          
          
          
                     Using Annuities for Tax Deferral
          
          
               With annuities, your money keeps compounding
          completely tax-deferred until you're ready to take it
          out.  
               This technique is not just for the wealthy.  Let's
          assume that you are in the 33% tax bracket (counting
          federal, state and local taxes).  Let's say that you
          put $30,000 into a taxable investment that averages 10%
          return each year.  After 10 years you'd have $57,380. 
          But if you put the same $30,000 into an annuity that
          averages the same 10% return, your money is compounding
          without taxes taken out every year, and after 10 years
          you'd have $77,812. 
               In other words, by keeping the government's hands
          off your money, you earned an extra $20,432.  And
          that's after just 10 years.  Over 20 years, the
          difference would be $92,074.
               Until a few years ago many Swiss annuities were
          not a particularly good deal, with some high initial
          charges.  That is no longer the case, and there are now
          some superb products available to American investors.  
               A new Swiss annuity product (first offered in
          1991), Swiss Plus, brings together the benefits of
          Swiss bank accounts and Swiss deferred annuities,
          without the drawbacks -- presenting the best Swiss
          investment advantages for American investors.
               Swiss Plus, is a convertible annuity account,
          offered only by Elvia Life of Geneva.  Elvia Life is a
          $2 billion strong company, serving 220,000 clients, of
          which 57% are living in Switzerland and 43% abroad. 
          The account can be denominated in the Swiss franc, the
          U.S. dollar, the German mark, or the ECU, and the
          investor can switch at any time from one to another.  
          Or an investor can diversify the account by investing
          in more than one currency, and still change the
          currency at any time during the accumulation period --
          up until beginning to receive income or withdrawing the
          capital.  
               Swiss Plus offers instant liquidity, a rarity in
          annuities.  All capital, plus all accumulated interest
          and dividends, can be freely accessible after the first
          year.  During the first year 100% of the principal is
          freely accessible, less a SFr 500 fee, and loss of the
          interest.  So if all funds are needed quickly, either
          for an emergency or for another investment, there is no
          "lock-in" period as there is with most American
          annuities.
               Although called an annuity, Swiss Plus acts more
          like a savings account than a deferred annuity.  But it
          is operated under an insurance company's umbrella, so
          that it conforms to the IRS' definition of an annuity,
          and as such, compounds tax-free.
               Swiss Plus accounts earn approximately the same
          return as long-term government bonds in the same
          currency the account is denominated in (European
          Community bonds in the case of the ECU), less a half-
          percent management fee.
               According to Swiss law, insurance policies --
          including annuity contracts -- cannot be seized by
          creditors.  They also cannot be included in a Swiss
          bankruptcy procedure.  Even if an American court
          expressly orders the seizure of a Swiss annuity account
          or its inclusion in a bankruptcy estate, the account
          will not be seized by Swiss authorities, provided that
          it has been structured the right way.
               There are two requirements: A U. S. resident who
          buys a life insurance policy from a Swiss insurance
          company must designate his or her spouse or
          descendants, or a third party (if done so irrevocably)
          as beneficiaries.  Also, to avoid suspicion of making a
          fraudulent conveyance to avoid a specific judgment,
          under Swiss law, the person must have purchased the
          policy or designated the beneficiaries not less than
          six months before any bankruptcy decree or collection
          process.
               For more information contact Jurg Lattmann, JML
          Swiss Investment Counsellors AG, Dept. 212,
          Baarerstrasse 53, 6304 Zug, Switzerland; telephone 011
          (41-42) 26 55 00; fax: 011 (41-42) 26 55 90, attn:
          Dept. 212.
               Swiss annuities provide investment and tax
          benefits that are far superior to American annuities. 
          Some annuity holders are afraid that if they cash in
          their old annuities they will have to pay taxes on the
          accumulated earnings of the cash value. That's not
          true. The tax code allows you to exchange insurance
          policies tax free. You can exchange life insurance for
          life insurance, an endowment contract for another
          endowment or annuity contract, and an annuity for
          another annuity.  A recent Tax Court case makes the
          exchange even easier.  The taxpayer's old insurer
          refused to transfer the cash value of her old annuity
          to the new insurance company selected by the taxpayer. 
          Instead, the old insurer issued a check to the
          taxpayer, and the check was immediately reinvested in
          the new annuity.  The IRS claimed that there was income
          when the check was received because the taxpayer was
          not bound to reinvest it.  The Tax Court disagreed.  It
          said that the tax-free exchange provision is to be
          broadly interpreted.  You can cash in your old policy
          and use the proceeds to buy a new policy immediately.
          (Green, 85 TC No. 59(1985))
               The IRS ruled that the tax-free exchange of
          insurance policies applies when you exchange an U.S.
          annuity for a foreign annuity.  There is no requirement
          that either or both of the insurance policies exchange
          be issued by insurers doing business in the United
          States (Letter Ruling 9319024).
               The Swiss annuities are not foreign financial
          accounts, and therefore need not be reported on your
          tax return nor on the special form for reporting
          foreign financial accounts.
          
          
          
          
