ROTH annuity options

[Allen Trent]

but they don't allow a withdrawal the first year.

My guess is this is a commission decision by the carrier not wanting to have the money go in, pay comp & have it leave right away. So, have to take the needed money before issuing the contract or wait 12 months. It does make it a bit difficult if the money is currently sitting at another carrier or custodian to get the distribution out. I am sure it is a bit clumsier than the Athene contract. If using in a strategy to pay Life insurance premiums, I bet it is also a bit clumsy to try to line up the annual distribution so it is coming out of the contract when needed to pay the annual payment to the life contract.

 

[scagnt83]

That's not the tax bill.

The tax bill is the unrealized taxes yet to be paid on the entire IRA account.

And the more you postpone, the more it'll be confiscated (jargon?) by the IRS tax code through the plan beneficiaries when they inherit it.

That is the yearly tax bill. Even at the increasing RMD rate, assuming the same rate of return, she is netting more without conversion.

Just because she pays more in taxes over her life, does not mean she has not netted more in after tax dollars.

Was it your intention, when you started this plan, to make the IRS the primary beneficiary of this plan?

Completely untrue statement for 99.8%+ of the population.

The only people this is true for are the ones who live in the state of CA and fall into the top income tax bracket.... still while in retirement.

That statement is not jargon. Its just an outright lie unless you are working with the 0.2% of the population that applies to.

 

[scagnt83]

You labeling it jargon doesn't make it any less true. You can badmouth "my jargon", but the facts are still there.

And plenty of top producers enjoy using 'jargon' if it helps to communicate effectively.

Btw, "jargon" isn't defined as you implied it. "Jargon" is when you're using technical speak to speak above someone's head.


jargon
[ˈjärɡən]
NOUN

1. special words or expressions that are used by a particular profession or group and are difficult for others to understand.

Its not true at all. It is no different than any other taxable asset.

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I called it "sales jargon". Which has its own subset definition:
Technical vocabulary that is used by professionals within a certain field, as a form of communication. Involves the use of inflated phrases, which makes the user and their ideas sound impressive to the listener.

You are using inflated phrases that are misleading and not making a fair comparison of situations.

And no, not all Advisors do that. Just because the ones you look up to do, does not mean it isnt frowned upon by the rest of the industry.

 

[DHK]

And no, not all Advisors do that. Just because the ones you look up to do, does not mean it isnt frowned upon by the rest of the industry.

Wow. Well, plenty of top producing ETHICAL advisors do, including CPAs and attorneys. Language is a skill and it's an art to cultivate in our industry.

As far as "the rest of the industry"... I don't know who your industry idols are, but I'm sure Michael Kitces (who seems to hate the insurance industry) would be proud of your stance.

And at that, I guess we're done on this topic.

 

[scagnt83]

Wow. Well, plenty of top producing ETHICAL advisors do, including CPAs and attorneys. Language is a skill and it's an art to cultivate in our industry.

As far as "the rest of the industry"... I don't know who your industry idols are, but I'm sure Michael Kitces (who seems to hate the insurance industry) would be proud of your stance.

And at that, I guess we're done on this topic.

There is a difference between truthful jargon, misleading jargon, and untruthful jargon. Ethical advisors only utilize the first type.

Saying "you do not own all of your 401k" is misleading.

Saying "the IRS is the main beneficiary of your 401k" is not truthful.

Misleading & untruthful jargon does this industry (especially the insurance side) a tremendous disservice.

I certainly don't look up to Mr. Love, that's for sure.

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You have yet to explain how a taxable retirement account is any different than any other taxable investment....

Or why the OPs client should pay 100% more in taxes just to avoid a tax bill that would be a fraction of the interest from the amount paid in taxes....

If you could back up your jargon with facts, then it wouldn't be an issue. You are no different than anyone else on this forum. You make an untrue or misleading statement, you get asked to back it up. I've asked you these 2 questions repeatedly and you just gave me nonfactual jargonish replies along with 4 hour videos that have no bearing on the facts at hand.

 

[Allen Trent]

You are no different than anyone else on this forum.

I am not sure that is fair. In regard to this post, based on the facts I am aware of, I think it would be malpractice to suggest the client convert to Roth after anything faster than a 10-20 year time frame.

