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  • Tax Deferred Annuity

  • Who Can Establish a Tax Deferred Annuity?
    Tax Deferred Annuity (TDA) Plans, also known as 403(b), are available to the employees of public schools and certain tax-exempt organizations described in Internal Revenue Code section 501(c) (3).

    Qualified Employers
    Some hospitals; public schools, colleges, and universities; nonprofit organizations operated exclusively for religious, charitable, educational, scientific, literary, or testing for public safety purposes, or to promote national or international sports competition, or to prevent cruelty to children or animals, are eligible to establish a TDA plan for their employees.

    Although governmental agencies and municipalities generally are not qualified employers, if the organization is a separate entity operated for the purposes outlined above and is not engaged in activities that are an integral part of state or local government, it may be a qualified employer.

    The best method for determining whether a particular organization qualifies for a TDA plan is to make an inquiry with the chief administrator or manager of the organization. In order to be eligible to participate in a TDA plan, an individual must be an employee of a qualified employer, as opposed to an independent contractor. An employee is a person who directly or indirectly renders services for the organization and is subject to the will and control of the employer regarding both the assignment of tasks and the method of accomplishing them. Rules put in place in 2009 require special information sharing agreements between the vendor and employer and employer oversight of transactions.

    Tax Deferred Annuity TDA/403(b)

    Objectives and goals:

    The Farm Bureau Life Insurance Company of Michigan’s Tax Deferred Annuity is a No-Load fixed dollar deferred annuity. Every dollar paid in is added to a fund which accumulates at a stated rate of interest. Income payments are deferred until the occurrence of some future event, i.e. retirement, disability, or death. No matter how market conditions change, you will never lose your initial investment.

    Surrender charges:

    There are no charges assessed against your contract accumulation values for administration, record keeping or other services. The only charge applied is a surrender charge that will be assessed on funds withdrawn or surrendered during the first 8 years of the contract. The charge is a percent of the amount withdrawn (including the surrender charge) and varies by duration.

    Policy Year

    Withdrawal & Surrender Charge

    1

    8%

    2

    7%

    3

    6%

    4

    5%

    5

    4%

    6

    3%

    7

    2%

    8

    1%

    9 and later

    0%

    If a loan is processed on your policy, there will be a $35.00 loan administration charge.

    Guaranteed Interest Rate:

    Below is a chart showing guaranteed minimum interest rates for policy date ranges:

    Policy Issue Dates Guaranteed minimum interest rate
    Issued July 1, 2019 to present 1.30%
    Between January 1, 2019 and June 30, 2019 1.60%
    Between July 1, 2018 and December 31, 2018 1.15%
    Between November 22, 2010 and June 30, 2018 1.00%
    Between September 1, 1998 and November 21, 2010 3.00%
    Between August 1, 1980 and August 31, 1998 4.00%


     Historical performance for Qualified Flexible Premium Annuity:

    The one-year, five-year and ten-year rate of return is as follows:

    Summary of Rate of Return for all issues as of December 31, 2018

    Policy Issue Dates 

    One-year rate or rate since inception, if less than one year

    Five-year rate or rate since Inception*, if less than five years

    Ten-year rate or rate since Inception*, if less than ten years

    Between July 1, 2018 and December 31, 2018

    1.75%

    *1.75%

    *1.75%

    Between November 22, 2010 and June 31, 2018

    1.75%

    1.89%

    *2.01%

    Between September 1, 1998 and November 21, 2010

    3.00%

    3.00%

    3.15%

    Between August 1, 1980 and August 31, 1998

    4.00%

    4.00%

    4.02%


     Benchmark comparison:

    Treasury Rates of Return for One Year Treasury Bill as of December 31, 2017

    One Year

    Five Years

    Ten Years

    Treasury Rate of Return, 1 Year Treasury Bill

    1.86%

    0.71%

    0.57%

    Contact your Farm Bureau Insurance agent for more information on insurance products from Farm Bureau Insurance of Michigan.

     

    The product information included in the Farm Bureau Insurance of Michigan web site is intended for Michigan residents only, and is neither an offer to sell nor an invitation to purchase any insurance product.

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