IRA fixed indexed annuity

Please explain what an IRA fixed annuity is. Thanks!



I fixed indexed annuity is the new name for the prior equity indexed annuity, an annuity product that pays a small portion of market gains usually based on a broad index such as S&P 500, but guarantees against downside losses by hedging. The costs of providing the downside protection eats up most of the gains, so that in many cases the investment results net out to about the same as a fixed (non indexed) annuity. This product is easily made to sound better than it actually is. It is the same product in an IRA as outside an IRA, but within an IRA the IRS tax rules apply.



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