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Deferred Fixed Annuities feature a guaranteed1 interest rate for a set period of time called the guarantee period, typically 3 to 10 years. View Rates for Fixed Annuities Available Through Fidelity.2
With a Deferred Fixed Annuity, you do not pay any taxes until you withdraw money from the annuity. At that time, any gains and pretax contributions are taxed as ordinary income at your current tax rate. Remember though, similar rules regarding early withdrawals of any tax-deferred account—such as an IRA—apply to annuities. Taxable amounts withdrawn before age 59½ may incur a 10% IRS early-withdrawal penalty. An exchange from one annuity to another (also called a 1035 exchange, which refers to a provision in the tax code) does not require you to pay taxes.
If you die, assets from a Deferred Fixed Annuity typically go to the designated beneficiary or beneficiaries. Your beneficiaries can generally choose to receive their portion of the balance in one of three ways:
Note: If your beneficiary is a spouse as defined by federal law, then he or she may elect to simply assume ownership of the contract rather than withdrawing or turning assets into an income stream.3
Before investing, consider the investment objectives, risks, charges, and expenses of the annuity and its investment options. Call or write to Fidelity or visit Fidelity.com for a free prospectus and, if available, a summary prospectus containing this information. Read it carefully.