How to purchase an annuityWritten by Jakob Jelling
An annuity is a contract with an insurance company to make periodic payments for retirement income and sometimes other purposes. There are basically two types of annuities. Fixed Annuities A fixed annuity earns a guaranteed interest rate over a specific period of time. When this period of time expires a new interest rate is set for next period of time. Is important to note that a fixed annuity is not backed by Federal Deposit Insurance Corporation (FDIC). Variable Annuities Variable annuities offer a much greater range of investment funding options than fixed annuities. Because their performance depends on investment options your principal and return are not guaranteed. Some variable annuities offer a fixed accounts alternative that guarantees principal and interest a lot like fixed annuities. You can then divide your funds between low-risk option as well as high-risk options such as stocks. Purchasing Annuities There are two ways to purchase annuities. You can either pay premium using one lump sum or you can make ongoing contributions to what is called a flexible payment annuity. With a flexible payment annuity you can contribute money pretty much any time you want. Another benefit of variable annuities is that they allow you to transfer money from one account to other without having to pay taxes on any earnings you make as a result of transfer. The disadvantage of variable annuities is that you will most likely pay higher fees than you would with a fixed annuity.
| | Tax Records - What You Should Keep And For How LongWritten by Richard A. Chapo
Many taxpayers are confused about how long they should keep tax records. The term "tax records" refers to your tax returns and documents that support information in returns. These documents can include receipts, bank statements, 1099s, etc. If you are one of unlucky few to be audited, these records will be vital to fending off IRS. Tax Returns To protect yourself from a nasty audit, you should keep all of your tax returns indefinitely. The IRS has been known to lose or misplace tax returns. While conspiracy advocates argue that this is evidence of a nefarious scheme, simple fact is that IRS receives millions of returns over a three-month period and lost returns are inevitable. So how do you protect yourself? You keep copies of every single tax return. A quick word on IRS e-file program. If you file your returns electronically, make sure you get copies from company that filed your return. All such entities are required by law to provide you with paper copies. Records Supporting Tax Returns You should keep supporting tax records for a period of six years from date returns were actually filed. In general IRS only has three years to audit you from filing date. For example, if you filed your 2000 tax return on April 15, 2001, IRS would have to start an audit by April 15, 2004. Keep in mind that if you filed an extension, IRS will have three years from date you submitted return. As is always case with taxes, there are exceptions to this general time period. If your tax return looks like great American novel, running of three-year audit period may not save you. Failure to report more than 25% of your gross income gives IRS an additional three years to pursue you. Using previous example, IRS would have until April 15, 2007 to audit your 2000 tax return.
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