Another tax problem is that when you take withdrawals or annuitize it, the earnings are taxed as regular income.

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In addition to impressive earnings growth, Hershey pays a regular quarterly dividend of 42 cents per share, representing an annual dividend yield of 2.3%.

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But if you would have invested in a regular stock mutual fund, a lot of those earnings would have been taxed at the lower capital gains rate (currently 0-15%).

FORBES: Are Variable Annuities a Good Deal or a Ripoff?

If the IRS later determines an employee's original deferral violated some new rule (say, just missing a deadline for deciding to defer pay), he'll have to pay regular taxes and the 20% penalty tax on the whole balance (including earnings).

FORBES: Strings Attached

You'll owe regular taxes plus a hefty 20% penalty tax on the whole balance (including earnings), and interest on the taxes that would have been due originally on the wrongly deferred pay.

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Doctors were told that in addition to buying regular disability insurance, their practices could pump--pretax--up to 100% of their excess earnings into a supplemental disability plan offered by the Doctors Benefit Insurance Co.

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