Variable annuities
Variable annuities through Schwab offer a range of benefits
A variable annuity is a long-term investment for retirement that offers tax-deferred growth potential and a variety of investment options. Variable annuities can offer a wide range of features including a guaranteed* death benefit and income for life. Many investors use variable annuities to complement other tax-deferred retirement investments such as IRA and 401(k) plans since, unlike these investments, the IRS imposes no contribution limits on an annuity. However, the issuer may impose such limits. In addition, many variable annuities allow you and your clients to choose from a broad mix of professionally managed investment options from a variety of fund families.
View key differences between variable annuities (non-qualified assets) and some common tax-deferred retirement plans below:
| Variable annuities | IRA, Roth IRA, Keogh, 401(k) | |
|---|---|---|
| Contribution free from IRS limits | Yes | No |
| Tax-deferred investment earnings | Yes | Yes1 |
| Pre-tax contribution | No | Potentially |
| Contribution reduces taxable income | No2 | Potentially3 |
| Distribution taxed as regular income | Yes | Potentially |
| 10% federal penalty for distribution of earnings before age 59½ | Yes4 | Yes4 |
| Defer start of distributions past age 73 | Yes | No5 |
| Guaranteed* death benefit | Potentially6 | No7 |
| Guaranteed* living benefit | Potentially8 | No9 |
*Guarantees subject to the financial strength and claims-paying ability of the issuing insurance company, not Schwab.
Schwab's Annuity Concierge Service for Advisors delivers specialized support
Schwab offers dedicated support of the variable annuities we provide through the Schwab Annuity Concierge at no additional cost. This team of licensed annuity professionals is available to assist through all phases of the annuity process: from helping you choose which annuity fits your clients' needs, to supporting the 1035 exchange10 process (as applicable), to ongoing support and assistance related to existing and newly-issued annuity contracts purchased through Schwab. Schwab Annuity Concierge licensed annuity professionals handle the sales process, including completing the suitability assessment and essential documentation, to ensure each annuity is consistent with the financial goals and investment objectives you have established with your clients.
Schwab offers a choice of variable annuities
Schwab offers two variable annuities from well-known carriers that may provide unlimited, tax-deferred growth potential and a wide selection of professionally managed investment choices.
Visit the Introduction to variable annuity products offered through Schwab section of the Service Guide for a detailed comparison of both variable annuities we offer—the Schwab Genesis Advisory Variable Annuity™ (from Protective Life®) and the Pacific Advisory Variable Annuity (from Pacific Life). Product availability and features vary by state.
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Prospectus
Variable annuities are registered products that are sold by prospectus only. Prospectuses can be obtained by calling 888-667-2145 (option 2). Before purchasing, investors should carefully read the prospectus and consider its investment objectives and all risks, charges, and expenses associated with the annuity and its investment options.
- Roth IRA earnings are tax-free if the distributions meet certain requirements.
- Contributions reduce taxable income if the variable annuities were purchased in a qualified retirement plan, such as a 401(k), or an IRA. The decision to purchase an annuity within a qualified plan or IRA should not be based on the annuity's tax deferred accrual feature as this is already provided by the qualified plan or IRA itself.
- A regular IRA reduces taxable income only within certain income guidelines and under certain circumstances. A Roth IRA does not reduce taxable income.
- Subject to certain exceptions.
- Roth IRA owners may defer start of distributions past age 73 as Roth IRAs are funded with after-tax money and not subject to Required Minimum Distributions.
- Death benefit features vary among variable annuity contracts and may be subject to an additional cost. Guarantees are backed by the claims paying ability of the issuing insurance company.
- Assumes the IRA, Roth IRA, Keogh, or 401(k) is not funded with a variable annuity contract.
- Living benefit features vary among variable annuity contracts and are subject to limitations, restrictions and an additional cost. Guarantees are backed by the claims paying ability of the issuing insurance company.
- Assumes the IRA, Roth IRA, Keogh, or 401(k) is not funded with a variable annuity contract.
- Section 1035 of the Internal Revenue Service code allows for the tax-free exchange of one annuity contract for another. Before initiating exchange of an existing annuity, there are a number of important factors to consider which could reduce or eliminate the benefit of the exchange. These include surrender charges on the existing contract, loss of guaranteed benefits, and differences in features, costs, services, and company strength. Consider surrender charges that may apply upon terminating an annuity contract. These charges may reduce or eliminate the benefits of a transfer.
Charles Schwab & Co., Inc., in association with Crump Life Insurance Services (Crump), provides clients with detailed information about insurance, helps determine what's right for them and, if appropriate, assists in selecting a policy that fits their needs. Charles Schwab & Co., Inc. and Crump are not affiliated. Both are licensed insurance agencies.
A variable annuity's value will fluctuate depending on the underlying investment. An investor's units, when redeemed, may be worth more or less than the original amount invested.
Annuities may be subject to insurance company limitations, including limits on purchase payment amounts that will be accepted, as referenced in the prospectus. Some annuities can be purchased as an individual retirement account and are therefore subject to IRS limitations.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance product and guarantees, including optional benefits and any fixed subaccount crediting rates or annuity payout rates, are backed by the financial strength and claims-paying ability of the issuing insurance company and do not protect the value of the variable investment options. They are not backed by the broker/dealer from which this annuity is purchased, the insurance agency from which this annuity is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.
Pacific Life variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA), and an affiliate of Pacific Life & Annuity Company, and are available through licensed third parties.
Protective and Protective Life refer to Protective Life Insurance Company (PLICO) and its affiliates, including Protective Life & Annuity Insurance Company (PLAIC). Protective Life does not offer or provide investment, fiduciary, financial, legal or tax advice or act in a fiduciary capacity for any client. Please consult with your investment advisory attorney or tax advisory as needed. Variable annuities are long-term investments intended for retirement planning and involve market risk and the possible loss of principal. Any withdrawals prior to 59½ may be subject to income tax and a 10% federal tax penalty. Investments in variable annuities are subject to fees and charges from the insurance company and the investment managers.
Schwab Genesis Advisory is a flexible premium deferred variable and fixed annuity contract issued under policy form series VDA-P-2006 (PLICO) and VDA-A-2006 (PLAIC). SecurePay Life benefits provided by rider form number VDA-P-6057 (PLICO) and VDA-A-6059 (PLAIC). Policy form numbers, product availability, and product features may vary by state. (WEB.2277634.03.21)
Charles Schwab & Co., Inc. is the selling broker-dealer and insurance agency and is not affiliated with either Protective Life Insurance Company (PLICO) and its affiliates or Pacific Life and its affiliates. All individuals selling this product must be licensed insurance agents and registered representatives.