Flexible Premium Deferred Annuity (FPDA)

Each contribution earns a fixed interest rate, guaranteed for 12 months. After that, your rate will be set annually, with a built-in minimum that lasts the life of your contract. That means your savings can keep growing, even when the market doesn’t.

How deferred annuities work

Step 1: Fund your annuity

Start with a minimum initial contribution of $5,000. You can add more anytime – consider setting up automatic transfers from your bank account to ensure consistent contributions. Over time, your additional contributions will help increase the growth potential of your savings.

Step 2: Grow your savings

Once you’ve funded your annuity, the next step is to let your savings grow. Each contribution you make will earn a fixed interest rate for 12 months, providing a predictable return on your investment. After the initial 12-month period, you will receive a new annual interest rate, allowing your funds to continue growing. This means your money works for you, accumulating interest as it sits in your account.

Step 3: Choose when to receive income

As soon as you’re ready, you decide how and when to begin receiving payments. You can tailor your payments to align with your retirement plans or other personal milestones. For instance, you might choose to start payouts later in retirement to ensure a steady income stream during your advanced years.

Choose the payout structure that best suits your needs:

• Lifetime income: You’ll receive payments for as long as you live.
• Life with period certain: Lifetime payments with a guaranteed minimum payout period. If you pass away before the end of the certain period, payments will continue to your beneficiary for the remainder of the certain period.
• Fixed period: Guaranteed payments for a set duration only, regardless of how long you live.
• Joint and survivor: Payments continue for your spouse if you pass away.

Is a FPDA a good fit for you?

The FPDA offers a unique blend of flexibility, tax advantages and the option for future income – making it a versatile choice for retirement planning. It might be a good fit if:

• You’re planning ahead. The FPDA is ideal for people who are thinking about long-term growth, not short-term spending.
• You plan to fund your annuity with regular contributions. With an FPDA you can make ongoing, continuous contributions. If you plan on funding your annuity with a single lump-sum payment, consider an Amica Multi-Year Guaranteed Annuity (MYGA) .
• You want predictable growth. Each contribution earns a guaranteed interest rate, so your savings grow steadily, regardless of market swings.
• You’re okay with limited access. After your first contract year, you can withdraw up to 10% of your account value per year without a penalty – other withdrawals are subject to a surrender charge. 
• You want to convert savings into income. When you’re ready, you can choose to annuitize – turning your accumulated savings into a steady, predictable income – or withdraw your money as a lump sum; however, surrender charges may apply.
• You prefer a stable, low-risk income source. With its built-in protections and guaranteed growth, the FPDA is well-suited to those who value security.

Need income sooner? 

If you want to start receiving payments right away, an immediate annuity  could be a better option.

Tax treatment of deferred annuities

One of the benefits of a deferred annuity is how it helps your money grow more efficiently. With tax-deferred growth, you don’t pay taxes on the interest or earnings as they accumulate. Instead, your earnings stay in your account, compounding over time.

How your annuity is taxed depends on how you fund it:

• Qualified annuities: These are funded with pre-tax dollars, like rollovers from a 401(k) or IRA. Since the money hasn’t been taxed yet, your entire withdrawal amount, both the original contributions and the earnings, will be taxed as ordinary income when you begin receiving payments. 
• Non-qualified annuities: These annuities are funded with after-tax dollars, like from your personal savings. In this case, only the interest is taxable. Your original contributions come back to you tax-free. 
• Early withdrawals: If you withdraw funds before age 59½, you may owe a 10% IRS penalty in addition to regular income taxes.

Understanding the FPDA in more detail

Amica’s FPDA gives you more control and stability as you save for retirement. Here’s a detailed look at how it works:

• Minimum initial contribution: FPDA requires a $5,000 minimum first-year contribution.
• Flexible contributions: You’re not locked into monthly payments. You decide when and how much to add, which gives you room to adjust as life changes.
• Interest rate structure: Each new contribution earns a fixed interest rate for 12 months. After that, the rate is subject to renewal based on current rates.
• Withdrawal access: After the first year, you can withdraw up to 10% of your account value annually without a penalty (required minimum distributions excluded).
• Surrender charges: If you withdraw more than the allowed 10%, or cash out early, you may face surrender charges.
• Income options: You can choose how to receive payments: for life, over a fixed number of years, or through a joint and survivor option.
• Death benefit: Depending on your chosen payout structure, a death benefit may be available to your beneficiaries.
• Availability: Product features may vary by state.