Do fixed immediate annuities make sense for individuals who are:
1. Not in good health, and/or
2. Do not have a family history of longevity better than the average mortality used by insurers in their annuity pricing, and/or
3. For retirement, already have, or expect to have, enough guaranteed sources of income streams ;such as Social Security and pension income) to cover their essential needs - food, housing and health care?
A small number of states impose a tax on the purchase cost of annuities. This relates to the payout phase, not to the accumulation phase of an “ investment” in an annuity. as opposed to the “purchase” of an annuity income stream). As an example, California’s tax rate is 0.50% on the purchase cost for “qualified” annuities (funded from tax sheltered retirement plans like IRAs, Section 401(k) plans and Section 403(b) plans), and 2.35% on non qualified plans. The tax comes off the top of the single premium. Dies that mean that an annuitant who pays, say, $200,000 to pay the single premium for an annuity will receive a regular income payout based not on $200,000 but on $195,300 (97.65% x $200,000)?