Pricing and costs of annuities includes money you pay to the administrator of the fund. These fees usually break down to service charge and maintenance fee and can mount up considerably.

Early withdraw fees are assessed by the program administrator in some cases if you withdraw before retirement. There is also a government-sanctioned penalty that you must pay if the annuity is tax deferred. Consider the following when determining pricing and costs of annuities:

1. Check the administrators charges on variable annuities.

2. Reduce risk of early withdraw penalties by having a safeguard fund when you have tax deferred retirement annuities.

3. Compare funds from annuity companies for the best interest rates possible.

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Choose fixed annuities funds with low or no service charges and save more

Shop for the best plans to offer to your employees. Many companies do not charge a service fee in the hopes of attracting more business. They may have an early withdrawal penalty or other fees so be sure to get a full disclosure.

I recommend: Immediate Annuities offers a calculator to determine the amount of money received based on the amount of lump sum your annuity is worth. Use this tool for your employees as a guide for determining how much monthly income they will need for retirement. Morgan Stanley offers fixed and variable annuity programs. Fill out their form to have a representative contact you about their offering, prices and service charges. Annuity FYI offers a comparison of the most common types of annuities, along with the benefits and costs associated with them. Be sure to look at the disclosure about the 10% Federal Tax penalty that may apply if you withdraw from your annuity before age 59 1/2.

Protect your employees from early withdrawal fees with annuities information

Offer annuities as part of the total benefit package and encourage your employees to take advantage of other forms of saving for an early day. Educate them on the risks of early withdrawal not only about the fees but also about not being prepared for retirement if they do not put the money back.

I recommend: Prudential offers variable, fixed, immediate and modified guaranteed annuities. They offer some annuity packages with interest rates up to 6%. They do charge service fees based on the program they are administering. Contact them for complete disclosure of all fees associated with the program of your choice. All programs may be subject to the federal tax penalty if withdraws are made before age 59 1/2. New York Life offers retirement programs and provides a detailed explanation of the risk of taking early withdrawal from your annuity under the section titled "Taxes and Penalties." In this scenario, they show that a distribution of $50,000 can net only $28,500 after penalties and taxes.

Shop for the best rates for your annuity program

Check with several companies before selecting the annuity program for your firm. Many offer higher interest rates for longer periods if you choose certain products.

I recommend: Allstate offers equity-indexed annuities. Equity-indexed rates grow the fastest when the market is up while providing a minimum interest rate when the market is down. Most Choice offers a list of the top 15 annuity products with their ratings and rate they are paying. Fill in their short online form and the next page takes you to the list which includes the top products, their AM Best rate, current rate, and yield to surrender. Lincoln Financial Group offers fixed annuity programs that offer a guaranteed interest rate from five to seven years and after this period, they offer interest rate guarantees in one-year intervals. Call a representative for current interest rates on the product that interests you.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Consider the pricing and costs of annuities service charges when making your decision. Many times the programs with the highest interest rates also have the highest maintenance costs.

Annuities are contracts which function as insurance policies in reverse. (In fact, annuities are sold by insurers.) If you buy an annuity, you pay a lump sum or make a series of periodic payments to a financial institution.

The annuities seller then invests the money and, under contract terms, must pay to you a series of fixed, periodic payments beginning at an agreed date for a period or, perhaps, as long as you might live. Annuities are useful for providing a stream of guaranteed income during retirement, much like a pension.

In this guide to annuities, you'll learn about:

1. The basic features of annuities.
2. Fixed vs. variable annuities.
3. Getting quotes on annuities.
4. Protecting yourself from annuities scams.

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Learning more about annuities

Annuity providers are quick to say that annuities are best considered a source of income to complement others, like tax-deferred savings in 401(k) plans. Unlike private pension plans, however, they are far more flexible and can allow for greater amounts to be saved tax-deferred.

I recommend: Bone up on annuity basics at the Insurance Information Institute, a trade group representing insurance companies.

Fixed vs. variable annuities

Most people who buy an annuity are seeking to reduce their involvement in investing and potential investment cycles. However, you can have it both ways. Fixed annuities provide a set return over a set period, but a variable annuity -- as the name implies -- vary in payout according to rising or falling values of the underlying investments, like stocks and bonds.

I recommend: Fixed annuities are relatively simple, but check out the Securities and Exchange Commission site on annuities for more on how fixed annuities work. Pay particular attention to the SEC page on variable annuities, and their various 'caution' statements regarding these types of annuities. If you find the warnings hard to grasp, definitely get expert advice before buying variable annuities.

Getting the best deal on annuities

In general, any financial website or brochure you see offering annuities is simply reselling a product from a major provider. You should go directly to an insurance agent you trust to buy your annuity. Or, buy an annuity through a large financial institution, like a mutual fund seller.

I recommend: You'll find a comprehensive list of insurance providers at the Insurance Information Institute. Some large mutual funds companies that also sell annuities include Fidelity, Vanguard and Schwab.

Don't be a victim of an annuities scam

As you can imagine, the idea of an older person sitting on a pile of cash to invest is incredibly tempting to thieves. Annuities scams are common and are relatively easy to detect (common sense helps a lot), but there are classic signs of an annuities scam for which you should carefully watch.

I recommend: The state of California provides an excellent checklist of what annuities should -- and should not -- provide. Also, always look up your potential annuity vendor, an insurance company, at A.M. Best, which provides ratings of insurers' financial condition.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Annuities are a tool, not a complete answer. If your concerns are long-term, take a look. If not, a 401(k) might be a better choice.
• •  Never buy an annuity under pressure. An ethical annuities provider will not force you to choose by a deadline to get a deal.
• •  Annuities, increasingly, come with provisions to pass on their benefits to heirs. Ask carefully about terms.

