Designed specifically for retired players, this program offers more than just a safety net.
The NFL Annuity program is a game plan for long-term financial stability.
In this blog, we will break down how the NFL Annuity Program works, why it's a game-changer for your post-football life, and how you can make the most of it.
Before diving in, it is important to understand, retirement planning for professional athletes doesn't have to start after you stop playing the game.
In fact, the sooner you start taking advantage of this benefit, the sooner your financial future will take shape.
NFL Annuity Program
The National Football League is one of the few employers that continues to include an annuity benefit as a part of its retirement plan.
Before specifically diving into the NFL Annuity Program, it is important to understand the basics of an annuity and how it works.
An annuity provides a series of regular payments over a set period of time.
Essentially, you make an initial investment, and in return, the annuity pays you back with regular payments.
The NFL Player Annuity Program helps players save for retirement, just like any annuity.
However, the money in these accounts comes from the teams (called "Clubs"), not the players themselves.
Said another way, it is a retirement savings plan funded solely by team contributions.
Sounds great, but who can participate?
Who Can Participate?
The NFL Player Annuity Program does have specific requirements for those who can participate.
It is open to:
Active players with at least one credited season from a previous year.
Former players with money in their Tax-Qualified Account.
Former players with money in their Non-Qualified Account.
NFL Annuity Program Process
There are 4 steps to the NFL Annuity Program Process:
Money Is Put In: The club contributes money into an account on your behalf.
Money is Invested: The money is then invested and managed by investment professionals.
You Become Vested: After three or more Credited Seasons, you become vested. This means you are the full owner of the money and the NFL cannot take it back from you.
You Take the Money Out: When you are no longer an active player and age 45 or older, you can take out the money.
*Note: money withdrawn prior to turning 59.5 years could result in a tax penalty.
Seems simple enough.
But before going any further, I want to better explain what a "Credited Season" is and how a player becomes "vested."
Credited Season
A Credited Season means you were on one of the following rosters for three or more regular or post-season games:
Active Roster
Inactive Roster
IR (Injured Reserve)
PUP (Physically Unable to Perform)
Similarly, if you are released injured or receive an injury settlement for 3 or more games, you earn a Credited Season.
Once a Credited Season is earned, you become eligible for most NFL benefits.
However, to be entitled to those benefits, you need to earn three or more Credited Seasons.
Simply put, three or more Credited Seasons means you are now "vested."
Think of it like levels to a game.
-First, you have to make the 53-man roster.
-Second, you have to be on said roster for 3 or more games.
-Third, you have to earn 3 or more Credited Seasons.
With that in mind, we need to further discuss the types of accounts involved and what club contributions include.
NFL Annuity Program Accounts and Club Contributions
NFL Annuity Program Accounts
NFL Players may have money in two types of accounts:
Tax-Qualified Account
Nonqualified Account
This is all dependent on how long a player has been in the NFL and earned their Credited Seasons.
A tax-qualified account is an account that holds money that has yet to be taxed. It is the responsibility of the player to pay the taxes once the money is taken out.
A non-qualified account is an account that holds money that has previously been taxed, meaning a player won't need to pay taxes on this money when they take it out.
The Annuity Program helps players save extra money for retirement, and the way it’s taxed depends on which account the money is in.
Additionally, your Club can put money into one or both of your accounts according to your Credited Seasons.
But, there are specific rules as to which account you start receiving these Club contributions in.
To start, you begin receiving Club contributions to your Tax-Qualified Account once you earn your second Credited Season.
Once you earn your fifth Credited Season, you start receiving Club contributions to your Nonqualified Account.
Said again, for players with two, three, or four Credited Seasons, you only receive a contribution to your Tax-Qualified Account. This is known as a Qualified Addition.
If you have five or more Credited Seasons, you will receive Club contributions to both your Tax-Qualified and Nonqualified Accounts. This is known as a Non-qualified Allocation.
NFL Annuity Program Contributions
Let's break down the contribution schedule for the 2018-2020 NFL Season.
Contributions to the Annuity Program are based on the number of Credited Seasons:
One Credited Season: $0
Two-Three Credited Seasons: $2,500 (Tax-Qualified Account)
Four Credited Seasons: $50,000 (Tax-Qualified Account)
Five or more Credited Seasons: $45,000 (Tax-Qualified Account) + $15,000 (Nonqualified Account, subject to taxes)
*Note: These amounts are before taxes are taken out. Of a $15,000 Nonqualified Allocation, $7,200 is withheld to cover income and payroll taxes.
It is important to note, the NFL suspended both Qualified Additions and Nonqualified Allocations from any Club for seasons 2020 through 2023.
NFL Annuity Program Distributions
The Annuity Program was set up so you could take advantage of the money contributed by your team (Club).
With that, I want to briefly explain how you can take the money out of the Annuity Program.
The four ways to do so include:
Single Lump Sum - this is a one-time payment for the entire balance.
TQ - available as soon as you are eligible
NQ - only after age 45
Partial Lump Sum - this means you receive payment of part of the balance.
TQ - available as soon as you are eligible
NQ - only after age 45
Installment Payments - this means you will receive the payments in equal installments.
TQ - available as soon as you are eligible
NQ - annual payments until you reach 45 (or a date of your choosing after that date)
Annuities - the balance is used to purchase an annuity from the insurance company. With the annuity, you have a bunch of options
Annuity for Your Life Only
Qualified Joint and Survivor Annuity
Qualified Optional Survivor Annuity
Joint and Survivor Annuity
To complete one of the above transactions, you must submit a Distribution Form to the NFL Player Benefits Office.
Lastly, the amount you receive will depend on the value of your account, but also, how you choose to take your money out. It is important to understand how you will receive your annuity before selecting an option to take the money out.
What Next?
Father time is undefeated and you will be faced with the reality of your last game sooner than you ever imagined.
Before you unbuckle your chinstrap for the last time, make sure you understand your benefits, including the NFL Annuity Program.
The NFL Annuity Program can be a game-changer for your post-football life. It is up to you to make the most of it.
Before making any decisions, be sure to consult your financial team and read through the NFL Benefits Package at NFLPlayerBenefits.com or call the NFL Player Benefits office at 800.638.3186.
At Moment Private Wealth we are specialists in athlete wealth management ensuring you maximize your league benefits.
I also highly suggest checking out the NFL Retirement Plan (2024 Edition). The NFL Annuity Program is just one of the many benefits afforded NFL players.
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If you are in the National Football League and want to better understand the NFL Pension Plan, schedule a call with a Moment Founder.
Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor.
Get in Touch With An Advisor
Frequently Asked Questions
Here are some answers to questions I received frequently about this topic.
Who can participate in NFL Annuity Program?
Active Players with at least one Credited Season in a Prior Plan Year.
When can I start receiving contributions to my NFL Annuity?
You begin receiving Club contributions to your Tax-Qualified Account once you earn your second Credited Season.
When can I start receiving my NFL Annuity contributions into my Non- qualified Account ?
This begins if you have five or more Credited Seasons.
When do I become vested in the NFL Annuity Program?
You become vested after earning three Credited Seasons.
Are there multiple ways to take out my NFL Annuity benefits?
Yes, there are multiple options. Be sure to consult your financial team for the best option for you.
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*Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.
