REPORT ON TAX-DEFERRED ANNUITIES
Tax-deferred annuities (TDAs) are being marketed as the ideal retirement investment for people who
have fully funded their tax deductible retirement accounts (i.e., IRAs or Keoghs)—and they probably are
ideal. A TDA is basically an investment in a mutual fund family that is wrapped inside an insurance
annuity contract. Because it is within the annuity contract, all dividends and capital gains from switching
between individual funds (no matter what the holding period) are not taxed until the cash is actually
withdrawn from the annuity contract, not the individual fund. This is in stark contrast to intra-family fund
switching, which is an immediately taxable event.