ATTORNEY NEWSLETTER
Fee-Based Annuities Present Tax Issues
Taking Out Advisors’ Fees May Result In Tax To Policy Owner
Our lawyers recommend you always beware when an insurance agent tries to sell you commission-based annuities or life insurance, particularly if you’re a senior. But fee-based annuities present disadvantages as well. Advisors are selling fee-based annuities at a growing rate, and we advise caution on those products. The San Francisco annuity attorneys at Evans Law Firm, Inc. represent consumers, often seniors, who have lost money due to commissions and fees, withdrawal charges, and tax bills as a result of the sales and exchanges of inappropriate annuities and life insurance. If you or someone you know is over 60 and lives in San Francisco or elsewhere in California and have suffered a loss on an annuity, call us today at 415-441-8669.
Fee-based annuities are products meant for registered investment advisers, who are paid a flat, annual advisory fee, often based on assets under management, rather than a commission for each product sale. These annuities don’t come with a sales load to compensate the adviser. However, this feature may create a tax issue for the contract owner. Pulling the advisory fee from some annuity products — specifically, nonqualified annuities — is a taxable event for the client, essentially making the financial advice all the more expensive.
A non-qualified annuity is a policy an agent sells a consumer outside of a retirement account, and distributions of gains from the accumulated portion of a non-qualified annuity are taxed at ordinary rates. If a withdrawal is made to pay an advisor’s fee, the amount withdrawn is likely to be taxed since the IRS treats distributions first as gains and not as returns of principal. Pulling an advisory fee from the annuity could have other adverse effects — if the product has a living-benefit rider of some kind, pulling out too much money from the annuity could dilute or nullify those benefits. In short, whether you’re considering a commission-based or fee-based annuity, proceed with caution and always consult your tax advisor before making any purchase.
Contact Us
If you or a loved one has suffered a loss on an annuity in San Francisco or elsewhere in California, contact Ingrid M. Evans and the other Evans Law Firm annuity attorneys at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
Annuities and life insurance produce large sales commissions for brokers but are often inappropriate products for consumers, especially seniors. Leading providers and distributors of life insurance and fixed, variable and fixed indexed deferred annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong or was involved in any way in the case discussed above. Rather, the list is provided solely as a reference for our readers.
AIG/American General Life Insurance Company
Allianz Life Insurance Company of North America
American Equity Investment Life Insurance Company
American General Life Insurance Company/AIG
American International Group, Inc. (AIG)
American National Life Insurance Company
Ameriprise Financial/RiverSource Life Insurance Company
Ameriprise Financial/Securities America, Inc.
Athene Annuity & Life Assurance Company
Athene Annuity and Life Company
Athene USA
Aviva Life Insurance Company
AXA Equitable Financial Services, LLC
AXA Equitable Life Insurance Company/AXA US
AXA Advisors, LLC
Bankers Life Insurance and Casualty Company
Berkshire Hathaway Group
Berkshire Hathaway Life Insurance Company of Nebraska
Brighthouse Financial, Inc./MetLife
Citigroup Global Markets, Inc.
Crump Life Insurance Services, Inc.
CUNA Mutual Group/CMFG Life Insurance Company
Delaware Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company/Global Atlantic Financial Group
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Global Atlantic Financial Group/Forethought Life Insurance Company
Guardian Life Insurance Company
Guggenheim Partners/Security Benefit Life Insurance Company
ING USA Annuity and Life Insurance Company
Jackson National Life Insurance Company
John Hancock Life Insurance Company
Lincoln Benefit Life Company
Lincoln Financial Group
Massachusetts Mutual Life Insurance Company
Merrill Lynch Life Agency Inc.
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
National Life Group
National Life Insurance Company/Equity Services, Inc.
National Western Life Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
North American Company for Life and Health Insurance
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Oxford Life Insurance Company
Pacific Life Insurance Company
Principal Financial Group
Prudential Life Insurance Company
Raymond James Insurance Group
Reliance Standard Life Insurance Company/Tokio Marine Group
RiverSource Life Insurance Company/Ameriprise Financial
Securities America, Inc./Ameriprise Financial
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
The Standard Life Insurance Company
Symetra Financial Corporation
Symetra Life Insurance Company
Transamerica Life Insurance Company
The United States Life Insurance Company in the City of New York
Unum Life Insurance Company of America
USAA Life Insurance Company
The Variable Annuity Life Insurance Company
Voya/Reliastar Life Insurance Company
Wells Fargo Advisors
Western & Southern Financial Group
The Western & Southern Life Insurance Company
World Financial Group Insurance Agency, Inc.
