Comparison of a Tax Efficient Mutual Fund and a Tax Deferred Variable Annuity Account

Assuming you could find a tax-efficient mutual fund that could manage to obtain the most favorable long-term capital gains rate available of 18 percent (which became available starting December 31, 2000, for capital gains assets purchased from that date and beyond and held five years), the tax-deferred variable annuity could still be the better investment after taxes! The following illustrations in Figures 7.12 and 7.13 assumes the same rate of return for each account.

Remember, when it comes to your wealth, use common sense and do the math! A 28 percent marginal tax rate was used for illustration purposes only. Your own individual tax rate should be taken into account. Be certain to include state taxes, if applicable.

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Sell Your Annuity

Sell Your Annuity

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