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I don't know the details, but it's either a larger than $1m contribution or a longer deferral period before taking withdrawals.
I know Athene allows up to $2m before requiring a "big case exception" form to be completed.
Transferring annuity proceeds to IRA
- Thread starter aubrey
- Start date
I know Athene allows up to $2m before requiring a "big case exception" form to be completed.
davephx
Expert
- 59
Note that the OP said it was a variable annuity. So we don't know if the distribution is coming from actual income or partly from market gains over a very favorable last few years. It seems like she had converted it to a life annuity, but the payout rate seems high, as others have noted.
The surrender value is $319k, but the accumulation value may be more. Hopefully, she is beyond the surrender period, although some old policies have forever surrender changes.
Usually, if you want to convert a VA to the same insurer's life annuity, you can find much better rates by doing an exchange into another company's life annuity (assuming it is not an IRA). If it is an IRA, find a better life annuity and do a direct transfer from old to new to avoid taxes withheld - vs a rollover distribution..
I have 80-year-old clients who still seek growth, not relying on investments for income. They may seek growth for heirs/younger wife etc. You can toss your dart at an S&P index fund and over most 10-20 years earn an average of 9%/yr. But need cash reserves and enough other investments so you do not have to sell and lock in a loss when markets are down - they always recover - hopefully in a person's lifetime
If you needed this money soon, you would just invest in a T-bill or something. But she has been in long-term investments, apparently, and only needs $25k. She has other investments, etc. We obviously need to know a lot more about her situation, risk tolerance, objective, age, etc.
I would not recommend any longer than 1 year bonds at this point since inflation and interest rates are at risk of going up again with the current situation. I also use "bond alternatives" without the interest rate risk.
On the cost of the mutual fund/s, how is the advisor being paid? I would never use a "toss your dart" at an index fund. If the advisor is fee-only (the most expensive way to get investment advice long-term for growth investments), the adviser is charging at least 1% of asset value.
Mathematically, this 1% a year over 10 years = a 9.1% front-end load A share, which would be illegal to charge if the value remains the same. If value moves up in growth assets it is much worse.
I only recommend A share fund with breakpoints, so cost is maybe one-time 2%-4% depending on how much in each fund. Would never recommend just one fund but diversification and certainly not in an index fund or worse yet ETFs. Markets often move up or down 2-4% in a week or so, sometimes in a few days.
Yes, on the securities side, we have tons more paperwork under the Best Interest Rules and DOL rules on rollovers, etc. Eliz Warren assumes we are all crooks, but the rules, in my view, are worthless for a dishonest rep. They just create lots of busy work compared to servicing the client. If I do an IRA rollover, there are about 70 pages of disclosure we have to do with the application.
Multi-year guaranteed fixed annuities are still attractive. I have clients (and myself) locked in at 5.5%/yr on 3-year from about a year ago. Today can get 5-6%/yr. with 3 or 5-year maturities and usually 5% or 10% annual surrender-free options, but I have never had a client needing to take early.
Also, note that she has a variable annuity, so someone had to be securities and insurance licensed to sell it originally. I have not recommended variables for many years since they no longer have favorable advantages.
It used to be we could be aggressive on the sub-account choices since you locked in the highest value of any year or a guaranteed minimum return each year. Insurance companies had significant losses when the market plunged a few decades ago, and those good benefits are no longer available.
The surrender value is $319k, but the accumulation value may be more. Hopefully, she is beyond the surrender period, although some old policies have forever surrender changes.
Usually, if you want to convert a VA to the same insurer's life annuity, you can find much better rates by doing an exchange into another company's life annuity (assuming it is not an IRA). If it is an IRA, find a better life annuity and do a direct transfer from old to new to avoid taxes withheld - vs a rollover distribution..
I have 80-year-old clients who still seek growth, not relying on investments for income. They may seek growth for heirs/younger wife etc. You can toss your dart at an S&P index fund and over most 10-20 years earn an average of 9%/yr. But need cash reserves and enough other investments so you do not have to sell and lock in a loss when markets are down - they always recover - hopefully in a person's lifetime
If you needed this money soon, you would just invest in a T-bill or something. But she has been in long-term investments, apparently, and only needs $25k. She has other investments, etc. We obviously need to know a lot more about her situation, risk tolerance, objective, age, etc.
I would not recommend any longer than 1 year bonds at this point since inflation and interest rates are at risk of going up again with the current situation. I also use "bond alternatives" without the interest rate risk.
On the cost of the mutual fund/s, how is the advisor being paid? I would never use a "toss your dart" at an index fund. If the advisor is fee-only (the most expensive way to get investment advice long-term for growth investments), the adviser is charging at least 1% of asset value.
Mathematically, this 1% a year over 10 years = a 9.1% front-end load A share, which would be illegal to charge if the value remains the same. If value moves up in growth assets it is much worse.
I only recommend A share fund with breakpoints, so cost is maybe one-time 2%-4% depending on how much in each fund. Would never recommend just one fund but diversification and certainly not in an index fund or worse yet ETFs. Markets often move up or down 2-4% in a week or so, sometimes in a few days.
Yes, on the securities side, we have tons more paperwork under the Best Interest Rules and DOL rules on rollovers, etc. Eliz Warren assumes we are all crooks, but the rules, in my view, are worthless for a dishonest rep. They just create lots of busy work compared to servicing the client. If I do an IRA rollover, there are about 70 pages of disclosure we have to do with the application.
Multi-year guaranteed fixed annuities are still attractive. I have clients (and myself) locked in at 5.5%/yr on 3-year from about a year ago. Today can get 5-6%/yr. with 3 or 5-year maturities and usually 5% or 10% annual surrender-free options, but I have never had a client needing to take early.
Also, note that she has a variable annuity, so someone had to be securities and insurance licensed to sell it originally. I have not recommended variables for many years since they no longer have favorable advantages.
It used to be we could be aggressive on the sub-account choices since you locked in the highest value of any year or a guaranteed minimum return each year. Insurance companies had significant losses when the market plunged a few decades ago, and those good benefits are no longer available.
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