Posted on 10/14/2009 3:37:42 PM PDT by unique
Has anyone here completed the transfer as noted above, e.g. transferred their 401K or 403b funds to an annuity with an insurance company, avoiding tax?
If yes, I would think that doing that now would be bad timing, given the low rate environment, correct?
Any thoughts on this subject would be appreciated.
I'm starting to look into options - thinking - fixed-rate for life - joint lives annuity.
self ping
Whenever you look at locking in fixed rate annuities, think about the unit of account. In other words, while it is difficult to forecast foreign exchange rates in general, an annuity contract is a major bet on the long term soundness of the dollar. Think about whether or not that’s a bet you want to take.
I second that self-ping
Bob Brinker has some unkind words to say about annuities. Give him a call on his radio show and ask what he thinks about this particular annuity.
And check out the fees . Sometimes they are outrageous but well hidden.
You roll it over to an IRA and the annuity is inside the IRA. Then you withdraw as you need to from the annuity, and pay taxes each year on your withdrawal.
If anyone is suggesting you can avoid taxes altogether, they are lying or stoned.
I really see no prospect of future employment. I have two young sons and four really old vehicles. I have been thinking about taking out some of it and putting the rest into another 401K but really can't see where I would put it.
My bank tried to sell me an annuity which of course included life insurance. I told them that I didn’t want more insurance for my kids to collect when I died, and that I just wanted to make enough interest to pay my bills w/o having to ask my kids to help me.
For the heck of it, I asked if there was any penalty for quitting early. I was ASSURED there were no penalties. They sent me a brochure. There were TWO penalties for getting out of the annuity. Read carefully.
Get the cash. Pay the penalty and get the hell out of dodge!
bump for later
Brinker is a mega s*ck up to the Fed and Greenspan plus he has mutual funds running ads on his show. Just pointing out that he is not an unbiased source.
Variable annuities in general are an avoid.
Fixed annuities - interest rate risk plus sinking dollar risk but safer than a lot of options.
Not a lot of great options when you have Mugabe 2 in control.
The salesman.
I moved some money from a CD and some of my late husbands retirement $'s to variable annuities and have been generally unhappy with their performance. They lost money at first but as the market is clawing it's way back so are they.
Everything is a crap shoot.
For immediate annuities (ones that offer regular income payments based on a fixed period or on your life expectancy at the time of purchase), distributions are also taxable on earnings or (in the case of qualified money) - on all distributed amounts.
The government also imposes a 10% surcharge on most qualified withdrawals prior to age 59 1/2 (with some exceptions). Bottom line: look before you leap. I used to sell annuities, and more recently helped design them. They can be very valuable asset planning tools but you must understand how they work and whether they are appropriate for your particular financial circumstances.
Let’s see, Geithner, Rangel, Daschle, et. al. have the working strategy. Avoid the taxes and when you get your hearing you forgot you had that money invested.
You can roll it tax free - make sure it is done custodian to custodian (ie, never take possession of the money yourself). Also look at Prudential’s and other companies Living benefits - guarantees a minimum of 6% or the market, whichever is greater, each year, and guarantees your retirement income for as long as you and your spouse live - it creates a pension for you - and be sure never to “annuitize” your account!
I was just thinking about this the other day. I have a call in to my financial advisor about it. I’ll post what/when I find out.
You can’t “put” money into a 401(K) except by payroll deduction.
Oh, gee. I am so sorry. I should have said roll over most of into another 401K and take some of it out.
Some people. I bet everyone else understood what I meant.
or Charlie Rangel...........
Ping!
You would have made more money if you hadn’t gone to cash in June.
You can’t go to another 401k unless you are employed or self-employed. You can roll it to an Individual Retirement Account. Depending on where you roll it, you can have a diversified portfolio of funds or low-cost ETFs, in a variety of stocks, bonds, commodities, real estate, etc.
The OP mentioned a fixed annuity. There are no high fees on a fixed annuity. You may be thinking of a variable annuity, which are notorious for high fees.
No need to go off on me. I just wanted to let you know that you can’t just deposit funds into a 401(k). Believe me, I won’t bring it up again. You obviously know all about it.
True. I actually had talked to a guy about the rollover in early May. I was so afraid of what Obama was trying to do then I didn't think the market would go anywhere. I am still trying to figure out what people are "investing" in.
