Group Annuities

[scagnt83]

I see confusion going on here.

Hey COInsguy, do you even know what a group annuity is? Have you ever seen an actual group annuity policy?

401k is just an IRC. It can be funded with either mutual funds, group annuity etc.

Exactly.

Many 401Ks are "technically" on a group annuity platform. But its still a 401K.

What I am assuming he is speaking of is a SIMPLE plan or something of the like.

Or he is just offering a voluntary salary deferral on a NQ basis with PI or a FA (not a group annuity)

 

[Franz Kafka]

From what I gather, a group annuity is a single policy for a group. How it works I have no idear. What place it has in our work I also don't know. Wouldn't mind a simple explanation though. I'm here to learn.

You are correct. The plan sponsor gets a master contract while the employees get certificates (like group life insurance). I'm thinking he's just selling individual policies using list bill because I've never seen a group annuity being sold outside a qualified plan.
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Exactly.

Many 401Ks are "technically" on a group annuity platform. But its still a 401K.

What I am assuming he is speaking of is a SIMPLE plan or something of the like.

Or he is just offering a voluntary salary deferral on a NQ basis with PI or a FA (not a group annuity)

You can have your IRA funded with either cash, FA, VA, mutual funds etc. You can have your 401k funded with the same.

Never a dull moment mentioned defined benefit (pension) plans. They almost always require funding through a group annuity because it alone can guarantee "defined" benefits in the future. JMO

 

[Full Throttle]

Correct: As a disclaimer to this thread I'm not & don't intend to be securities licensed anytime soon. Working in the very small group market I cant see the profit margin working well for even a 401k guy to want to come in on and be able to make enough sales to be successful.

The profit on the small plans isn't from the 401(k) or SIMPLE plan, it's for the other business opportunities it provides.

 

[retread]

group annuities are usually sold to fund defined benefit pension plans, especially those that are terminating.

You need to consider some of the cons about DB plans. Unlike DC plans, DBs must have an actuary, which raises the cost, and have mandatory funding with stiff penalties if not met. Big business can afford these, but even they are shedding them due to expense. If it were me, I would stick with DCs/401k's, etc.

However, using an annuity to fund a DB may shift the actuarial requirements to the insurance company I think. (I'm not sure) Somebody help me out here.....