A deferred annuity is an investment vehicle in which earnings are not subject to income tax until actually withdrawn from the contract. A single premium deferred annuity is purchased with a single sum payable at the beginning of the contract. A flexible premium annuity allows premiums to be paid at any time while the contract remains in force. One of the additional benefits available with tax-deferred annuities is cost-free access to annuitization options. Annuitization is the conversion of the cash value accumulated in a tax-deferred annuity into an income stream that may be paid out over a fixed period of time, over the lifetimes of one or two individuals, or over a combination of the two.

Let's look at an example in which you'll see, first, the advantage of tax deferral, and second, the advantage of converting a deferred annuity cash accumulation into a lifetime income.

Alice Crow is 45 and very concerned about saving for her retirement. Her employer sponsors a pension plan and her salary doesn't allow her to make tax-deductible contributions to a traditional IRA. She has established a Roth IRA with a $2,000 contribution, but still wants to invest an additional $2,000 a year, after-taxes, to accumulate additional retirement income in an investment vehicle that gives her the best and safest return possible. Let's assume a 6% return on Alice's annual investment and look at the accumulation advantage a deferred annuity offers her in her present 25% tax bracket.

Annual investment: $2,000 made at the beginning of each year

End of Year	Taxable Vehicle After-tax* Accumulation	Deferred Annuity Accumulation	The Deferred Annuity Before-tax Advantage
1	$2,090	$2,120	$30
10	$25,686	$27,943	$2,258
20	$65,566	$77,985	$12,419

*Calculated as if annual taxes were paid out of the investment itself.

It's clear that Alice accumulates more cash in her deferred annuity, but how much can she keep after tax? Alice's fully taxable investment provides her with $65,566 - all after-tax dollars - at age 65. Her deferred annuity provides her with $68,488.75, after tax ($77,985 - $40,000 of after-tax investment = $37,985 - 25% tax = $28,488.75; $28,488.75 + $40,000 investment = $68,488.75 or $2,922.75 more after-tax dollars). You can see the annuity advantage: $2,922.75 on just a $2,000 a year investment!

Assuming the same 25% tax bracket Alice was in while she worked, let's now look at the additional life-long income, or annuitization, advantage she can gain from having accumulated additional retirement funds in a deferred annuity as opposed to an investment in which earnings were subject to income taxation each year.

After-tax InvestmentAnnual Income	Deferred Annuity Annual Income	The Annuity Investment Income Advantage***
$5,662.92*	$6,248.63**	$585.66 or 10.3% more after-tax income

*Assumes immediate annuity purchase with $65,566, after-tax
**Assumes immediate annuity purchase with $77,985 deferred annuity accumulation ($40,000 after-tax investment + $37,985 tax-deferred interest earnings)
***Assumes lifetime annual-payment annuitization with no period certain

Presidential Life offers five single premium deferred annuities (SPDAs), with current interest rate guarantees ranging from one to six years. All of these annuities are suitable for both qualified (IRA, tax-sheltered annuity, 401(k), pension, profit sharing) and non-qualified use. When funds are being transferred from another financial institution to a new Presidential Life SPDA from an existing annuity or life insurance policy via an IRC 1035 exchange, it is possible to lock-in the current interest crediting rate guarantee for a period of 90 days for New York Regulation 60 transfers, all other transfers receive 60 days grace.

1, 2, 3, or 4 year Guarantee: Liberty SPDA Series
Presidential Life’s Liberty Series SPDA offers a 1, 2, 3, or 4-year current interest crediting rate guarantee. Subsequent renewal interest rates are subject to the contract lifetime minimum interest rate guarantee****. Surrender charges in this contract during the first (7) contract-years are: 6%, 6%, 5%, 5%, 4%, 4%, and 2% respectively. The owner of Liberty Series SPDA has the right to take a 10% surrender charge-free withdrawal in the first contract year calculated on the paid premium and in subsequent years, calculated on the beginning year contract value. The owner may also make complete withdrawal of the contract’s accumulation value if the renewal interest rate, following any interest rate guarantee period, falls more than 2.00% below their current interest rate. This is the bailout feature and it must be elected within a 60 calendar day period following the renewal interest rate date.

