Mom is About to Be 70 1/2 what to Do 403b Annuity?

[houcoogster]

Hey Guys,

My Mom is a retired school teacher and has a Horace Mann Annuity. She's going to be turning 70 1/2 in a couple of months. What are some good options for her she really doesn't need to use the money now and of course she doesn't want to give Uncle Sam more than she has to. It's about 100k. Thanks!

 

[jmhalvo]

Hey Guys, My Mom is a retired school teacher and has a Horace Mann Annuity. She's going to be turning 70 1/2 in a couple of months. What are some good options for her she really doesn't need to use the money now and of course she doesn't want to give Uncle Sam more than she has to. It's about 100k. Thanks!

Well if the issue is taxes, she has to pay them by April 2015- unless she has the RMD go directly to a charity like her church. It is the last year for that I believe, however.

 

[Justin Bilyj]

What's her marginal tax rate?
I am new at this but the most common solutions is to roll over into another annuity, take rmd's and buy life insurance, or rollover to a roth the amount that wouldn't put her in the next tax bracket (if she has money to pay for the conversion).

 

[AnonymousOne]

Hou, there is no golden ticket with this one. Rolling over to another annuity will not bring additional tax benefits but may provide better investments than Mann. Buying life or converting doesn't circumvent any taxes.
There are many "ideas" for what to do, but they will each have drawbacks and depending on the actual need, some will be better or worse than paying the taxes.

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Let us know if this money is earmarked for beneficiaries or income down the road.

 

[car253]

Rolling money into a life insurance policy at age 70 is crazy, more than crazy. You would be paying for high life insurance costs for no reason. You need to speak to an investment advisor and/or a tax person.

 

[jmhalvo]

Rolling money into a life insurance policy at age 70 is crazy, more than crazy. You would be paying for high life insurance costs for no reason. You need to speak to an investment advisor and/or a tax person.

that's not true at all. It's crazy for some, but it is all about goals. What if your goal is to maximize tax free generation transfers? Or have a DB that will pay for the conversion of the Inherited IRA? Yup- 95% of the time all this person can do is suck it up, pay the taxes or donate the $. However...

 

[Justin Bilyj]

Rolling money into a life insurance policy at age 70 is crazy, more than crazy. You would be paying for high life insurance costs for no reason. You need to speak to an investment advisor and/or a tax person.

Hello Mr. 2 post. You should learn about "net amount at risk" and figure that into the equation for costs when it comes to life insurance (IUL that is ).

And as far as avoiding taxes Anonymous, the conversion does save taxes if the client/prospect believes that taxes will be going up in the future...

 

[car253]

that's not true at all. It's crazy for some, but it is all about goals. What if your goal is to maximize tax free generation transfers? Or have a DB that will pay for the conversion of the Inherited IRA? Yup- 95% of the time all this person can do is suck it up, pay the taxes or donate the $. However...

The cost of life insurance (mortality costs) for a 70 1/2 year old on a Universal Life policy would be through the roof. The cost would be enormous. The rollover money would be eaten up by the insurance costs ASAP. That is a very bad idea to do that.

That is why I said to see an investment advisor or a tax person which I am not.

 

[AnonymousOne]

And as far as avoiding taxes Anonymous, the conversion does save taxes if the client/prospect believes that taxes will be going up in the future...

Couldn't that be said for anything.
Move it to a myga, if client thinks market is going to crash.
Convert if client thinks taxes are going up.

This is another question from consumer that draws way too many recommendations from agents and advisors before information is given on what the true need/goal is.

 

[jmhalvo]

Couldn't that be said for anything. Move it to a myga, if client thinks market is going to crash. Convert if client thinks taxes are going up. This is another question from consumer that draws way too many recommendations from agents and advisors before information is given on what the true need/goal is.

and let's face it- they rarely convert no matter what they think. She will take her RMD, buy something nice , and move on. Not a big deal.