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1.
You must pay taxes on investment earnings that build in your annuity account.
False. Your earnings in a deferred annuity build on a tax-deferred basis. You pay no tax on them until you receive them as a payout.
2.
An annuity that allows you to shelter some of your current income from taxes is called a _______.
Qualified annuity. A qualified annuity, based on the assets of a qualified retirement plan such as a 401(k) or 403(b), allows you to shelter some of your current income from taxes.
3.
An annuity that delays payments until some point in the future is called a(n) _______.
Deferred annuity. A deferred annuity delays payments until some point in the future.
4.
All of the following are benefits of deferred annuities except _______.
Easy access to capital. Easy access to capital is not a benefit of deferred annuities, where surrender fees and tax penalties can affect early withdrawals.
5.
The person who receives the benefits of an annuity is the _______.
Annuitant. While the annuitant and the owner may be the same person, and some kinds of annuities make payments to other beneficiaries, "annuitant" refers to the primary individual who receives the benefits of an annuity.