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Taylor Johnson
Annuities

Protect what you've built. Turn it into income.

For after you've built your savings, maybe in an old 401(k) your employer no longer matches. An annuity is a contract with an insurance company. You give it a sum of money, and in return it protects that money from market losses, grows it tax-deferred,4 and can pay you a guaranteed income for life.3

Is an annuity right for me?Compare with IUL

Key terms

Terms you'll meet when you compare annuities.

Rollover
Moving an old 401(k) or IRA into an annuity. Done directly, the money stays tax-deferred.4
Floor
The least an indexed annuity can credit: 0%. Market drops aren't credited as losses.1
Income rider
An add-on that guarantees lifetime income from a deferred annuity, while the account stays in your name.3
MYGA
Multi-Year Guaranteed Annuity. A fixed rate, guaranteed for a set term.3
SPIA
Single Premium Immediate Annuity. One lump sum in, income out, usually starting within a year.

The three types

Same family. Different jobs.

Taylor works with all three. Which one fits depends on what you need the money to do: grow with protection, earn a set rate, or pay you an income.

FIA

Fixed Indexed Annuity

Growth potential, with a 0% floor.

Interest is credited based on a market index, up to a cap, and never below zero.1 Your principal is protected from market losses.3

Guarantee
A 0% floor on index credits1
Best for
Growth with protection over 5–10+ years
MYGA

Multi-Year Guaranteed Annuity

A guaranteed rate, locked in.

Think of it like a CD from an insurance company: a fixed interest rate guaranteed for a set term, often 3–10 years,3 with tax-deferred growth.4

Guarantee
The rate, for the full term3
Best for
Predictable growth on money you don't need yet
SPIA · DIA

Income Annuity

A paycheck for life.

Turn a lump sum into guaranteed income that starts now (immediate) or later (deferred), and can last as long as you live.3

Guarantee
Income for life, or for a set period3
Best for
Covering essential bills in retirement

Each drawing shows how that type works. Schematic, not to scale.

Who it's for

Built for people who've saved, and want to keep it.

Annuities shine in the years just before and during retirement, when a market crash would hurt most and a steady paycheck matters more.

Often a good fit

  • Pre-retirees and retirees, typically 50 and up

    The years around retirement are when a market drop does the most damage.

  • Anyone with an old 401(k) from a previous job

    Once the employer match stops, it's worth a second look. A direct rollover keeps the money tax-deferred.4

  • Savers with CDs who want a better guaranteed rate

    MYGA rates often compete well with CDs. Unlike CDs, they aren't FDIC insured.3

  • People worried about outliving their money

    An income annuity can pay you for as long as you live.3

  • Those who can't, or would rather not, pass a medical exam

    Most annuities don't require medical underwriting.

  • Anyone who wants a floor under their retirement

    Fixed and indexed annuities aren't exposed to market losses.3

What it can do

What a 401(k) alone can't do.

A 401(k) is built for building. It rides the market, and on its own it won't pay you for life. Here's what an annuity adds, and when it works best.

What it can do

  • Principal protected from market losses (fixed and indexed types)3
  • Tax-deferred growth until you withdraw4
  • Guaranteed income options you can't outlive3
  • Guaranteed rates that often compete well with CDs3
  • Usually no medical underwriting
  • Remaining value can pass directly to beneficiaries

Works best when

  • You've already built savings, like an old 401(k), IRA or CDs
  • You're within about 5 to 10 years of retiring, or already retired
  • You want income you can count on, not just growth
  • You'd rather not watch the market every day
  • You'd like to protect a portion, not necessarily all, of what you've built

The balance

An annuity works best when the money has one clear job. Choose the type to match it.

Annuity questions

Questions, answered plainly.

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A contract with an insurance company. You put money in, all at once or over time, and the insurer either grows it with protection from market drops or turns it into a stream of income that can last for the rest of your life. It's built to solve one problem in particular: making sure your money lasts as long as you do.

Often, yes. Once you've left that employer, you usually have more options than you realize, and some plans allow it while you're still working there. A direct rollover generally moves the money without taxes or penalties, so it stays tax-deferred. Many people move part of it, not all, to protect a portion and create income. Taylor can review your old plan with you for free.

That's the risk that worries people most, because a big drop right before you retire can change when you're able to stop working and how long your savings last. Fixed and fixed indexed annuities aren't exposed to market losses, so the money you move into one isn't affected by a crash. That's why many people protect a portion of their savings as retirement gets close. Guarantees depend on the insurer's claims-paying ability.

Fixed, fixed indexed and income annuities aren't exposed to stock market losses. Their guarantees depend on the financial strength and claims-paying ability of the issuing insurer, so who you buy from matters. Taylor focuses on highly rated carriers. Annuities are not FDIC insured.

Usually not. With a deferred annuity, the account is still yours. You can see the value, take withdrawals each year and name your beneficiaries. You only give up the lump sum if you choose to annuitize, which converts it into a stream of payments. An income rider is another way to get lifetime income while the account stays in your name.

It depends on how much you put in, your age when income starts, whether payments cover just you or you and a spouse, and how long you wait. In general, waiting longer and starting older means larger payments. Taylor can compare real quotes from several insurers for you.

Similar idea, different wrapper. A MYGA locks in a fixed interest rate for a set number of years, often 3 to 10. Unlike a CD, the interest grows tax-deferred, and it's backed by the insurance company instead of FDIC insurance.

Growth is tax-deferred, so you pay no tax on gains until you take money out. Then gains are taxed as ordinary income. If the annuity was funded with IRA or 401(k) money, withdrawals are generally fully taxable, just like the account it came from. A tax professional can tell you how this applies to you.

You don't pay Taylor directly. The insurance company pays her commission, and your full deposit generally goes into the contract. The review itself is free, with no obligation.

If income hasn't started, the remaining value generally goes straight to your named beneficiaries, usually without going through probate. If income has started, it depends on the payout option you chose. Some payments stop at death. Others keep paying a spouse or refund what's left to your beneficiaries.

Taylor Johnson

IUL & Annuity Specialist

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