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The illustration that follows is based on $20,000 invested in a deferred annuity and $20,000 in vested in a CD, with both earning 8 percent. The CD earnings are taxed each year as received, assuming a 28 percent tax bracket.

Results at the End of:
  1 Yr. 5 Yrs. 10 Yrs. 15 Yrs. 20 Yrs.
Taxable CD $21,152 $26,463 $35,014 $46,329 $61,300
Tax Deferred Annuity $21,600 $29,387 $43,178 $63,443 $93,219

For longer-term wealth accumulation purposes, the deferred annuity in the illustration provides almost $32,000 more after 20 years. Although the earnings inside the annuity are subject to income tax when withdrawn, at the clients' then current tax bracket, the balance of the annuity not withdrawn would continue to grow on a tax-deferred basis.

This lets clients limit the amount of taxable income to amounts withdrawn.


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