Who Should Buy a Nonqualified Tax-deferred Annuity?

Authors

  • William Reichenstein Hankamer School of Business, Baylor University

DOI:

https://doi.org/10.61190/fsr.v11i1.4719

Keywords:

Savings vehicles, Variable annuity, Nonqualified annuity

Abstract

This study describes the structure of nonqualified tax-deferred annuities and examines when they are in the best interest of individual investors as savings vehicles. It concludes that, unless they are concerned about creditor protection, few individuals should consider saving in an annuity. Those few must decide between an annuity and a mutual fund held in a taxable account. In general, young investors with long investment horizons should consider annuities. Costs are a critical factor, however. Most annuities have high costs compared to mutual funds. This study concludes that investors fare better with either low-cost annuities or low-cost mutual funds.

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Published

2002-03-31

How to Cite

Reichenstein, W. (2002). Who Should Buy a Nonqualified Tax-deferred Annuity?. Financial Services Review, 11(1), 11—31. https://doi.org/10.61190/fsr.v11i1.4719

Issue

Vol. 11 No. 1 (2002): FSR Spring 2002

Section

New Original Submission

License

Copyright (c) 2002 Academy of Financial Services

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