An annuity statement is a summary of the performance of your annuity over time generated by your annuity provider. Along with other crucial information for tax purposes, you’ll receive regular updates on the annuity value and any interest or dividends you’ve earned.
Annuity statements also attest to related activities, such as changes to index values or information on rate caps. You will receive these statements regularly after purchasing an annuity, often once a year for fixed annuities and once every three months for variable annuities.
OPM Annuity Statement
When your application for a CSRS or FERS annuity was granted, the Office of Personnel Management sent you a statement that included information on your cost, commencement date, and gross monthly rate of your annuity benefit.
Here are the elements of the typical annuity statement.
A. Identification details
Identification information will often be located near the top of a statement for an annuity. The annuity policyholder’s name, account number, and address are included in these specifics. The message should also include the annuity provider’s contact details.
B: Contract Overview
If the annuity owner and annuitant is not the same person, the statement will include a summary of the contract terms, including their names. The product type, tax qualifying status, and effective date of the annuity contract are all included in this section’s detailed description of the agreement.
C: Financial Details
A summary of the financial data accessible for the statement period. This section briefly analyzes your annuity’s value changes during the statement period. The financial activity overview will provide information on index values and rate caps if you have an indexed annuity.
There won’t be much to report in this area if you own a conventional fixed annuity. The statement will detail the interest your annuity earned during the last statement period and the anticipated interest rate for the upcoming period.
D: Transactions History
Transaction history may be included in a separate portion of a variable annuity statement. You can read about any acquisitions or sales of mutual fund units in this section and any dividends you might have received from those mutual funds.
E: Value of Surrender
Your statement should contain the surrender value of the annuity regardless of the type you have. This figure indicates the money you would get if you cancel the annuity contract as of the statement date.
The surrender value will never equal the income you would receive from a mature annuity in its distribution stage because annuities function by letting a lump-sum premium increase over time to be transformed into a stream of income years later.
The OPM retirement statement
The cost is the amount you paid income tax on earlier. This amount represents a portion of your retirement plan contributions. Although you did not receive the funds contributed to the plan, they were counted toward your gross income for federal income tax reasons in the years they were deducted from your pay.
Note: Both were deemed initial deposits, and redeposits were included if you chose the alternative annuity option. You will compute the amount of your recoverable cost tax-free using the information from your annuity statement.
If you paid into the plan to earn full credit for service not subject to retirement deductions or if you refunded contributions to a retirement plan from which you had previously withdrawn, the entire repayment, in addition to any interest, is a portion of your cost. Any interest payments made are not deductible for interest. These payments are seen as regular employee contributions rather than voluntary contributions. Thus, you cannot classify them as such.
Depending on when your annuity begins, you must calculate the tax-free recovery of the cost of your CSRS or FERS annuity. That is the starting date on your OPM annuity statement. Your annuity’s commencement and accrual dates are unaffected if something happens, such as a late retirement application submission.
The gross monthly rate is the amount you would have received, less any deductions for income tax withholding, insurance premiums, etc., after your annuity had been adjusted for either the lump-sum payment under the alternative annuity option or the survivor’s annuity (if either applied).
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Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.
