Variable Annuities

Key Points

  • A variable annuity can provide income in retirement with potential for growth based on the markets
  • Many variable annuities offer a wide range of investment options
  • The funds in a variable annuity generally grow tax-deferred

A variable annuity is a retirement solution that can generate income for retirement. It can benefit from the potential growth in the financial markets and offers flexibility to manage your exposure to market risk.

A variable annuity is an insurance product that is a complex, long-term investment vehicle subject to market risk, including the potential loss of principal invested.

Why variable annuities?

Variable annuities are a tax-deferred, long-term investment that accumulates assets with the option of converting into an income stream you can depend on for as long as you live.

Variable annuities can help you achieve your retirement goals in several important ways:

  • Tax advantages. Annuities generally offer tax deferral, so you don’t pay taxes on any earnings until you actually begin to make withdrawals.
  • Investment options. Your variable annuity has the potential to perform according to the underlying investment options you select. Many variable annuities offer a wide range of investment options. For example, stocks and bonds.
  • Death benefits. A death benefit feature potentially protects your investment for your beneficiaries. Optional benefits are typically available (for an additional fee) and can potentially increase the amount you leave to your heirs.
  • Access to your funds. Although annuities are designed to be long-term investments, variable annuities generally allow partial access to your assets. For example, each year you may have access to your earnings or 10% of your contract anniversary value. 
  • Guaranteed income. When you are ready to start using the assets you have accumulated, annuities offer you a variety of guaranteed income options. All guarantees are subject to the claims-paying ability of the issuing company and do not apply to the performance of the variable subaccounts, which will vary with market conditions.

Annuities are intended for retirement investing; therefore withdrawals made from an annuity before age 59½ may be subject to a 10% IRS tax penalty.

If you use an annuity within a retirement plan that is already tax-deferred, such as an IRA, the annuity doesn’t provide any additional tax deferral.

Take the next step

Ameriprise Financial can help you plan for a more confident retirement with variable annuities available through third-party insurance carriers and our affiliates RiverSource Life Insurance Company (RiverSource Life), RiverSource Life Insurance Co. of New York (RiverSource Life of New York).

Be sure to talk to a financial advisor about the annuity’s features, benefits, risks and fees, and whether the annuity is appropriate for you, based on your financial situation and objectives.

Withdrawals that do not qualify for a waiver may be subject to a withdrawal charge. Withdrawals are subject to income taxes, and withdrawals before age 59½ may incur an IRS 10% early withdrawal penalty.
Variable annuities are insurance products that are complex long-term investment vehicles and are subject to market risk, including the potential loss of principal invested. Before you invest, be sure to ask your financial professional about the variable annuity’s features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based on your financial situation and objectives.
Most annuities have a tax-deferred feature. So do many retirement plans under the Internal Revenue code. As a result, when you use an annuity to fund a retirement plan that is tax-deferred, your annuity will not provide any necessary or additional deferral for that retirement plan. But annuities do have features other than tax deferral that may help you reach your retirement goals. You should consult your tax adviser prior to making a purchase for an explanation of the tax implications to you.
Policies and features may not be available in all states, or may vary by state.
The benefits of tax deferral may outweigh the costs of a variable annuity only if you hold it as a long-term investment.
RiverSource® products are offered by affiliates of Ameriprise Financial Services, Inc., Member FINRA and SIPC. CA License #0684538. Ameriprise Financial Services, Inc. Member FINRA and SIPC.
VARIABLE ANNUITIES:
Are Not a Deposit of Any Bank or Bank Affiliate Are Not FDIC Insured Are Not Insured by Any Federal Government Agency Not Bank Guaranteed May Lose Value