Fixed Deferred Annuities

If you're looking for safety from market volatility, a fixed deferred annuity could be right for you. It gives you the security of a fixed guaranteed interest rate while the interest you earn is tax-deferred. If you'd like to explore this option, Schwab can help you choose the fixed deferred annuity that best fits your needs.

All guarantees are backed by the claims-paying ability and financial strength of the issuing insurance company, not Schwab.

Fixed deferred annuities also have surrender charges (a charge on an early withdrawal based on the time period of the policy or cancellation of the policy) and some contracts may impose a market value adjustment, which may be positive or negative, if you make a withdrawal during one or more of the guaranteed periods you can elect under the policy. Generally, any withdrawals in a given year that exceed 5% - 10% of your account value (based on the contract you select) will be subject to surrender charges and/or a market value adjustment.

Withdrawals from a fixed deferred annuity will reduce the value of your annuity and can be subject to ordinary income tax. Withdrawals prior to age 59½ may also be subject to a 10% federal tax penalty.

In a fixed deferred annuity, you may elect to withdraw your money at the end of the interest rate guarantee period in a lump sum. Or, you may want to annuitize and permanently convert your cash value into an income stream, which depending on the option you select, can last for life, a guaranteed period, or both. Alternatively, your money may be kept in the annuity to accumulate at the renewal rate until a need for the funds arises.