SIE practice questionmediumVariable Annuities — Suitability
Variable annuities are generally NOT suitable for which type of account?
- AAn investor seeking tax-deferred growth
- BA non-qualified individual investment account
- CA traditional IRA or qualified retirement plan that already provides tax deferral✓ Correct answer
- DA long-term investor with a moderate risk tolerance
Explanation
Why C — A traditional IRA or qualified retirement plan that already provides tax deferral
Variable annuities in IRAs or qualified plans are generally unsuitable because those accounts already provide tax deferral. The annuity adds no additional tax benefit but comes with extra fees (mortality & expense charges, surrender charges, administrative fees). This layering of costs without a corresponding tax benefit is why FINRA has specifically flagged this as a suitability concern.
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