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

[car253]

To buy life insurance at age 70 1/2 does not make sense because all the money will be eaten up quickly by the cost of the insurance. It cost a lot of money to insure a 70 1/2 year old for life insurance. If you do what is right for the customer you surely wouldn't roll the money into a life insurance policy.

That might be beneficial for the agent's pocket but not the customers.

 

[Tahoe Ray]

To buy life insurance at age 70 1/2 does not make sense because all the money will be eaten up quickly by the cost of the insurance. It cost a lot of money to insure a 70 1/2 year old for life insurance. If you do what is right for the customer you surely wouldn't roll the money into a life insurance policy.

That might be beneficial for the agent's pocket but not the customers.

He wasn't recommending buying CV life insurance...a permanent GUL with little to no CV (sold strictly for the DB) is often used in planning for people ages 60+ (into their 80s) to provide flexibility to the qualified account beneficiary.

 

[jmhalvo]

He wasn't recommending buying CV life insurance...a permanent GUL with little to no CV (sold strictly for the DB) is often used in planning for people ages 60+ (into their 80s) to provide flexibility to the qualified account beneficiary.

exactly. It makes perfect sense to use a GUL. I do it for people 65+ at least monthly.

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Although I have never done it for a future conversion- that was Rays idea

 

[AnonymousOne]

He wasn't recommending buying CV life insurance...a permanent GUL with little to no CV (sold strictly for the DB) is often used in planning for people ages 60+ (into their 80s) to provide flexibility to the qualified account beneficiary.

I understand and have used this strategy MANY times in the past.
How does this help with taxable RMDs?

 

[RedKite]

Insurance isn't really the answer here and sometimes, you need to ask more questions than give answers as to avoid the "square peg round hole" debate. It sounds like this was part of a 403(b) plan offered through her employment? You will want to call the plan administrator and get the details of the employer plan. If your concern is 70 1/2 then its likely it is. If its qualified money then you have to look at strategies in the qualified money space. Challenges like these I solve every day for high net worth individuals. Shoot me a PM and we can cover the details.

 

[jmhalvo]

To buy life insurance at age 70 1/2 does not make sense because all the money will be eaten up quickly by the cost of the insurance. It cost a lot of money to insure a 70 1/2 year old for life insurance. If you do what is right for the customer you surely wouldn't roll the money into a life insurance policy. That might be beneficial for the agent's pocket but not the customers.

again, as I said, it is about the goal! Cash value? Who cares, if the goal is a tax free generational transfer? Perfectly legit although as I said not the usual goal.

 

[Tahoe Ray]

Although I have never done it for a future conversion- that was Rays idea

I stole it from someone not on this board...but I'll take the credit.

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I understand and have used this strategy MANY times in the past.
How does this help with taxable RMDs?

It doesn't...it will just help the beneficiary long term. I know that wasn't the OPs original question and this thread has seemed to veer off topic. As jmhalvo pointed out (and as you're aware as well), short of giving the money away to charity or using some creative tax planning (lowering your overall income), she's going to have to take the tax hit.

 

[jmhalvo]

To buy life insurance at age 70 1/2 does not make sense because all the money will be eaten up quickly by the cost of the insurance. It cost a lot of money to insure a 70 1/2 year old for life insurance. If you do what is right for the customer you surely wouldn't roll the money into a life insurance policy. That might be beneficial for the agent's pocket but not the customers.

ok example. Her RMD would be 3600 year one. She could buy a 145k GUL for 300/mo at preferred. If her 403b keeps earning as well, mostly covering the RMD for the next several years , her heirs are much better off if she dies. If she lives to be 110, they still get the 145k tax free as a worst case. If her goals AND low risk tolerance match this strategy, she may choose it.

 

[AnonymousOne]

ok example. Her RMD would be 3600 year one. She could buy a 145k GUL for 300/mo at preferred. If her 403b keeps earning as well, mostly covering the RMD for the next several years , her heirs are much better off if she dies. If she lives to be 110, they still get the 145k tax free as a worst case. If her goals AND low risk tolerance match this strategy, she may choose it.

If she lived to 110, she will have cashed in entire 403b in RMDs and put in 144k in principle to the IUL for a 145k db...

 

[jmhalvo]

If she lived to 110, she will have cashed in entire 403b in RMDs and put in 144k in principle to the IUL for a 145k db...

403b cashed in regardless. She's paying for the guarantee. Sure, investing the rmd annually could be better - but not if she dies earlier