The annuity accumulation phase is where the owner's interest earnings accumulate. The accumulating interest, which in effect is added to the owner's premiums, is not reported on the owner's tax return, nor are income taxes paid on accumulations.
Some annuities pay owners incentive bonuses as "teasers" to premium payments. "Bonus" products offer annuity owners immediate credits of a percentage of purchase payments. Annuity bonus rates typically are a guaranteed two percent for years one through ten, three percent for years eleven and beyond; the larger the premium contribution, the larger the bonus.
Depending on the contract, bonus annuities may allow owners to withdraw 10 percent to 15 percent of their premium payments annually without penalty, although additional withdrawals may be subject to income tax and 10 percent federal penalty if taken before age 59 1/2. However, there are often additional surrender charges that consumers should evaluate when considering these product features.
Ohio National is not affiliated with, nor does it endorse or sponsor, any particular prospecting, marketing or selling system.