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An annuity is a contract with an insurance company. You pay a premium, either at once or over time, and in return the insurer agrees to credit interest under the contract’s terms, make income payments, or both.

It is not a bank deposit and is not FDIC insured. Its guarantees depend on the financial strength and claims-paying ability of the insurer that issues it.

No. Many people use them for retirement income, but they are also used to accumulate savings over a defined term or to hold a portion of savings more conservatively.

They are long-term contracts, though. Surrender charges can apply in the early years, and withdrawals of earnings before age 59½ may face an additional 10% federal tax, so they suit money you don’t expect to need soon.

Fixed and fixed indexed annuities are designed so that market declines don’t reduce your contract value directly: in a fixed indexed annuity a negative index period typically credits zero rather than a loss.

You can still get back less than you put in. Surrender charges and market value adjustments can apply to early withdrawals, optional rider fees are deducted from contract value, and guarantees depend on the insurer’s ability to pay. State guaranty associations provide limited protection that varies by state. Variable annuities, which we do not focus on, can lose value with the market.

A fixed annuity credits interest at a rate the insurer declares; a multi-year guaranteed annuity (MYGA) locks one rate for a set term. You know the rate in advance.

A fixed indexed annuity credits interest based on an external index, such as the S&P 500, limited by a cap, participation rate or spread, with a floor that protects against negative index returns. Your money is not invested in the index. Some periods may credit nothing.

Yes. Income can come from annuitizing a contract or from an optional income rider on a deferred annuity. Either can be structured to pay for life, including over two lives.

The amount depends on your age, the premium, the contract and the payout option. Riders usually carry an annual fee, annuitization is generally irrevocable, and every guarantee rests on the issuing insurer.

Usually some of it. Many contracts allow a penalty-free withdrawal each year, often up to 10% of the contract value. Withdrawals above that during the surrender period can trigger surrender charges and, in some contracts, a market value adjustment.

Some contracts waive charges for nursing-home confinement or terminal illness. Taxes, and possibly an additional 10% federal tax before 59½, apply to earnings withdrawn. Keep emergency money outside the annuity.

Neither is better; they are built differently. A CD is a bank deposit, FDIC insured up to applicable limits, usually for shorter terms, with interest taxed each year.

A MYGA is an insurance contract backed by the insurer rather than the FDIC. Its interest grows tax-deferred, terms are often longer, surrender charges apply to early withdrawals, and the 59½ rule applies. The useful comparison is rate, term, access, tax treatment and who stands behind the guarantee.

In an annuity bought with after-tax money, earnings grow tax-deferred. Withdrawals are generally taxed as ordinary income, earnings first; with annuitized payments, part of each payment is treated as a return of your premium.

An annuity inside an IRA or other qualified plan gets no additional tax deferral; distributions are generally fully taxable and required minimum distributions apply. Withdrawals before 59½ may face an additional 10% federal tax, with some exceptions. We do not give tax advice, so please confirm your situation with a tax professional.

Generally, yes. IRA money can move into an annuity held inside an IRA, and money in a 401(k), 403(b) or TSP can usually be rolled over once you’ve left that employer or reached an age your plan allows. A direct, trustee-to-trustee rollover generally isn’t taxed when the money moves; taking a check yourself starts a 60-day clock and can trigger withholding and taxes if it’s missed.

Inside an IRA an annuity adds no extra tax deferral — the reason to use one is the guarantee, such as income for life or protection from index losses. Payments are taxed as ordinary income and required minimum distributions still apply, though a qualifying longevity annuity contract (QLAC) can delay them on part of your balance, up to an IRS limit. Plan rules vary, and we coordinate with your tax professional.

During the accumulation phase, your named beneficiaries generally receive a death benefit, typically at least the contract value, and usually without going through probate. Some contracts offer enhanced death benefits for a fee.

If the contract has been annuitized, it depends on the payout chosen: life-only payments stop, while period-certain or joint options continue. Beneficiaries owe income tax on gains they receive. Keeping beneficiary designations current matters.

Start with the job the money needs to do, when you’ll need it, what you’ll keep accessible elsewhere, your tax picture, and whether you’re comfortable with a surrender period. An annuity may suit a portion of savings; it is rarely right for all of it, and it isn’t right for everyone.

That is what the review is for. We look at your situation, compare relevant options, explain the trade-offs, and you decide — with no obligation to buy anything.