What are the annuity loans?
Delayed annuity owners can get temporary access to their accounts through an annuity loan. Generally, annuite loans can be equal to one half of the account balance. As long as the loan repayment is carried out in time, the loan amount is not taxed. If the owner stops making loans or defaults, the loan is considered to be distributed. In the United States, the distribution of annuity is subject to income tax. If the debtor is under the age of 59 1/2, the sentence is charged. These insurance companies determine interest rates and conditions for annuity loans. Some companies charge credit services in addition to interest. Loans can save the owner's money. If applicable, they are immediately subject to income tax and sanction tax.
debtors usually have five years to pay off an annuity loan. Some insurance companies extend the repayment period for loans used to buy primary residence. The extended repayment date is usually not more than 20 years.
these loans maIt also eats some disadvantages. If one does not return in time, it is considered to be distributed. The debtor is obliged to repay the loan immediately, outstanding interest, loans fees plus any tax payable. If the owner cannot repay the loan, the interest will continue to increase from the outstanding loan balance.
Anuits are designed to create earnings delayed by tax. These earnings are then paid in installments to provide income during retirement. Loans slow the gainful power of the annuity until the funds are paid. Any outstanding loan balance does not earn interest.
When an annuity loan is never repaid, the owner will defeat the purpose of the annuity. No funds that do not return to the annuity will no longer contribute to the growth of the delayed tax. This reduces the means needed to ensure income during retirement.
Invalid annuity loans also prevents the owner in the transfer or outAnnuity on another insurance company without fines. In general, the debtor must maintain the annuity with the current insurance company until the loan is repaid. Some insurance companies will allow transfer. In this case, any outstanding loan balance is considered to be distributed and appropriately taxed.
If the annuity is part of the borrower's pension plan, the annuity loans have another risk. Usually, if the debtor leaves the employer or is terminated, the outstanding loan balance must be paid immediately. If the employee is unable to repay the loan, an outstanding loan balance becomes distribution. Income tax and possible fine tax will be used.