While the SPDA market focuses on locating sources of existing money, the FPDA market targets new money – prospects with longer-term wealth accumulation or retirement planning needs that they want to meet by periodically investing smaller sums over time. FPDAs are a great retirement planning tool for people ages 25 and up who are able to invest on a regular basis.
Before 1986, deferred annuities were commonly used informally to fund non-qualified deferred compensation plans. After the Tax Reform Act of 1986, however, annuity contracts owned by "non-natural persons," such as corporations, no longer receive tax-deferred treatment. While annuity interest is currently taxed to corporations, FPDAs still offer the advantages of safety and guarantees, competitive interest rates, and income option flexibility in funding deferred compensation plans.
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