There are several SPIAs that allow for lump sum liquidity and/or commuted value withdrawals.
Pretending Social Security is an annuity and calculating a base for it???
- Thread starter LostDollar
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There are several SPIAs that allow for lump sum liquidity and/or commuted value withdrawals.
- 4,882
I think he was talking about Social Security not having any lump sum value & no continued value after death to anyone other than the original recipient & some value to a lower earning spouse who may trade their check for the higher deceased spouse
PrivClientSG
Guru
- 353
I meant social security. Thanks.
PrivClientSG
Guru
- 353
Thanks, and yes, I was. A lot of critics, proof-readers, and members of the "you're wrong" club here, LOL. All the best!
- Thread starter
- #25
- 6,966
I am assuming "lump sum liquidity" means something like being able to make partial withdrawals from a 401(k) if the administrator allows it.
What does "commuted value withdrawal" mean?
Thanks.
PrivClientSG
Guru
- 353
Agreed. It's interesting, one of the items in Biden's Green Book (and also in the Blue Book as well) is pushing out the RMD age again. OK, let's say they do go from 72 to 75. While it may be counterintuitive at first glance, the truth is, it does give more time for tax-deferred growth. Does that really give the Fed's more monies? Well, market performance is a factor. Another factor they can address -- and I am shocked they haven't, is simply using a different actuarial table for RMD's.
What could be even more dangerous is bringing back the old "Excess Accumulation Tax" and "Excess Distribution Tax" and that could have a major impact on the wealthy. How big that class of people are, I have no idea, LOL. Regardless, what I do see as the no longer kicking the can down the road is a multifaceted approach, and over time. I see some, or potentially all of the above, a dwindling funding on the current SS allocation/fund, a cut-off date or assignment date for new participants into a new program, and perhaps a portion of it will be privatized or quasi-privatized. I do think "shifting" is going to take place as well, with more of the financial responsibility being transferred back to the participants (what else is new, LOL).
- 4,882
many carriers will commute the income annuity/SPIA checks when the original owner dies. The carrier may prefer to settle up in a lump sum right now rather than to continue monthly payments, checks, tax reporting. IE: If person bought or turned an Annuity or life policy into a Life with 10 year certain payout monthly stream & dies in year 6, the carrier may commute the value of those remaining 4 years & pay it as a lump sum
The odd part is I have had consumers knowing put a payout annuity as the primary beneficiary for a fixed period of years like 10-15 years so that their spouse or children that had issues handling money would get an income stream & not a lump sum........only to have the carrier offer the beneficiary a commuted lump sum check at claim time
That was my misunderstanding as Allen pointed out. Apologies and no problem.
PrivClientSG
Guru
- 353
Agreed...forgetting about a carrier's motivation...in both scenarios you referenced above...have you ever looked at using annuities inside grantor trusts? In the last 12 months I saw two annuity carriers offer advanced sales/training web meetings on using annuities inside trusts. Given the "latitude" that a trustee can have, even more so with a trust protector, and having a "distribution" trustee, you can have so much control over whether money is ever paid out of this trust or not. Designed properly, and by a true expert, a trust can be very, very flexible. All the best!
Even the original purchaser may be able to take a commuted value. They don't have to die.
The whole "change your mind" provisions started to become more popular once QLACs became a thing (not that they sold worth a damn).
At least that's my recollection.
