions:

• The owner is over age 59½
• The owner is disabled after contract purchase
• The owner, not the non-owner annuitant, dies
• Pre-TEFRA (prior to 8/14/82 contributions) nonqualified money
• Immediate nonqualified annuity

Substantially equal payments

• must continue for 5 years or until owner reaches 59½, whichever is later
• must be computed based on life expectancy
• Annuitization (for the owner’s life or life expectancy

Note: An exchange from a deferred to an immediate annuity does not qualify as an immediate annuity for the purposes of avoiding tax penalty.

Tax Consequences of Ownership Changes

Types:

• Addition/deletion of joint owner
• Transfer to another individual or entity
• Assignment

Taxation:

• Earnings are subject to income tax at time of transfer
• 10% penalty may apply
• Gift taxes may apply

Exceptions:

• Transfers between spouses
• Transfers incident to divorce
• Transfers between an individual and his/her grantor trust

Mandatory Distribution upon Death of Owner

If Owner dies Prior to Annuitization:

Surviving owner (or beneficiary) must elect one of the following:

• immediate lump sum
• complete withdrawal(s) within 5 years of death
• annuitization (over the life of the new owner) to start within one year of death. If spouse is sole surviving owner (or beneficiary), spouse can also elect to continue contract. If owner is a grantor trust, death of grantor triggers mandatory distribution.

Mandatory distribution applies to all contracts issued after 1/18/85

If Owner Dies After Annuitization:

Payments continue to beneficiary, based on annuitant’s life and type of payment plan chosen

What are the phases of the annuity contract?

There are two distinct phases of the annuity contract: the accumulation phase and the annuitization phase. During the accumulation phase, the owner generally is not taxed on the earnings credited to the cash value of the annuity contract unless a distribution is received. The accumulation phase continues until the annuity contract is terminated or the annuitization phase begins.

The annuitization phase starts when the contract value is applied to an annuity payout option. This phase continues until the last payment is made according to the annuity payout period chosen by the owner (or in some cases, the beneficiary).

How are the distributions taxed during the accumulation phase?

When an annuity contract is fully surrendered during the accumulation phase, the owner must pay income tax on the earnings in the contract. The owner is not taxed on amounts that represent a return of contributions (such as premiums or investment in the contract). Partial withdrawals from an annuity in the accumulation phase are taxed on a last in, first out (LIFO) basis.

In order words, withdrawals from an annuity are made earnings first, and the owner is taxed on the payments until all of the earnings have been distributed. There is an exception to the earnings first rule for contributions made to annuity contracts prior to 8/14/82. These contributions are distributed on a first in, first out (FIFO) basis and the owner is not taxed until such contributions are fully recovered.

There is an aggregation rule which requires that all annuity contracts issued by the same company, to the same owner, in the same calendar year must be treated as one annuity contract for purposes of determining the taxable portion of any distributions.

How are distributions taxed during the annuitization phase?

During annuitization, a portion of each annuity payment represents a return of non-taxable investment in the contract and the balance of each payment is considered taxable income. The taxable and non-taxable portions of the payments are determined by an exclusion ratio. The exclusion ratio for a fixed annuity is the ratio the investment in the contract bears to the expected return under the contract.

The exclusion ratio for a variable annuity is determined by dividing the investment in the contract by the total number of expected payments. Once the total amount of the investment in the contract is recovered using the exclusion ratio, the annuity payments are fully taxable. If the owner dies before the total investment in the contract is recovered, and annuity payments cease as a result of his death, the un-recovered amount is allowed as a deduction to the owner in his last taxable year.

Income from an annuity doesn’t count toward income tallied for the purpose of calculating taxes on Social Security benefits. “This is a fairly significant benefit tax benefit for older taxpayer.

When does the 10% penalty tax apply?

