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Annuity FAQs

  • An annuity is a contract between you and an insurance company in which you pay the insurer a lump-sum payment or series of payments. Your money is invested and accumulates on a tax-deferred basis. In return, at retirement the money is returned to you either in a lump sum, through periodic withdrawals, or as a guaranteed income stream for a specified period of time.

    An annuity can be issued as a non-qualified annuity, an individual retirement annuity (IRA) or a tax-shelter annuity (TSA). The amounts that can be paid into the annuity contract and the tax-treatment of withdrawals from it will depend on what type of annuity it is: non-qualified, IRA or TSA.

  • Variable annuities are designed to supplement a retirement program, serving as long-term savings vehicles and efficient sources of retirement income. Deposits to a variable annuity are invested in equity and/or fixed income funds.

    The value of the annuity (and income ultimately received) is directly related to the performance of the funds within the annuity. The fund selection process is critical and will vary for each individual depending on tolerance for risk and desired return.

    A variable annuity can be issued as a non-qualified annuity, an individual retirement annuity (IRA), or a tax-shelter annuity (TSA). The amounts that can be paid into the annuity contract and the tax-treatment of withdrawals from it will depend on what type of annuity it is – non-qualified, IRA or TSA.

  • To annuitize is to convert the accumulated value of an annuity into a stream of income. The payments may be a fixed amount, for a fixed period of time, or for a lifetime.
  • The following settlement options are available for both spouse, non-spouse, and partner beneficiaries, qualified and non-qualified, and most annuity products:

    • Lump Sum Payment

    • Fixed Interest Account (Immediate Taxation)

    • Transfer to a Non-Qualified Deferred Annuity or Life Insurance Contract

    • Transfers the Value to a Fixed Interest Supplemental Contract (Taxation Deferred up to 10 years)

    • Income Payments for a Fixed Period (Taxed as payments are received)

     

    Trust and Estate beneficiaries and MEMBERS Zone have more limited options:

     

    • Lump Sum Payment

    • Transfers the Value to a Fixed Interest Supplemental Contract (Taxation Deferred up to 5 years)

    • Income Payments for a Fixed Period (Taxed as payments are received)

     

    Additional settlement options may be available based on product and beneficiary relationship.

  • The ability to change ownership of a policy varies by product. The service request can be made by completing a form.  To obtain the form, follow the steps below or call for assistance. 
    Sign-In or Create Your Account  
    • Select Help and Support  
    • Select the type of Annuity product you have from the Forms section
    • Select the Absolute Assignment form that matches your request
    • Complete and mail 
  • Partial withdrawals cannot be made online. Please call for friendly help and expert assistance with your contract.
  • Go to Account Overview and click on View Policy Details or View Contract Details. Please refer to your contract for additional features and benefits or call for friendly help and expert assistance.
  • This service request can be made by completing and mailing a form.
    Sign-In or Create Your Account  
    • Select Help and Support  
    • Select the type of Annuity product you have from the Forms section
    • Select the form that matches your request
    • Complete and mail 
  • We currently do not provide e-delivery of statements or other documents. Please call us for assistance at 1-800-798-5500.

    For assistance by TTY: dial 711 and ask to be connected to 1-800-798-5500. Dialing 711 connects you to Telecommunications Relay Services (TRS). TRS permits persons with a hearing or speech disability to use the telephone system via a text telephone (TTY) or other devices to call persons with or without such disabilities. TRS calls have no time limits and are confidential.

  • Federal Tax Forms such as 1099-R will be mailed by January 31st each year. Certain tax forms may be required to be mailed on different dates.
  • The length of time it takes to receive your money will depend on the time at which the request is received and the delivery method that you choose. Requests received prior to 3:00 p.m. CT are processed within 3 calendar days. Requests received after 3:00 p.m. are considered received the next business day and will be processed within 4 calendar days.

