Need Help with D.R.O.P Plan

[dabulls]

I need your help annuity gurus! I have a client, who is a family friend, that is retiring from the fire department. He has a deferred retirement option plan(DROP) with about $285,000(Q). He turns 51 late this year and he doesn't really need the money yet, as he owns his own company as well. He wants to roll it into an annuity and is a conservative investor(no variable).

So my questions are:
1. Is there any way to avoid the 10% penalty before 59 1/2, besides a SPIA?
2. What would be the best current product, around 10 years with the best guaranteed return (MYGA/Fixed)?
3. What would be the best current product, around 10 years with the best potential return (FIA)?
4. What in your professional opinion would you recommend or do?

Thanks guys

 

[Stephen]

I don't know of any way to avoid the 10% penalty outside of section 72.

Why 10 year? I am hesitant to recommend any 10 year products with the current interest rate environment.

My recommendation is to bring in another agent for a % of the case , or work with an fmo that doesn't mind doing a bit of hand holding.

 

[jmhalvo]

I need your help annuity gurus! I have a client, who is a family friend, that is retiring from the fire department. He has a deferred retirement option plan(DROP) with about $285,000(Q). He turns 51 late this year and he doesn't really need the money yet, as he owns his own company as well. He wants to roll it into an annuity and is a conservative investor(no variable). So my questions are: 1. Is there any way to avoid the 10% penalty before 59 1/2, besides a SPIA? 2. What would be the best current product, around 10 years with the best guaranteed return (MYGA/Fixed)? 3. What would be the best current product, around 10 years with the best potential return (FIA)? 4. What in your professional opinion would you recommend or do? Thanks guys

1. It's for retirement so let it be for retirement. Only 72q otherwise: no 2. Delaware 3.25% 3. Ask your FMO about uncapped products like AIG or Am Equity 4. Impossible- need much more information

 

[dabulls]

I don't know of any way to avoid the 10% penalty outside of section 72.

Why 10 year? I am hesitant to recommend any 10 year products with the current interest rate environment.

My recommendation is to bring in another agent for a % of the case , or work with an fmo that doesn't mind doing a bit of hand holding.

10 years is about when he wants to "start" his retirement. So you think short surrender period and shop the products after the surrender period? I have wrote quite a few NQ annuities, inherited IRAs, and a few Q ones as well. The DROP plan is just something new to me because the client can withdraw the money one time before 59 1/2 and only pay Federal taxes. No 10%. But doesnt want to touch it until in a lower tax bracket. I was just curious if he could take a small withdrawal, if needed.

----------

1. It's for retirement so let it be for retirement. Only 72q otherwise: no 2. Delaware 3.25% 3. Ask your FMO about uncapped products like AIG or Am Equity 4. Impossible- need much more information

Thank you for the reply. I am trying to get more info, I just wanted a starting point.

 

[Stephen]

10 years is about when he wants to "start" his retirement. So you think short surrender period and shop the products after the surrender period?

----------

That's up to you, or you could go over both 5 & 10 year options and tell him which way you would lean, but leave it up to him. I personally prefer that my clients have the option to re evaluate their situation and the product environment sooner rather than later.

 

[dabulls]

That's up to you, or you could go over both 5 & 10 year options and tell him which way you would lean, but leave it up to him. I personally prefer that my clients have the option to re evaluate their situation and the product environment sooner rather than later.

Yes I totally agree. Thank you.