When Is An Annuity Appropriate? It is important to understand that annuities can be an appropriate tool if used properly by you and your advisor. Annuity contributions are not tax deductible. That’s why most experts advise funding other retirement plans first. If you have already contributed the maximum allowable amount to other available retirement plans, however, an annuity can be an excellent choice. There is no investment limit to your annuity. Like other retirement plans, the funds are allowed to grow tax deferred until you begin taking distributions. Annuities are designed to be a long-term investment vehicle. In most cases, you’ll pay a penalty for early withdrawals. If you take a lump sum distribution of your annuity funds within the first few years after purchasing your