     

    Delivery methods available include: 

    Method Time Charges
    Check sent via U.S. Postal Service Sent the day after the request is processed. Receipt depends on U.S. Postal Service. None
    Check sent via Overnight Delivery Service Sent the day after request is processed. For most areas, you will receive the check the next business day. Some remote areas take 2 business days. $25.00
    Wire to your account Funds will be credited to your account the day after we process your request. We need the name of your financial institution, routing and account numbers, type of account (savings, checking or share draft) and names on the account. $25.00
    Electronic Funds Transfer Funds will be credited to your account with 48 hours (business days) after your request is processed. We need the name of your financial institution, routing and account numbers, type of account (savings, checking or share draft) and names on the account. None

     

     


  • Individual Retirement Arrangements (IRAs) are personal savings plans that give you tax advantages for setting aside money for retirement. IRAs can be an individual retirement account or an annuity, which can be either a fixed or variable annuity. It must be set up in the United States in your name and for the exclusive benefit of you or your beneficiaries. Following is a chart of the primary differences between Traditional IRAs and Roth IRAs:

    Eligibility
    Roth IRA Traditional IRA

    Individuals with compensation meeting income limits

    OR

    Non-income earning spouses who file a joint return with a working spouse who meets the income limits.

     

    Individuals with compensation

    OR

    Non-income earning spouses who file a joint return with a working spouse

     Federal Taxes
    • Contributions are not tax deductible.
    • Contributions and earnings are free from federal tax upon withdrawal under specified conditions.
    • Distributions are not required during the lifetime of the owner.
    • Contributions may or may not be deductible depending on your income tax filing status, modified adjusted gross income (MAGI), and eligibility to participate in a qualified employer sponsored retirement plan.
    • Earnings grow tax deferred. Earnings and deductible contributions are taxed as ordinary income upon withdrawal.
    • Minimum distributions are required beginning at age 72.
    •  

     

  • Transfer

    A transfer is a method of moving qualified funds from one trustee to another without triggering a reportable event. Transfers often occur between two financial institutions but they can also be between contracts or accounts at the same institution. To qualify as a transfer:

    • It must be between "like kind" plans (e.g. Traditional IRA to Traditional IRA, Roth IRA to Roth IRA), and
    • There must be no constructive receipt of the funds. In other words, the check must be payable and directed to the receiving financial institution as trustee.

    Direct Rollover

    A direct rollover is a method of rolling eligible distributions from one type of qualified retirement plan to another type of qualified retirement plan (e.g. Tax Sheltered Annuity (TSA) to a Traditional IRA, 401(k) to a Traditional IRA). To qualify as a direct rollover:

    • The funds distributed must be an "eligible rollover distribution" which can generally be described as a distribution you receive upon a qualifying event such as retirement, termination of employment, attainment of age 59 1/2, or disability. The Internal Revenue Code defines eligible rollover distributions for each plan type.
    • The receiving qualified retirement plan must allow for the acceptance of rollovers, and
    • The funds must be transferred directly from one financial institution to another for your benefit. In other words, the check must be payable and sent to the receiving financial institution as trustee.

    Indirect Rollover

    An Indirect Rollover is another method of rolling qualified retirement plan assets from one qualified plan to another (e.g. 401(k) to Traditional IRA, Traditional IRA to Traditional IRA). In an indirect rollover, the plan participant or IRA holder has constructive receipt of the funds from the distributing plan. In other words, the check is made payable to the account owner instead of the receiving financial institution.

     
    Generally, individuals receiving the funds from a qualified retirement plan have 60 days to roll the funds into another qualified plan to avoid taxation. This can be accomplished by endorsing over the check or writing a personal check to the receiving financial institution. The receiving plan must allow for the acceptance of the rollover. The Internal Revenue Code defines eligible rollover distributions for each plan type. Additionally, amounts distributed from a qualified retirement plan or TSA may be subject to 20% mandatory withholding.

     

    1035 Exchange

    A 1035 exchange is the exchange of an insurance contract for another that meets all the requirements of Section 1035 of the Internal Revenue Code (IRC 1035). When a contract is exchanged under IRC 1035, the gain or loss of the exchanged contract is transferred to the new contract.

     

    Only the following types of exchanges will qualify for non-taxable treatment:

    FROM:  TO:
     Life Insurance Policy Life Insurance Policy, endowment or non-qualified annuity contract 
    Endowment Contract Non-qualified annuity contract or endowment contract*
    Non-qualified annuity contract  Non-qualified annuity contract 
     *The maturity date of the new endowment contract may not be later than the maturity date of the replaced endowment contract.

    The other requirements for non-taxable treatment include:

    • The owner and insured/annuitant on both contracts must be identical.
    • The contract being exchanged must be in force. If the contract is maturing, the 1035 exchange request must be signed prior to the maturity date.
    • The entire value of the existing contract must be exchanged. If any cash is received, the taxable gain up to the amount of cash received is taxable.