5-6 Year FIA for 2 Sons in College
- Thread starter inreverse
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- 10,704
Not many options at that low of a deposit. Look at American Equity, they have a $10k minimum on many of their products if I remember correctly.
Make sure he realizes they cant touch it until age 60 without penalty if he is setting it up with them as the Owners. He might want to consider doing it in his name to give him more options. He can gift it to them later in life by signing ownership over to them. And make them beneficiaries in case if he dies.
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- #4
boys are 22 & 26, money is from his sister with no kids, wants to protect the money from market declines and impulsive spending
- 10,704
There are decent indexed annuities out there right now for growth. Historical lookbacks for AG and Athene are in the 4%-8% range based on current rates.
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I would recommend he just put them in his name with the kids as beneficiaries. Indexed Annuities would be fine to use and do what he wants.
If he wants to give the kids control later he can via transfer of ownership of the policy. In 10 or 15 years he might be totally comfortable with them having control of the funds. It gives him more options. And if he transfers ownership to them, they still have the age 59.5 restriction.
Athene would be another good option for products. I just looked and they have products that allow premiums as low as $5k. Probably better than AE right now for growth. And the historical lookbacks are very strong.
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I would recommend he just put them in his name with the kids as beneficiaries. Indexed Annuities would be fine to use and do what he wants.
If he wants to give the kids control later he can via transfer of ownership of the policy. In 10 or 15 years he might be totally comfortable with them having control of the funds. It gives him more options. And if he transfers ownership to them, they still have the age 59.5 restriction.
Athene would be another good option for products. I just looked and they have products that allow premiums as low as $5k. Probably better than AE right now for growth. And the historical lookbacks are very strong.
From a return standpoint SC is right, that'll work. The only issue I see is they are likely going to want to get to that money in 5-6yrs, and if its in an annuity that won't be good. If they want to put it away long term, it will be fine there.
If the boys are going to need/want access to the money in 5yrs, as much as I hate them probably a cd is their best bet for a no strings situation to protect it and grow a little. 5yr pays around 2%. Stinks but better than savings, plus its locked up somewhat.
If the boys are going to need/want access to the money in 5yrs, as much as I hate them probably a cd is their best bet for a no strings situation to protect it and grow a little. 5yr pays around 2%. Stinks but better than savings, plus its locked up somewhat.
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- #7
If it is non-qualified money going in, there should not be a penalty prior to 59.5, just taxes on the growth, or am I missing something?
- 10,704
You are missing something. Annuities are designed to be retirement vehicles. The IRS lets them be tax-deferred, but any withdrawals over basis before retirement (59.5) are assessed a 10% tax penalty.
- 1,953
22 and 26? Why doesn't she just buy a single premium life policy and let them live their life. Dump in $30k with 50/50 beneficiary split? At least there's a guarantee especially if they get married and have kids.
Good call on point #2. Ascent Pro 5 from Athene on the product option should also get a look (5k min).
