Management Notes

Reference Notes for Management

How are annuities given favorable tax treatment ?

How are annuities given favorable tax treatment ?

How are annuities given favorable tax treatment ?

 Options:

A) Gains are tax deductible
B) Gains are tax exempt at distribution
C) Gains are taxed at distribution
D) Gains are converted to tax credits

The Correct Answer Is:

  • C) Gains are taxed at distribution

Annuities are given favorable tax treatment because gains are taxed at distribution. This means that the income generated from annuities is taxed less than other forms of income. Tax breaks, including the retirement savings contribution credit, are also available to annuity providers, which can reduce your tax liability even further.

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