The Insured Retirement Institute released a report on Monday showing how deferring taxes of annuity earnings benefits consumers. The report found middle income Americans, the largest segment of annuity owners, receive the greatest benefit.

IRI cited a December 2010 report from the National Commission on Fiscal Responsibility and Reform which offered ideas for tax reform, including eliminating over 150 tax expenditures, "generally understood to include the protections afforded to insurance products," according to the Institute.

Among the suggestions offered by the National Commission on Fiscal Responsibility and Reform, are to consolidate retirement accounts; cap tax-preferred contributions to $20,000 or 20% of income, whichever is lower; and to expand the saver’s credit.

"Insured retirement strategies are designed with the goal to help provide guaranteed retirement income for all consumers who seek to ensure a stable and secure financial future," said IRI President and CEO Cathy Weatherford (left), in a statement. "IRI's report proves these products are indeed serving those whom need them most – hard working middle class Americans."

The Institute noted that while the budget proposed Feb. 14 didn’t address changes to annuities' current tax treatment, "this is only the beginning of the tax reform debate." The report authors argued that middle class investors, who are more likely to need supplemental income in retirement than affluent investors, could be heavily impacted by such reform. According to IRI, 80% of annuity owners earn less than $100,000, and 64% earn less than $75,000.

IRI cited data from Allianz which shows more than half of annuity owners claim tax-deferred growth potential is a reason for their satisfaction with annuities, while Cerulli Associates found 37% of advisors consider tax deferral a "key criterion" in recommending the products. Furthermore, 67% of advisors surveyed by Cerulli said retirement income was a key criterion in recommending annuities. A 2010 survey for IRI found 60% of advisors believed "guaranteed lifetime income provided by annuities should be promoted and further incentivized."

Although eliminating tax deferral in annuities wouldn't necessarily lower the accumulated value, IRI acknowledges, owners would have to tap other resources to pay the tax, lowering their long-term savings.

"Today, the personal responsibility attached to retirement income is at an all-time high," Weatherford added. "Millions of Americans are looking for ways to provide themselves with the 'mailbox money' that will give them a guaranteed paycheck for life. Annuities, and their tax deferred status, are uniquely poised to provide middle class Americans with the retirement peace of mind they seek."