Top MYGA Rates Available in South Carolina
How South Carolina taxes annuity income
South Carolina applies graduated income tax rates with a top rate of 6.2% (on a legislated schedule of reductions) to the taxable portion of annuity distributions — but layered deductions substantially soften the bill for retirees:
- Retirement income deduction: up to $3,000 per year of qualified retirement income (pension, annuity, IRA, 401(k)) for taxpayers under 65, rising to $10,000 per year at age 65.
- Senior deduction: taxpayers 65 and older may also claim a separate deduction of up to $15,000 against any income ($30,000 for a couple), reduced by the retirement deduction claimed.
South Carolina does not tax Social Security benefits. Combined, a 65+ couple can shelter a meaningful share of annuity income each year. Federal income tax and the 10% federal early-withdrawal penalty (before age 59½) apply as usual. Verify current deduction amounts with the SC Department of Revenue.
Source: South Carolina Department of Revenue — Individual Income Tax
South Carolina Annuity Regulations
Free Look Period: At least 10 days; see your contract's cover page
South Carolina annuity contracts include a free look period — a window after delivery during which you may return the contract for a full refund with no surrender charges. The minimum period is at least 10 days for most contracts, with the exact terms stated on your contract's cover page.
Carriers may offer longer periods than the state minimum. Confirm current requirements with the South Carolina Department of Insurance.
Source: South Carolina Department of Insurance — consumer resources
Best Interest Standard: Adopted — effective November 27, 2022
Effective November 27, 2022, South Carolina holds producers to the NAIC best-interest standard of conduct when recommending an annuity (S.C. Code Ann. Regs. 69-29). The producer must act in the consumer's best interest — satisfying care, disclosure, conflict-of-interest, and documentation obligations — and may not place their own financial interest ahead of the consumer's. Producers must complete a 4-hour best-interest training course before selling annuities, and insurers must maintain supervision systems.
Source: S.C. Code Ann. Regs. 69-29 — South Carolina Department of Insurance
Replacement Rules
South Carolina requires consumer protections when an existing annuity or life insurance policy is replaced:
- A written replacement notice identifying the contracts being replaced and disclosing surrender charges, benefits, and features being given up.
- Notification to the existing insurer.
- A documented best-interest basis for the recommendation under S.C. Code Ann. Regs. 69-29.
Source: South Carolina Department of Insurance — consumer resources