But I wouldn't say DHK is no different than anyone else on the forum. I think he gives way more than he takes & most all of his advice is sound, goes out of way to help, etc

Sure, I think he has drank some extra strong Kool aid on a couple narrow topics/strategies/sales tactics in terms of qualified money evil//Iife insurance can fix everything, but he is certainly not a threat to the general public, this forum, etc

My guess is that if he took the Strengthsfinder profiles, he would test with an extremely strong BELIEF. That is a great trait, but on occasion it causes those of us with it to zero in on an idea that we won't let go of easily

 

[scagnt83]

My guess is this is a commission decision by the carrier not wanting to have the money go in, pay comp & have it leave right away. So, have to take the needed money before issuing the contract or wait 12 months. It does make it a bit difficult if the money is currently sitting at another carrier or custodian to get the distribution out. I am sure it is a bit clumsier than the Athene contract. If using in a strategy to pay Life insurance premiums, I bet it is also a bit clumsy to try to line up the annual distribution so it is coming out of the contract when needed to pay the annual payment to the life contract.

Reserves also play a part in it. They have to account for that possibility of immediate drawdown. Often rates on these products are lower than competing products because of this.

But in general, annuity carriers have never been eager to make it easier for clients to get their money back. Competition & regulations are the only reason they give in.

 

[Allen Trent]

Reserves also play a part in it. They have to account for that possibility of immediate drawdown. Often rates on these products are lower than competing products because of this.

But in general, annuity carriers have never been eager to make it easier for clients to get their money back. Competition & regulations are the only reason they give in.

sure, reserves plus the cost of putting the money in investments like bonds/commercial mortgages, etc only to have to immediately pull out 10% to send back to client

You are right, most of the MYGA contracts out there have no 100% guarantee of principal(surrender charge can eat into principal for early surrender) & most dont allow any distributions in 1st year & many then dont allow anything more than interest to be pulled out annually without surrender charge. The MYGA transition to this current product design I see is to try to pay sligthly higher interest in a declining interest rate environment. Only way to pull that off is less liquidity & lower commission

 

[scagnt83]

I am not sure that is fair. In regard to this post, based on the facts I am aware of, I think it would be malpractice to suggest the client convert to Roth after anything faster than a 10-20 year time frame.

But I wouldn't say DHK is no different than anyone else on the forum. I think he gives way more than he takes & most all of his advice is sound, goes out of way to help, etc

Sure, I think he has drank some extra strong Kool aid on a couple narrow topics/strategies/sales tactics in terms of qualified money evil//Iife insurance can fix everything, but he is certainly not a threat to the general public, this forum, etc

My guess is that if he took the Strengthsfinder profiles, he would test with an extremely strong BELIEF. That is a great trait, but on occasion it causes those of us with it to zero in on an idea that we won't let go of easily

I mean in regards to pursuing the truth and facts surrounding what we do. Factual inaccuracies should be corrected on this forum, no matter who says them. Sure there is plenty of opinion to could the grey area, but facts are facts.

I certainly do not think DHK agrees with the OPs recommendation or would reach the same conclusions on his own if this were his client. He specifically said it should be a much longer time period if done. And I am 99.999% sure that he honestly does believe his recommendations to be what is best for the client. And we all know that whats "best" is ultimately up to the clients preferences to a large extent. Clients do business with an advisor whos beliefs they align with.

Perhaps I could have been a bit more professional, I feel that I was at first. When misleading or inaccurate sales slogans are just being repeated without addressing issues that are brought up about them, well, I guess it feels like a negative thing for the conversation and the industry at large.

I apologize for taking the conversation off track.
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But getting back to the main issue in this thread, I agree it would be malpractice to recommend anything shorter than 10 years. Get any half decent CPA on the stand during mediation and the agents E&O carrier will be begging to settle.

 

[scagnt83]

You are right, most of the MYGA contracts out there have no 100% guarantee of principal(surrender charge can eat into principal for early surrender) & most dont allow any distributions in 1st year & many then dont allow anything more than interest to be pulled out annually without surrender charge. The MYGA transition to this current product design I see is to try to pay sligthly higher interest in a declining interest rate environment. Only way to pull that off is less liquidity & lower commission

You are right. But I actually meant it about FIAs. Using "rates" as a general term for caps/spreads/etc.

Many FIAs do not allow 1st year free withdrawals. Some dont allow distributions at all in y1. Most do not use the basis for free withdrawal calcs like the Agility that DHK uses does. And some products even let you reduce the standard free withdrawal amount in exchange for higher Caps/etc.

And that is exactly how I see FIAs for accumulation. Wont be any worse than a MYGA, probably will be a bit better.