Things You'll Need:
- Funds for the annuity
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Step 1
Set up a nonqualified annuity when you want to contribute more toward your retirement than you are allowed under your employer-sponsored plan. There is no maximum contribution amount for these types of annuities.
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Step 2
Select an insurance company for your annuity. Go with an insurance company with a good reputation and great customer service. Although insurance is heavily regulated, it doesn't hurt to research an insurance company with your state's insurance commissioner before you invest your savings.
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Step 3
Get a free consultation from a licensed insurance agent. You can usually fill out a form online and then wait to be contacted by phone or in person.
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Step 4
Choose a fixed, nonqualified annuity when you want to ensure that you receive a particular interest rate for a selected period of time.
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Step 5
Work with a professional who knows the financial, legal and tax ramifications of an annuity. There are a number of different savings investments and you want to ensure that you choose the best one for your individual situation.
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Step 6
Remember that the nonqualified annuity is purchased with after-tax dollars and will not reduce your gross income for the purpose of income-tax savings.
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Step 7
Plan to keep your nonqualified annuity until you are 59 1/2 years old. If you make an early withdrawal of the funds, you will be subject to a 10-percent tax penalty on the monies you have withdrawn. There may be circumstances in which this penalty does not apply, such as if a serious illness occurs.
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Step 8
Name a beneficiary who will receive the remainder of any unused annuity payments at the time of death. This person will receive this amount either in a lump sum or spread over a specific number of years.
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Step 9
Discuss the amount you want to invest and the method by which you will pay your premiums. Companies now offer electronic deposits as well as conventional methods.
