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yorke
Apprentice
Joined: 26 Jan 2007
Posts: 1
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 Posted: 01/09/10 - 08:34 Post subject: |
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| I want to start to pay in pension fund; I have heard that you can meet some problems, about fees that pension funds are charging, tax related problems, penalties for early withdrawal, costs, etc. I would like to have some information from those who have experience in this field. Does really this types of problems exist and are there some options to avoid these kinds of problems. |
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winfred
Apprentice
Joined: 11 Aug 2008
Posts: 1
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| Posted: 02/08/10 - 03:51 Post subject: |
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If you are up to become member of some pension plan, you should really know something of following.
If you decide to have all pensions lump sum you will have to pay tax on whole amount while if you decide for annuities you can avoid paying tax on whole amount only on gains received from annuity.
There are penalties for early withdrawal. Variable annuities are designed as retirement savings vehicles. So, you pay a 10% federal tax penalty if you withdraw money before age 59½. Insurance companies typically levy surrender charges of their own if you withdraw more than 10% of your balance in the first few years. Also there are costs related. The insurance features of an annuity aren't free, of course. The typical annuity with just a death benefit costs 50% to 100% more in annual fees than comparable mutual funds. Life benefits can add 20% or more to that cost.
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