The 10% penalty tax generally applies to the taxable amount of distributions from annuities made before the owner attains age 59½. However, there are exceptions for distributions: (1) made as a result of the owner’s death or disability; (2) made in substantially equal periodic payments over the life or life expectancy of the owner, or joint lives or joint life expectancy of the owner and designated beneficiary; (3) made under an immediate annuity; or (4) attributable to investment in the annuity made prior to 8/14/82.

What are the tax consequences of a transfer of ownership?

If an individual transfers ownership of a nonqualified annuity issued after 4/22/87, without full and adequate consideration, the owner must pay income tax on the earnings in the contract at the time of the transfer (except for transfers to a spouse or transfers made to a former spouse incident to a divorce). If the contract was issued before that date, the earnings in the contract can continue to be deferred, with the old cost basis carried over to the new owner. Transfer of ownership includes the addition or deletion of a joint owner. Also, the transfer of ownership may result in gift tax consequences for the owner.

What about Collateral Assignments?

Individuals who assign their annuities as collateral for loans may be surprised by the treatment of assignments. Generally, any collaterally assigned, pledged, or received as a loan under an annuity issued after 8/13/82 is treated as if it was distributed from the annuity. The amount collaterally assigned is taxed according to the rules applicable to partial withdrawals and full surrenders and may also be subject to the 10% penalty tax. If the entire contract is assigned or pledged, then earnings subsequently credited to the contract are automatically deemed subject to the assignment or pledge and are treated as additional partial withdrawals.

What happens at the owners’ death?

Distributions

If the owner dies after the annuitization phase has begun, the remaining payments, if any, must be paid out at least as rapidly as under the annuity payout option in effect at the time of the owner’s death.

If a beneficiary receives the remaining payments under the annuity payout option in effect at the owner’s death, the taxable and nontaxable portions of such payments will continue to be determined by the original exclusion ratio.

Withdrawals

Pre-TEFRA Contracts (Prior to 8/14/82):

• Principal out first – Not taxable
• Earnings outlast – fully taxable, but no penalty tax –

Post TEFRA Contracts (After 8/13/82)

• Earnings out first – Fully taxable and may be subject to penalty tax
• Principal out last – Not taxable

Notes:

If a pre-TEFRA contract is subsequently exchanged, it keeps pre-TEFRA tax treatment. Sub-accounts are combined to compute income in the contract

If the owner dies during the accumulation phase, the entire death benefit must be distributed within five years of the date of the owner’s death. However, there is an exception to the five-year rule, if the death benefit is paid as an annuity over the life, or a period not longer than the life expectancy, of the beneficiary and the payments start within one year of the owner’s date of death. If an annuity contract has joint owners, the distribution at death rules are applied upon the first death.

Under a special exception to the distribution at death rules, if the beneficiary is the surviving spouse of the owner, the annuity contract may be continued with the surviving spouse as the owner. If the owner of the annuity is a non-natural owner, then the annuitant’s death triggers the distribution at death rules. In addition, the distribution at death rules are also triggered by a change in the annuitant on an annuity contract owned by a non-natural person. 

Income Tax. Unlike death benefits paid from life insurance policies, the beneficiary may be taxed on distributions made from an annuity after the owner’s death. Amounts paid under the five-year rule are taxed in the same manner as partial withdrawals or full surrenders, and amounts paid under an annuity option are taxed in the same manner as annuity payments.

For variable annuity contracts issued on or after 10/29/79, and for all fixed annuity contracts, there is no “step-up” in basis for income tax purposes and the beneficiary pays income tax on the earnings. However, the beneficiary is entitled to deduct a portion of estate tax paid on the annuity for income tax purposes. For variable annuity contracts issued prior to 10/21/79, there is a “step-up” in basis for income tax purposes and no income tax is payable on the earnings.

Estate Tax

For federal estate tax purposes, the total value of the contract is subject to estate tax. Except as noted above, annuities are income in respect of a decedent and there is no “step-up” in basis for the contract and the annuity is subject to income tax when distributed

Tax-Qualified Annuities

Qualified annuities refers to an annuity that is purchased inside of a qualified retirement plan, like an Individual Retirement Account (IRA). A qualified annuity is taxed identically to any other qualified account such as an IRA, 401(k), profit sharing plan or other tax-deferred retirement account.

