Life insurance = dying too soon; annuity = living too long (outliving your money).

Accumulation period = paying in; annuitization (payout) period = receiving income.

The annuitant must be a natural person; the owner may be a trust or business.

SPIA: one premium, income starts right away; first payment within 12 months of the contract date.

Deferred annuity: income starts later; single or flexible premiums; used to accumulate.

Same premium: 65-year-old man > 65-year-old woman > 45-year-old man in payment size.

Surrender value = premiums + interest - surrender charge; charges decline each year.

Clients must be told about liquidity limits and surrender charges before buying.

Unpaid annuity benefits paid to a beneficiary are taxable above the cost basis.

Life only pays the most per period but stops at death with no refund.

More guarantees (longer certain period, refund, second life) = smaller payments.

Annuity certain pays for a fixed period or amount, regardless of lifespan.

Fixed annuity: general account, guaranteed minimum rate, fixed payouts; inflation is the weakness.

Indexed annuity: interest linked to an index (e.g., S&P 500) through caps, participation rates or spreads, with a floor.

Variable annuity = separate account, a security, needs FINRA registration.

Qualified = pre-tax money inside a plan or IRA; withdrawals generally fully taxable.

Nonqualified = after-tax money, no deduction, tax-deferred growth; only earnings are taxed.

Pre-annuitization withdrawals: earnings first (LIFO); annuity payments use the exclusion ratio.

2026 IRA limit: $7,500; age 50+ catch-up $1,100 (total $8,600).

RMDs generally start at 73; missed RMD excise tax 25% (10% if corrected timely).

No life insurance or collectibles inside an IRA; 10% early-withdrawal tax before 59½ unless excepted.

Roth: no deduction, no lifetime RMDs, qualified distributions tax-free (5 years + qualifying event).

Rollover: 60 days; employer-plan payout to you has mandatory 20% withholding.

Trustee-to-trustee transfer: no withholding; IRA-to-IRA rollover only once per 12 months.

Qualified plan musts: exclusive benefit, written, nondiscriminatory, permanent, vesting.

Max eligibility requirement: age 21 and 1 year of service (1,000 hours).

Defined benefit: employer bears risk, favors older/highly paid; defined contribution: employee bears risk, favors younger.

2026: 401(k)/403(b) $24,500 (+$8,000 at 50+); SIMPLE $17,000; SEP up to 25% of pay, max $72,000.

403(b)/TSA = public schools and 501(c)(3) nonprofits; Keogh = self-employed.

401(k) loans: lesser of $50,000 or 50% of vested balance ($10,000 floor), repaid within 5 years.

Exam outline: 14 suitability items (§10509.913(i)), incl. reverse mortgage and Medi-Cal plans.

Since 1/1/2025: best interest standard (care, disclosure, conflict of interest, documentation).

Keep records 5 years; agent penalties start at $1,000 (up to $50,000 per repeat/knowing violation).