Annuity Rates in New York

As you plan for your retirement in New York, an annuity can be a great addition to your financial portfolio. There are many options available with a range of rates.

Buying an Annuity in New York

Annuities approved for sale in New York adhere to specific financial protections for buyers. If an annuity broker suggests you buy an annuity from another state or sign an application outside of New York, know that you will not be subject to the same protections and benefits.

You can use the New York State Department of Financial Services Company Search to confirm that your company is licensed in good standing in New York.

One thing to also be aware of is that New York’s heavy regulations — while designed to protect customers — may make some products less robust than they would be in other states.

“New York’s products don’t have anywhere near as beneficial bonuses and those little extras that they put into the policies that kind of, you know, reward people for participating,” licensed agent Jonathan Varner told Annuity.org.

Here’s a perfect example: I had a client from New York who intended to invest $2.5 million in a fixed index annuity with an income rider, guaranteeing a payout of $382,000 per year for the rest of his life. The catch was that this specific annuity was only available in states outside of New York. If he opted for an annuity within New York state with the same $2.5 million investment, his income would be nearly $100,000 less.

John Stevenson, CFFOwner and Advisor at Stevenson Retirement Solutions

John Stevenson, a Certified Financial Fiduciary®️, specializes in securing retirements with tax-free accounts. With a focus on guaranteed retirement, he’s ensured none of his clients suffer from market fluctuations. As a renowned educator and podcast host, John empowers thousands weekly, sharing his expertise in minimizing taxes and protecting against financial downturns.

Regulations and Tax Implications in New York

New York mandates heightened protections and enhanced benefits for people who buy state-approved annuities.

This includes a minimum free-look period of 10 days and a maximum of 30 days, allowing annuity buyers the chance to review their contracts thoroughly and cancel without penalty if needed.

The state also adopted the most recent version of the Suitability and Best Interests in Life Insurance and Annuity Transactions Regulation, which requires brokers, agents and insurers to act in the best interest of the consumer when recommending annuity. By law, they must consider the buyer’s needs, objectives, risk tolerance, financial situation and other relevant factors. They also must disclose any conflicts of interest or compensation arrangements. The regulation imposes suitability, disclosure, training and recordkeeping requirements on agents and insurers. 

Once you buy a New-York-approved annuity, it is subject to rules to help maximize your benefits. For example, annuities that grow in value over time must maintain a certain account value, and New York has standards to calculate this value. They include maximum charges and minimum interest rates that benefit the annuity owner.

Also, the distribution of death benefits in New York isn’t considered a surrender. That means the money is not subject to surrender charges.

As far as taxation, New York doesn’t impose a state premium tax on annuities unlike some other states, but its taxes still can be hefty. In 2024, the state income tax ranges from 10.9% to 4%. Residents of New York City and Yonkers have their own income tax rates.

Taxpayers over 59 1/2 can exclude up to $20,000 of qualified pensions and annuity income. Any income over $20,000 from a private retirement plan or an out-of-state government plan is subject to New York taxes.

New York Resources

New York annuity regulations can be complicated, but you get help navigating them through certain organizations.

Resources

Life Insurance Company Guaranty Corporation of New York

The Guaranty Corporation website shares the details of New York consumer coverage and protections.

New York State Department of Financial Services

The New York State Department of Financial Services provides annuity-specific information and a company search portal, which you can use to confirm that a company is licensed in New York. The site also provides an outline of policyholder protections and a glossary of terms.

New York State Department of Taxation and Finance

The New York State Department of Taxation and Finance website has tax filing links for New Yorkers and helpful tax information for retirees.