NYL Special Annuity Taxation?

[scagnt83]

Im pretty sure the product at hand is NYLs "Deferred Immediate Annuity". They call it the "Future Income Annuity".

Yes, the name is an oxymoron, but its a real product.


It acts kinda sorta like an IA w/ Income Rider but not exactly.


Its a Lifetime SPIA with a mandatory 2 year deferral before taking income.

The catch is that no accumulation is credited during deferral. They hypothetically give you a higher payout rate the longer you defer (depending on the performance of their portfolio.. its not necessarily guaranteed).


I had a NYL wholesaler stop by a few months ago to talk about the product... here is an excerpt of our conversation:

-Me: "How much the money earns in deferral?"
-Him: "4.2%".
-Me: "So your money grows at 4% until you take income?"
-Him: "Well, thats what NYL makes on it."
-Me: "say what??"
-Him: "Well.... NYL is currently making around 4% on it, and they credit that towards higher payout rates"
-Me: "So NYL raises the payout rate on some kind of "prorata" (for lack of a better word) basis in relation to the return they earn?"
-Him: "Well, no. But the more they earn the more they are able to pay down the road.."
-Me: "So my money could sit there for 40 years and not earn a dime, and I still get the same payout rates of today (hypothetically)"
-Him: "Well.... yeah, I guess thats right.."



I will give them credit that the payout rates are competitive.
And its taxed as a SPIA, as opposed to an income rider.

Its not a bad product necessarily... but you can get a higher income from an IA w/ bonus & income rider.
Also, you give up liquidity unlike an IA w/ Rider...



To hit on M&Ms comments; you need to know what you are selling!!!!!!!!!!!!!!!!!!

You work for NYL... right?
With company resources you should know the product you sell backwards and forwards.
You owe that to your clients.

Once you actually understand the products, you will realize how to effectively utilize them with clients.


To answer your question:
Yes. All companies play by the same rules technically. All SPIAs are taxed the same.

This product is supposedly patent pending.. but I doubt it would actually hold up if this product takes off and others replicate it... history says it wouldnt.
You can bet other carriers are watching this product. But none have jumped for obvious reasons.

This is the first answer to come from the Big Mutuals to compete against the Income Riders....

 

[DennisTheMennis]

scagnt83 I owe you a beer, that's exactly what it is.
- - - - - - - - - - - - - - - - - -
No I don't work for NYL.

Diving into the taxation and how to weight the benefits of both, that's where the question lies. Working on it right now, any other great, on-point answers are appreciated.

 

[iceco1d]

This is the first answer to come from the Big Mutuals to compete against the Income Riders....

You mean...besides actually HAVING income riders?

 

[scagnt83]

You mean...besides actually HAVING income riders?

Its their answer for fixed products.

I might be wrong, but none of the big mutuals (nyl, mass, guardian, nwm) have a fixed annuity income rider. They are all on VAs. And they are all sub-par.

But who knows, maybe I might actually learn something from you...
I do admit that I dont keep up with the mutuals like I used to

 

[iceco1d]

Its their answer for fixed products.

I might be wrong, but none of the big mutuals (nyl, mass, guardian, nwm) have a fixed annuity income rider. They are all on VAs. And they are all sub-par.

But who knows, maybe I might actually learn something from you...
I do admit that I dont keep up with the mutuals like I used to

You said it's their answer to "income riders" not "indexed annuity income riders." I was under the impression you thought the mutuals didn't have income riders for ANY of their products.

Sometimes I forget what forum I'm on though, and think when you are talking about "annuities" you might actually really be speaking about all types of annuities, but alas, I the only thing "annuity" could possibly stand for is a FIA, right?

 

[scagnt83]

You said it's their answer to "income riders" not "indexed annuity income riders." I was under the impression you thought the mutuals didn't have income riders for ANY of their products.

Sometimes I forget what forum I'm on though, and think when you are talking about "annuities" you might actually really be speaking about all types of annuities, but alas, I the only thing "annuity" could possibly stand for is a FIA, right?

The thread was on fixed products, not variable.

Yes, mutuals have income riders on VAs but they are not competitive at all. So they basically might as well not exist.


Excuse me for not being precise and assuming most people are able to read between the lines.... but if it makes you feel better about yourself I will tell you that your right...

 

[iceco1d]

The thread was on fixed products, not variable.

Yes, mutuals have income riders on VAs but they are not competitive at all. So they basically might as well not exist.


Excuse me for not being precise and assuming most people are able to read between the lines.... but if it makes you feel better about yourself I will tell you that your right...

You have no idea what you're talking about in regards to VAs.

 

[scagnt83]

You have no idea what you're talking about in regards to VAs.

So educate me then...out of the carriers I mentioned who has a competitive income rider?

 

[iceco1d]

So educate me then...out of the carriers I mentioned who has a competitive income rider?

You're mistaking "competitive" to only mean the b.s. "Smoke and Mirrors" portion of income riders.

And to answer your question...

1. For someone in the 59.5 - 70 range, I think Pac Life has an awesome product for "income now." 5% withdrawals for life. No smoke and mirrors ratchets. 50 bps cost. Up to 75% equity exposure.

2 For "income later" when income will start over age 70, I think JNL is pretty good (especially for income at 76 or later). Doubling of income base after 10 years, 5% withdrawals at 65, or 6% at 76%. No limitations on equity exposure.

3. For entities (like an endowment), JNL's combined LB/DB rider can be great.

4. Ohio National used to have a very strong GLWB rider on a very inexpensive contract, buuuut I think they've lowered their income percentages.

5. Allianz has the same rider available for their variable products that they do for their indexed products.

Again, I will ASSume that my posts above will be essentially ignored, and our audiences attention will be diverted back to the fact of the "smoke and mirrors" of the indexed product riders, rather than what the client ACTUALLY wants to accomplish.

Exactly which indexed product right now gives you an expected return of 5% (forget 6%+) based on current cap/spread/part/trigger rates available?

 

[BNTRS]

Umm, not that I really want to get involved, but when you start flaming people for allegedly not knowing what they are talking about and then use Pac Life, ONL, and Allianz as examples of the Mutuals with competitive income riders on their VA's, I can't help but chuckle a little.

I'll let Pac and ONL slide as MHC's, but Allianz? The mother ship is a publicly traded company...

And as someone who was very intimately acquainted with the Mutuals for quite a while, I'll also note than when we talk about the Mutuals, none of those companies come to mind.

Just sayin...

Of course, I'm sure I have no idea what I'm talking about.