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Annuities FAQs: Deferred Fixed Annuities

  • What fixed annuity rates are available through Fidelity?

    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

  • How are Deferred Fixed Annuities taxed?

    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 Taxable amounts withdrawn before age 59½ may incur a 10% IRS early-withdrawal penalty.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.

  • What happens to the annuity assets if you die?

    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:

    • All at once in a single lump sum
    • Any amount at any time, spread over a period of five years
    • A guaranteed1 stream of income for the rest of their lives

    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

1. Guarantees are subject to the claims-paying ability of the issuing insurance company. All products and rate guarantee periods may not be available in all states. Principal and interest are guaranteed if held for the length of the guarantee period. When selecting a guarantee period you should consider your liquidity needs for the period's duration.
2. Fixed annuities available at Fidelity are issued by third-party insurance companies, which are not affiliated with any Fidelity Investments company. These products are distributed by Fidelity Insurance Agency, Inc., and, for certain products, Fidelity Brokerage Services, Member NYSE, SIPC. A contract’s financial guarantees are solely the responsibility of and are subject to the claims-paying ability of the issuing insurance company.
3. Each individual's situation is unique and therefore seeking additional guidance from a tax advisor is suggested.

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.

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