You Cannot Outlive Your Income
An SPIA is particularly attractive because it delivers a stream of income that cannot be outlived. If you choose a life contingent payment option, your payments will continue for the rest of your life, guaranteed, even if you live well beyond your normal life expectancy. An SPIA provides the security that so many retirees seek and need. | | Eliminate Investment Risk
SPIA payments do not change in amount or frequency. You will enjoy the financial security of a guaranteed income with no investment risk. Economic conditions or investment returns in the market may change, but your SPIA payments are guaranteed by BRK Direct. |
Maximize Your Current Income Stream
When your SPIA payment option is life contingent, you may receive a higher income than you would receive from other highly secure, fixed-income instruments, such as U.S. Treasuries or Municipal Bonds. First, you will not need to set aside income today for the contingency that you live beyond your normal life expectancy. Second, an SPIA maximizes your cash flow since each payment constitutes both an interest payment and a return of principal. In contrast, bonds pay interest until maturity and then return the principal at maturity. | | Tax-Favored Income
Under current IRS rules use of after-tax funds to purchase an SPIA results in payments that are only partially subject to federal income taxes. The non-taxable portion of each payment represents the return of your original investment over the life of the annuity.
At the other extreme, if you purchase your SPIA with funds from a tax-qualified plan (IRA, TSA, 401(k) etc.), the payments you receive are generally fully taxable as they represent funds that have not yet been taxed.
However, as SPIA payments are made to you over time, taxes will be payable over time. Therefore, even if you purchase an SPIA with pre-tax funds from a tax-qualified plan, you increase your tax-deferral benefit relative to a lump sum distribution, where the entire amount is taxed in the year of receipt.
Currently, BRK Direct does not offer tax-qualified annuities. |