MARINA DEL REY, Calif., Dec. 5, 2000 (PRIMEZONE) -- The year 2000 may prove to be a bearish one for many investors, and none more so than for investors who lost money on their mutual fund investments but who are still saddled with a 1099 statement for capital gain taxes.
Many mutual funds, even funds with negative returns this year, will distribute taxable gains. Some fund managers sold stocks bought in previous years to secure gains and reshuffle their portfolios. The gains from those sales are then distributed to all shareholders of the fund, regardless of how long they've owned the funds. As a result, investors who subsequently lost value in their mutual fund might nevertheless receive a nasty tax bill.
"Annuity owners, unlike owners of taxable investment funds, are not issued 1099s whenever the fund managers restructure their portfolios, and as a result, generated gains," said Gregory G. Yost, chairman and CEO of AnnuityScout. Yost is a noted expert on tax-deferred investing and his company has been featured in such media outlets as Bloomberg's Money Wise, BusinessWeek, Dow Jones News Service and The Wall Street Journal.
The practice of restructuring a portfolio and locking in capital gains also occur within an annuity's sub-account, which puts its funds in public equity markets. However, annuities by law offer tax-deferred protection, and therefore no 1099s are issued to their owners.
"While 2000 may be a lost cause for some investors, moving forward, savvy investors should consider variable annuities for a portion of their long term portfolio, particularly if they have already maxed out their 401[k]s and IRAs. It's an opportunity to participate in equity markets without worrying about annual 1099s," Yost added.
AnnuityScout makes comparing and shopping for annuities easy. Rated by Online Investor Magazine (October 2000) as a top personal finance Web site, AnnuityScout.com is the leading no-load annuity marketplace representing more than 50 highly rated insurance companies. Unlike single-carrier, single-product sites, AnnuityScout maintains its independence from any one company, placing its priorities on the needs of clients. The company has a state-of-the-art call center fully staffed with nationally licensed Annuity Specialists. AnnuityScout encourages consumers to call its toll-free number at 1-800 TAX-CUTS with any questions.
About the Annuities Industry
LIMRA International (an independent service that monitors the Insurance Industry) reports that overall annuity sales (combined variable and fixed annuities) grew from $98.5 billion in 1995 to (an estimated) $155 billion in 1999. This represents an average annual growth rate of 12%. Variable annuity sales have shown even greater growth. According to The VARDS Report (an independent service that monitors the variable annuity sales), the variable annuity market has grown from $51 billion in 1995 to $121 billion in 1999, a compound annual growth rate of 19%. Through third quarter 2000, sales for variable annuities reached $105.9 billion, a trend that could make 2000 a record year for variable annuity sales and could push the overall market past $200 billion.
About AnnuityScout: "Annuities Done Right"
AnnuityScout is an independent annuity service for both consumers and the company's business-to-business alliances. Rated by Online Investor Magazine (October 2000) as a top personal finance Web site, AnnuityScout.com is the leading online marketplace for no-load annuities. Representing more than 50 insurance companies, the comprehensive AnnuityScout "supermarket" is designed to offer products direct to those consumers who want more value from their annuities. AnnuityScout's proprietary technological platform enables the company to efficiently service the needs of its business-to-consumer clients and its business-to business alliances both on and offline. The state-of-the-art AnnuityScout call center is staffed with nationally licensed Annuity Specialists. AnnuityScout is a free service of Independent Advantage Financial and Insurance Services, Inc. (IAF). Founded in 1987, IAF has facilitated the purchase of more than $1 billion in annuities and high-end life insurance direct to the consumer through marketing alliances and other endorsements. AnnuityScout is headquartered in Marina Del Rey, Calif. and can be reached at 1 (800) TAX-CUTS (829-2887).
Licensed employees of Independent Advantage Financial and Insurance Services, Inc. (dba) AnnuityScout.com, are registered representatives of, and securities are sold through, Sentra Securities Corporation, a registered broker-dealer, member NASD/SIPC.
Variable annuities are sold only by prospectus, which contains complete information on charges, expenses and risk factors. Prospective investors may obtain a free prospectus by contacting AnnuityScout.com at 1 (800) TAX CUTS. The prospectus should be read carefully before investing or sending money.
Variable annuities involve investment risks including the possible loss of principal. An investor's contract, when redeemed, may be worth more or less than the original investment amount.
Annuities are designed as long-term retirement savings vehicles. Earnings withdrawn prior to age 59 1/2 may be subject to a 10% federal tax penalty. Individuals should consult their tax advisor for questions regarding their particular situation.