Let’s start with one big issue with annuities (both fixed and variable). First, the money grows tax-deferred (that’s really good), but the profits, when they are taken out of the annuity, are taxed as ordinary income as opposed to a long-term capital gain (that’s not so good) because ordinary income can be taxed at a higher rate depending on your income and tax rate. This is a very important point you need to consider before you invest.
