Question: With constant tax rates over time, why does a single premium deferred annuity contract (SPDA) provide greater after tax rates of return than does a

With constant tax rates over time, why does a single premium deferred annuity contract (SPDA) provide greater after tax rates of return than does a money market account? How is the difference in after tax accumulations in these two vehicles affected by the level of interest rates? Why does the length of the holding period affect the after tax rates of return per period on SPDAs and not on money market accounts?

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An SPDA provides greater aftertax rates of return than a money market account because the investment earnings in an SPDA compound at the beforetax rat... View full answer

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