Fixed Annuities are financial contracts with an insurance company that are designed to be a source of retirement income. They earn a fixed interest rate for a specified period of time. Because these are long term contracts, you want to make sure the company you purchase an annuity from is solid and stable.
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A Farmers Tax-Sheltered Annuity is a contract used to fund special retirement benefits for employees of public educational organizations and certain tax-exempt organizations. Tax-Sheltered Annuities offered by Farmers New World Life Insurance Company qualify under section 403(b) of the Internal Revenue Code. Eligibility Employees of these organizations are eligible to establish a Tax-Sheltered Annuity:
Public schools, state colleges and universities
State departments of education
Qualifying non-profit, tax-exempt hospitals and medical schools
Parochial schools
Religious organizations
Private colleges and universities
Foundations and charitable institutions
(The above is not intended as a comprehensive listing of eligible employees. Farmers does not determine eligibility.)
Distributions Distributions from a Tax-Sheltered Annuity must commence no later than April 1 on:
The calendar year in which the employee attains age 70 1/2
The calendar year of retirement (Not applicable with regard to contributions and earnings which accrued in a Tax-Sheltered Annuity prior to January 1, 1987.)
Employer contributions, as a general rule, are not included in the employee's gross income, so distributions from a Tax-Sheltered Annuity will be included in the employee's gross income for tax purposes. Early distributions (prior to employee's attaining age 59 1/2) are subject to a 10 percent premature distribution penalty unless a statutory exemption applies (such as the employee's death or qualifying disability or taking a lifetime annuity income).
This document is for informational purposes only. You should consult your attorney, accountant or tax adviser for specific legal or tax advice.
