An annuity is a contract between you and an insurance company, which is designed to grow and protect your money without risk of loss at the end of the chosen term and offer a guaranteed income stream for a specified period or for life.

• Fixed Annuity – your investment grows based on guaranteed interest for a specified term.
• Indexed Annuity – offer an interest rate tied to the performance of stock market indices and potential to increase earnings based on index growth, and with market downside protection.

• Contribution deferral – Earnings earned are not taxable until such time as withdrawals or distributions are taken.
• Death Benefits – contributions are generally protected against risk in the event of death.
• Available as an Individual Retirement Annuity
  • Contributions may be deductible from the income tax return, up to a maximum established by law. *
  • Allows transfers from other IRAs or pension plans. *

• Partial Withdrawals – You can withdraw up to 10% of the premium paid annually with no early withdrawal or market value adjustment fees. Subject to a maximum of 50% in 7 and 10 year annuities.
• Total distribution – you must wait for the expiration of the contract, depending on the term selected. If they cancel before the due date, they are subject to a penalty and adjustment to the market value, whether positive or negative.
• Guaranteed income benefit for life – endorsement to ensure guaranteed income for life. You must be 57 years of age to purchase and activate the endorsement.

• The IRA or individual retirement annuity is designed to stimulate savings in the taxpayer and to establish a fund for his retirement.
• Contributions may be deductible from the income tax return and earnings are not taxed until withdrawals from the account or contract begin.
• If a withdrawal is made from the IRA before the age of 60, it could be subject to a penalty from the Department of the Treasury of 10% of the amount of the withdrawal.

• Anyone who receives income from salary, professional services, or self-employment includes anyone who participates in another eligible retirement plan.
• Any person who has not reached the age of 75.
• Resident of Puerto Rico.

• You can make annual contributions of up to $5,000 or 100% of income generated, whichever is less.
• Up to $10,000 can be contributed if the return is filed jointly by married couple (a separate account must be established for each spouse).
• The contribution limit also applies to the Roth IRA (IRA is not deductible and generates interest or exempt earnings).

• After reaching 60 years of age.
• If the taxpayer has not reached 60 years of age, there is a penalty from the Department of the Treasury of 10% of the amount of the withdrawal, except if the taxpayer makes a withdrawal for the following reasons:
  • Inability
  • Job losses
  • Paying for children’s college education
  • Purchase of the first residence
  • Repairs of damage to the primary residence caused by hurricane, earthquake, fire or other acts of God
  • Computer purchase (limitations apply)
  • Terminal disease

Deductible:

• Maximum contribution of $5,000 per taxpayer
• The tax advantage is at the moment
• Earnings increase by postponing contributions
• Those taxpayers who have a higher tax rate benefit more

Non-deductible (Roth):

• Maximum contribution of $5,000
• The tax advantage is at the time of retirement
• Withdrawals are exempt from contributions including the principal

• Yes, it is allowed to transfer funds from an IRA to another qualified plan in P.R. or to another IRA Rollover account or direct transfer
• Ex. 401K, 1165e, pension plans, Keogh
• To consolidate IRAs