Sorry. A little touchy today. I do know what the rules are. Thanks for trying. (:^0
Apology accepted. I’m unemployed too, so I know a little about what you’re going through. Keep the faith and good luck.
‘unique’ stated “an annuity with an insurance company”. This almost always involves commissions and fees, as well as profits to the insurance company.
Unique also said “fixed-rate for life - joint lives annuity.”
That’s a fixed annuity. You don’t pay a commission or fees on a fixed annuity. The insurance company pays the commission to the agent. Fixed annuities are quite a bit different than variable annuities.
I know this stuff. I’ve been involved with annuities and insurance companies for 15 years.
Cash in, buy lottery tickets.
I moved some of my IRA money from a Ginny May fund to an annuity. I was going to put it in laddered CDs just to preserve the principal while earning a small return. I put it in the annuity instead of CDs. I still preserve my principal against losses if rates spike, but will also earn higher interest if rates do go up. My rates adjust each year but can’t go lower than where they started. State Farm payed all its obligations throughout the Great Depression so I feel the investment is as safe as moist. I realize I already had tax deferral in the old IRA, but I still have it with a floor under my principal but no cap on rate increases. I think it is a great place for half the fixed income portion of my retirement funds.
Don’t remove your money from the 401 unless you roll it over into an IRA. You can keep in in money market if you like but I suggest you put it in either a treasury money market or in FDIC money market. There are other options later but you should protect your principal first.
Principal guaranteed anuities usually require you to renew your annuity after 10 years and then again every 10 years. Be careful that this is what you want to do before signing on the dotted line.
The way your post is phrased, you are not a sophisicated financial investor. Nearly all financial advisors are salemen or women first and fiduciaries second (or third). Trust is critical.
I know advisors who sell only anuities and believe in them completely. There are others (like me) who wouldn’t touch them with a 10 ft poll.
You are looking for someone who is not committed to one asset allocation but professes to preserve and grow captial in both bull and bear markets.
They don’t have to be the most perfect market timers but if they can preserve your capital during the coming massive market pullback, then they will have earned their fee.
Good luck. Everyone will need it.
Dumb. Dumb. Dumb.
Right. Right. Right.
There are other choises.
Accurate info. BUT there is a lot more to the equation.
Be careful, very careful of this advice.
And the rabbit wouldn’t have been caught if he hadn’t stopped to pee.
Woulda, coulda, soulda. The market is at one of its biggest divergence’s between fundamentals and technicals ever. Google and read David Rosenberg of Gluskin Sheef, free registration required, to keep up.
It’s one of the toughest markets for the unemployed since the ‘30s. There are 5 unemployed for every opening. My brother-in-law was out for about 5 months and recently got a job with the state. He’s one of the lucky ones.
Tax deferral is not the only advantage of annuities. Read my above comments to see that I’m not a fan of annuities.
Insurance companies have take a big hit in the finacial collapse. AIG also has LOTS of annuities. I have no idea how the AIG credit default swaps might or might not impact the annuities but why take a chance?
Hope this works out for you. State Farm is not known as a market leader in annuities.
Wait til Monday and you may be too late.
Actually they were offering very competitive rates. As I mentioned, I was originally looking for CDs, but State Farm had much better rates on their annuities. I also financed a truck with State Farm a couple of years ago. No one around here could compete with their rates on auto loans either. State farm and State Farm Bank have come a long ways in recent years. Check them out.
Some of the posters here are dead on right about agents setting up annuities because of the commissions they get paid. Mine talked me out of moving the two annuities to fixed earlier this week. I'm still mulling it over but seeing the stock market go over 10,000.00 made me smile. The time to move is coming soon.........I hope.
Getting back to your original starting place is one of the major psychological impediments listed by the gurus to successful investing.
The difference between the surge in the markets and the disaster in the real economy could cause the markets to retest its lows. The reversal could begin any time, they say.
Should this happen, it would be a shame if you rode the market all the way back down because you didn’t make it all the way get back up to your original place. This might be a good time to rethink your strategy.
It’s not easy getting off the elevator while it’s still going up. If this is money you can’t afford to lose then it shouldn’t be at risk.
Good luck.
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