Help with annuity decisions - size and ownership.

[Tahoe Ray]

How can a MYGA have an annuitant?

MYGAs can be annuitized at the existing carrier without a 1035. For ones issued today, it's normally not advantageous. For those issued over 10 years ago, annuitizing an existing annuity (of any kind) MAY be a better option.

Also, and again, not so much today, but some contracts are/were driven (which triggers death benefits) by the annuitant and not the owner. You still see this in trusts owned policies that need to base everything on a natural person (since the trust doesn't "die"). Those contracts become annuitant driven.

I would suggest speaking with someone to recommend a plan based on your goals, and then questioning all of the moving parts of that plan (even if it does SEEM to accomplish what you're looking for).

That way, you know what you own, what to expect, and you don't have to learn an entire industry all at once.

 

[scagnt83]

As Ray said, a MYGA has an "annuitization feature" that lets you Annuitize it and take an income stream just like a SPIA provides. You can usually find a higher rate/income by 1035ing to a SPIA. But its a feature of all Deferred Annuities. Cant be an Annuity if it cant be Annuitized.

So even if you dont plan on using that feature of the MYGA, you will still designate a person as Annuitant on paper. So to go back to the advice of Joint Ownership on the MYGA, you would list yourself as Annuitant. When you 1035 to the SPIA, you would have to be listed as Annuitant, but you would have the option of adding your wife.

To get technical about it, a MYGA is a type of Deferred Annuity. Not all Deferred Annuities guarantee the interest rate like a MYGA does. Some have an "annually renewable" rate that can change each year. All Deferred Annuities have the ability to be Annuitized and create an income stream. If doing so is advantageous or not depends on the situation.

 

[Garya505]

Thanks for the info, but I'm really confused now. Every other source I have read says the the owner and insured (annuitant) cannot be changed when you do a 1035. Or maybe I just don't understand what I'm reading.
I'm also having trouble with "owner" vs "annuitant".

 

[Garya505]

Ah, this helps:
Annuitant | What It Is and How It's Different From The Annuity Owner

 

[scagnt83]

Thanks for the info, but I'm really confused now. Every other source I have read says the the owner and insured (annuitant) cannot be changed when you do a 1035. Or maybe I just don't understand what I'm reading.
I'm also having trouble with "owner" vs "annuitant".

The original Owner/Annuitant cant be changed. But additional ones can be added.

Owner can legally make changes to the Contract. Think the "administrator" of the Contract.

Annuitant is the person who's life the payments are based on. This could hypothetically be someone other than the Owner. But the Owner must have some type of "financial interest" in the Annuitant if they are different.

 

[goillini52]

Is there a formula for determining suitability, such as % of assets or having so many months expenses on hand?

 

[Tahoe Ray]

Is there a formula for determining suitability, such as % of assets or having so many months expenses on hand?

It's based on the carrier but the rule of thumb is no more than 50-60% of total assets in annuities.

Anything beyond that normally requires a suitability exception (but not for every carrier).

 

[Life Hawk]

Used the ol' "Green Money/Red Money" to help guide that discussion/decision. Didn't totally answer the percentages for annuities alone, but did help see where safe vs. risk should be in a very generic formula.

Depends on the level of liquidity you want/need.

Amazing the money I have seen families help my clients burn through over the years! Penalties included!

 

[producernumber1]

You can change names on a 1035, the application could be under just your name, or your wifes name. You would fill out the transfer paperwork like-for-like as it is written with the company you are moving it from. I have done this often on annuities I have written and moved to Nationwide. If you have any questions, call their planning department, they know all the ins-and-outs. Why are you just planning on using MYGA's and SPIA's? SPIA's payouts aren't much higher than an indexed annuity. I don't disagree with using a MYGA right now, especially with a 7-year rate at 4.8%, it beats the old 4% rule! There are some great indexed annuities with no fees or charges and provide an ADL doubler up to 5 years, even if the account value goes to $0, again, NO FEES. A MYA or SPIA can't provide that option. There are also indexed annuities that will increase each year whatever the index earns, it will continue to grow unitl the account value reaches zero, then the payment will stop increasing, but it will pay you that amount for the rest of your life. The potential increase is 40-60% more than you started with. Be open to other ideas, you will never get an increase with a SPIA. Also, get some money in the market, there are a lot of great options with companies as bond alternatives, I currently am placing some of my clients funds in a 3-year income options at 9.50% annually, with coupon paid quarterly. This has been a huge play for those that got slaughtered on bonds (most people do hold junk bonds, they just don's know it) and mutual funds. I am open for any discussions if you care to talk sometime. [email protected]

 

[Tahoe Ray]

You can change names on a 1035, the application could be under just your name, or your wifes name. You would fill out the transfer paperwork like-for-like as it is written with the company you are moving it from.

I'm not sure I follow here. You say that you can change names on a 1035 but yet you say like for like?

Are you just suggesting changing ownership at the existing carrier? That's certainly doable but you can't change ownership via 1035.