You can buy an annuity with funds in your IRA, and if you use pretax money from an IRA or a 401(k) to purchase the annuity, then all payouts will be fully taxed.

The annuity does not gain any additional tax advantages when housed inside of the qualified retirement plan, but will be subject to rules that govern qualified plans.

Annuities are chosen as part of a qualified plan primarily for their ability to provide a guaranteed income to the annuitant at retirement. But you must understand the rules for annuities inside of qualified plans.

Tax-deductible contributions

Annuities inside of a qualified retirement plan can take advantage of tax-deductible contributions, which are normally not an option when contributing money to an annuity. As a trade-off, contribution limits apply to annuities inside of a qualified plan.

Tax-deferred accumulation

Annuities inside of a qualified plan enjoy tax-deferred accumulation of cash values inside the annuity account. This means that money will not be taxed while it is inside of your qualified annuity.

Taxation of withdrawals

Withdrawals from a qualified annuity are taxed at ordinary income tax rates.

Because the contributions were tax-deductible, you “lose” the exclusion ratio normally found in an annuity.

The “exclusion ratio” in non-qualified annuities reduces your income tax burden by allowing you to create an annuity from your savings

When this happens, part of your monthly retirement check is comprised of principal and part of the check is comprised of interest. Since, normally, only interest is taxed, this helps to reduce current income taxes during retirement.

Investing in an annuity contract in the context of a qualified retirement plan moots the tax-deferral benefits of the annuity, since assets in qualified plans are already afforded tax deferral anyway. Still, annuities offer other features that might justify using them within a qualified retirement plan.

“Critics frequently question the value of putting an annuity, which offers tax-deferral benefits, in another tax-deferred investment such as a qualified plan or IRA. However, this argument fails to recognize the great value that annuity insurance guarantees can offer. 

Annuities offer consumers the option of insuring that the pre-tax dollars they have allocated for retirement are protected against downside market risk. They also offer beneficiary protection in the form of a guaranteed minimum death benefit, and the ability to convert retirement savings into a lifetime stream of income-all of which help ensure that their hard-earned savings will be there when they, or their heirs, need them most.”

The preceding is for information purposes only as we do not give tax advise, you should consult your tax professional for complete information regarding annuity taxation.

Senate Passes Financial Reform Bill

Harkin Amendment Provides Final Definition of Fixed Indexed Annuities as Insurance Products

This has been a historic week for the future of Fixed Indexed Annuities. On Monday, July 12, the appeals court vacated the Securities and Exchange Commission’s Rule 151A. While this was certainly good news, the passing of the Financial Regulations Bill by the Senate will prevent the SEC from asserting jurisdiction over Fixed Indexed Annuities when the conditions of the Harkin Amendment are satisfied.

After our next hurdle – getting this important legislation signed into law by the President – we must continue our diligence and focus adhering to state insurance regulation, product education and annuity training so consumers are assured an open and well-informed marketing environment.

While this is great news for the insurance industry it is also a reminder that it is our collective responsibility to make sure we never again face the challenges we have had to endure since the SEC introduced Rule 151A a little more than a year and a half ago.

We should be controlled in our exuberance and remain focused on a simple fact. Fixed annuities offer consumers a means of guaranteed retirement income that may play a vital role in helping consumers provide for their own financial wellbeing in retirement. 

Strict adherence to state regulations and our own code of ethics, should always be our primary focus as we continue to provide products and services to assist our consumers with their retirement needs.

Thank you to all of you that wrote letters, made phone calls and made other important contributions to this effort. The Annuity News worked hard to support this effort throughout the process.

We can all feel rewarded by the fact that our efforts have yielded these positive results. The Annuity News would like to acknowledge and express special thanks to the National Association for Fixed Annuities (NAFA) for their continuous work on all fronts of this effort.