Annuities basics cover what an annuity is and how to purchase the best plan. Annuities are policies in which you put money and when you retire, the policy then pays you an income. The trick is picking the correct payment structure and compensation plan. Variable annuities have the potential to pay out much higher but they can also drop in value. Fixed annuities as the name implies guarantees a certain rate of payment.

Choose a lump sum distribution or have the annuity pay over time. If you pay over time, then you can pick a certain period to receive the annuity, called period certain. Of course, the payments will be less but the policy covers your employee for the period picked, even if he dies during that time. Picking the lifetime of the annuitant guarantees payment during that person's life. Alternatively, pick lifetime of annuitant and spouse to cover both spouses. Look for the following annuities basics:

1. Choose lump sum payments or pay over time into the annuity with payroll deduction.

2. Select the terms of the annuity payment.

3. Check annuity rates and maintenance fees for the plan.

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Pick annuity companies that offer diverse plans

Your employees have different needs, so choose companies that offer some choice in the plans they offer. Find out if you can change the plan during the term, since circumstances change, and offer the best plans to your employees.

I recommend: MetLife offers annuity programs for any employee regardless of how near or far from retirement. Add this benefit to your employee bundle for your employee's future peace of mind. Protective offers many different kinds of annuities including fixed rate, variable and immediate, so you can provide the best selection for your employees.

Get annuities information to find the best terms for your employees

Some employees will need a lifetime of payments to support them throughout retirement. Others will need a lump sum distribution to pay off debts before beginning retirement. Still others are concerned about the welfare of the spouse and children. Pick a plan that addresses all of these needs.

I recommend: Ameriprise offers annuity programs that offer either a lump sum payout or payment for the term you choose. Take it for life or a period of time such as 20 years. Mass Mutual offers various annuity products and provides calculators to determine how much money you will need at retirement and how much a certain investment will provide at retirement. Use these tools to let your employees make informed decisions about their benefits package.

Find the best annuity quotes with the highest interest rate and lowest service charge

Annuities can vary from company to company and fund to fund so look at what the fund is paying. The company handling the annuity will charge a service charge and a maintenance fee to maintain the account. Shop around for the best deals in annuities.

I recommend: Vanguard offers a tax deferred rate, which is good for up to five years for a certain product. Ask the representative to explain their fixed and tax deferred annuity plans for a full disclosure of the fees and interest rates. John Hancock offers several annuity options with flexible terms. They list their charges on the webpage and they offer liquid accounts in case your employee needs to withdraw funds prematurely. This factor can be very important, since there is no early withdraw penalty after just a few years.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Before you add retirement annuities to your list of benefits, ask for a prospectus and read it carefully. Make sure you also distribute the prospectus to your employees so they are knowledgeable about their plan.

Retirees are often people who have worked hard for many years while looking forward to carefree years in the future. Annuities provide many benefits for these deserving people, yet the choices are myriad and possibly confusing. Fortunately, there are some excellent companies with a great menu of valuable products. Usually, these companies have talented, informative agents who will help the newcomer navigate the waters of strategic investment policies.

Annuities are very popular, but thoughtful planners should work with knowledgeable experts to find the perfect annuity. A clear understanding of the annuities key terms should facilitate decisions.

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Annuity

An annuity is a financial product crafted to provide income for retirement. While daily reports show that the financial markets have their ups and downs, an annuity will not change with the volatility in the market, but it will protect an investor from some of the vicissitudes possibly faced by retirees and other investors. An insurance company with a team of smart people will invest the money that you put into an annuity, so the profits should be better than the profits realized by ordinary investors.

I recommend: All State Financial offers informative pages on annuities in general and the annuity products that are available.

Equity-indexed annuities

Equity-indexed annuities have special advantages. Savvy investors make and lose money in the stock market, which makes most people nervous about taking a risk by investing their money in stocks. Equity-indexed annuities provide an opportunity to invest in the stock market and minimize risk.

I recommend: Security and Exchange Commission has clear explanations on the advantages and disadvantages of equity-indexed annuities.

Variable annuity

Wise investment counselors usually advise an early start to retirement savings, and a variable annuity is a product that can be the perfect tool with which to accomplish this goal. The wise investment counselors will invest your funds in a variable annuity that can include a death benefit, deferment of taxes and a good return on the investment. A variable annuity contract might provide several choices, so speak with a trustworthy agent to help you make the best decisions.

I recommend: Prudential has clear explanations of the annuity options available to its clients.

Tax-deferred annuity

Although a tax-deferred annuity does not eliminate taxes, it delays the payment of some taxes until the taxpayer is retired and usually in a lower tax bracket. In the meantime, you have invested your money to earn interest.

I recommend: Most Choice provides details about investment options in clear, concise language for novices and experts alike.

Immediate annuity

Retirees might consider an immediate annuity, which will reduce some of their risk in a shaky economy and provide them with regular and guaranteed income. Each immediate annuity contract is different, so investors should read the contract carefully and work with an informative agent before committing. Immediate annuities are generally less risky than other types of annuities.

I recommend: The Lincoln Financial Group educates potential and current clients on its company website.

Lifetime annuity

Retirees with a lifetime annuity will have an income that they can depend on forever. That's the good news, but a lifetime annuity will not provide benefits for survivors in most cases. There are risks involved for a lifetime annuity because it ends with the death of the annuitant-which could be two months or 20 years after the annuity starts to pay.

I recommend: The Insurance Information Institute is educational and a great resource for those investigating investment products. You'll find explanations of lifetime annuities as well as other types.