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Financial Learning Center


Variable Annuities

A Note about Taxes

Obviously, one of the most attractive features of annuities is the potential tax-deferred growth that occurs during the accumulation phase. It should be noted, however, that when money is withdrawn or distributed, not on a regular basis, all or a portion would be taxed at ordinary income tax rates rather than as capital gains or dividends. This will be the case if you make systematic or periodic withdrawals, and a 10% penalty tax generally applies to withdrawals of earnings made before age 59½.

On the other hand, if you annuitize, only the portion of the money distributed that relates to earnings, as opposed to principal, will be taxable. In this instance, a portion of your income would be considered a "return of principal" and would not be taxable.

Investment return and principal value of an investment will fluctuate, and an investor's shares, when redeemed, may be more or less than their original cost.

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Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA (Opens in a new Window)/SIPC (Opens in a new Window).  UniVest Financial Services is a trade name of UniBank. Infinex and UniBank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of, nor guaranteed or insured by, any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.