# Annuity



## blueheels2 (Apr 22, 2009)

Hey guys I am in local 553 and we don't have an annuity. What is the annuity and how does it differ from the pension?


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## Vic277 (May 7, 2015)

blueheels2 said:


> Hey guys I am in local 553 and we don't have an annuity. What is the annuity and how does it differ from the pension?


An annuity is a what the rest of the world calls a 401K. The most diversified retirement plans will include both a pension and a 401K.

A pension plan is a defined contribution. A 401K would be best described as profit sharing.

I'd suggest doing a little Googling on the differences as they are great.


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## GrayHair (Jan 14, 2013)

An annuity is a paper generating mechanism; at least that is how it seems now.

For a short definition of annuity, go *here*.


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## don_resqcapt19 (Jul 18, 2010)

Vic277 said:


> An annuity is a what the rest of the world calls a 401K. The most diversified retirement plans will include both a pension and a 401K.
> 
> A pension plan is a defined contribution. A 401K would be best described as profit sharing.
> 
> I'd suggest doing a little Googling on the differences as they are great.


A pension plan is a defined benefit, not a defined contribution. 

The "annuity" as used in most IBEW locals, is a defined contribution plan. As noted by Vic, the use of this term is not the same as how it is normally defined. 

With the pension, you are expecting to get a specific amount per month when you retire...a defined amount...that makes it a defined benefit.

With the defined contribution plans, you get the contributions, plus what ever investment growth that has built up. The only specific amounts in this type of plan is the contributions....defined contribution.


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## Loose Neutral (Jun 3, 2009)

I like to define it as..... the difference between retiring and retiring and getting the new truck, boat and other toy's and trips that you may want. As I get older, *compounding interest* is my new ****.


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## Loose Neutral (Jun 3, 2009)

cant say p 0 r n.


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## dreamcrusher28 (Oct 19, 2010)

Pron???


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## John Valdes (May 17, 2007)

Vic277 said:


> An annuity is a what the rest of the world calls a 401K. The most diversified retirement plans will include both a pension and a 401K.
> 
> A pension plan is a defined contribution. A 401K would be best described as profit sharing.
> 
> I'd suggest doing a little Googling on the differences as they are great.


I would not lump all annuities and 401ks into one thing as they are not.
Both vehicles are long term investments. 
Annuities can have guaranteed returns depending on the investment firm.
I have one annuity that when fully mature (12 years) guarantee's double your initial investment as long as you don't touch it.
So, if you put in $1000 initially, in 12 years you would get $2000.
I don't pick the investments, my broker does.
So far, so good. But it really does not matter all that much because no matter his choices, I have guaranteed or promised returns.
His actions may allow me to make more money then promised, but do not allow for me to lose any money as long as I let the annuity mature.

With 401k's in my case I was able to pick my investment allocations by percentage and investment type. 
Anyone can go out and buy an annuity and anyone can open an IRA on their own.
But a 401k is usually sponsored by a employer and you investment options are very limited. But with 401k, your employer can help to grow your retirement by also contributing.

People who complain they can never retire either are not aware of whats available to them as employees, don't care until its to late or work for ****ty outfits.
Also, in addition to your personal investments, there is SS.
I cannot see how anyone cannot retire at some point.


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## don_resqcapt19 (Jul 18, 2010)

John Valdes said:


> I would not lump all annuities and 401ks into one thing as they are not. ...


The term annuity as used by most IBEW locals is much closer to a 401K in the real world. (it is actually a 401a plan) Direct contributions by the employee are not permitted in a 401a plan. 

It is a defined contribution plan with, in most cases, some ability for the member to select investments from a limited list. There is no guarantee on the results...you get your original contributions and the investment gain or loss as the case may be. The contributions are pre-tax, so you pay income taxes on the money you take out of the fund.


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