Current Rates

1-year Guarantee: Classic SPDA
Presidential Life's Classic SPDA with a 1-year current interest crediting rate guarantee sets this rate on an annual policy-year basis. Subsequent renewal interest rates are subject to the policy lifetime minimum interest rate guarantees**. Surrender charges in this policy during the first (7) policy-years are: 6%, 6%, 5%, 5%, 4%, 4% and 2% respectively. The owner of the Classic SPDA has the right to take a 10% surrender charge-free withdrawal in the first policy year calculated on the premium paid and in subsequent years, calculated on the beginning year policy value.

Current Rates

4-year Guarantee: Secure 4
Presidential Life's SPDA with a 4-year current interest crediting rate guarantee is called Secure 4. Subsequent annual renewal interest rates are subject to the policy lifetime minimum interest rate guarantee***. Surrender charges in this policy run for the length of the initial interest rate guarantee period: 4 years, at 7%, 6%, 6% and 5% respectively. The owner of the Secure 4 SPDA has the right to take a 10% surrender charge-free withdrawal in the first policy year calculated on the premium paid and in subsequent years, calculated on the beginning year policy value.

Current Rates

5-year Guarantee: Secure 5
Presidential Life's SPDA with a 5-year current interest crediting rate guarantee is called Secure 5. Subsequent annual renewal interest rates are subject to the policy lifetime minimum interest rate guarantee***. Surrender charges in this policy run for the length of the initial interest rate guarantee period: 5 years, at 7%, 7%, 6%, 6% and 4% respectively. The owner of the Secure 5 SPDA has the right to take a 10% surrender charge-free withdrawal in the first policy year calculated on the premium paid and in subsequent years, calculated on the beginning year policy value.

Current Rates                    5-Year Split Annuity

6-year Guarantee: Secure 6
Presidential Life's SPDA with a 6-year current interest crediting rate guarantee is called Secure 6. Subsequent annual renewal interest rates are subject to the policy lifetime minimum interest rate guarantee***. Surrender charges in this policy run for the length of the initial interest rate guarantee period: 6 years, at 7%, 7%, 7%, 6%, 5% and 4% respectively. The owner of the Secure 6 SPDA has the right to take a 10% surrender charge-free withdrawal in the first policy year calculated on the premium paid and in subsequent years, calculated on the beginning year policy value.

Current Rates                   6-Year Split Annuity

Presidential Life offers 2 flexible premium deferred annuities that are used in different markets. The basic features of these policies are similar with the exception of the surrender periods and loan feature. All our flexible premium annuities allow a client to make ongoing premium contributions into the contract, either on a fixed periodic basis, such as monthly, quarterly, semi-annually or annually, or on those occasions, when he or she has additional non-periodic funds for investment. Funds transferring from another financial institution will receive the interest rate in effect at the time funds are received by Presidential Life.

The current interest rate is guaranteed on a calendar year basis. New premiums earn the current interest rate to December 31 of the year in which they are paid into the contract. Each January 1, all accumulated funds are aggregated and a competitive renewal interest rate is guaranteed on these funds for 12 months. Like our other deferred annuities, there are no fees or expense charges to reduce current earnings, or any market value adjustment features to reduce future earnings.

The Non-load Flexible Premium deferred annuity is available for Roth and Traditional IRAs, qualified plans, IRA rollovers and non-qualified (after-tax) policies. The No-Load Flexible Premium deferred annuity has surrender charges over the first 9 policy years. These charges are: 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, and 1% respectively.

The 401(k) Flexible Premium deferred annuity is available for use in 401(k) plans only. It has the same loan provision as the TSA-Loan Flex, but has a different surrender charge period. The 401(k) Flexible Premium deferred annuity has surrender charges over the first 7 policy years. These charges are: 6%, 6%, 5%, 5%, 4%, 4%, and 2% respectively.

Current Rates