The Jacobs Company; Deferrred Annuities

The Jacobs Company
The Value of Tax Deferral

A tax-deferred annuity offers the same benefits as a non-deductible IRA but without the $2,000 contribution limit, the mandatory withdrawal requirement at age 70 1/2, and without all the record keeping and reporting requirements. Assume the following facts, in a hypothetical example:

Initial Sum
Growth of Taxable Investment
Growth of Tax-Deferred Annuity
Current Marginal Tax Bracket
Tax Bracket at Retirement

$20,000
6%
6%
36%
28%

No. of Years	Taxable Investment at 6% After-Tax Return 3.8%	Premium to Annuity at 6% No Tax	Before Tax Additional Accumulation with Annuity	Taxes Paid at time Withdrawn from Annuity at 28%	Net Savings with Annuity
5	$24.136	$26,765	$2,618	$1,894	$724
10	29,153	35,817	6,664	4,429	2,236
15	35,197	47,931	12,735	7,821	4,914
20	42,494	64,143	21,649	12,360	9,289
25	51,303	85,837	34,534	18,434	16,099
30	61,940	114,870	52,930	26,564	26,366

Withdrawals From A Tax-Deferred Annuity
Withdrawals Before Annuitization
Withdrawals After Annuitization

Variable Annuities
Fixed Annuity
Index Annuity

This document was last modified on July 15, 1999