IRA Transfer

[Tampa Teddy]

I am 72 and want to transfer my IRA to a joint fixed annuity with my wife. I know that my IRA withdrawal will be taxed. What I don't know, is can I deduct the amount that I transfer into the annuity? Please do not guess, only provide definite answers, thank you.

[anteater]

No, you cannot deduct the amount invested in the annuity.

[tranquility]

And, while the products are constantly changing, unless you are quite rich and are really trying to shelter money, our office feels getting a 72 year old into an annuity should be punished by law.

[Tampa Teddy]

Originally Posted by anteater

No, you cannot deduct the amount invested in the annuity.

Would I have 60 days to roll it over into another IRA and avoid taxes if I decided on that route instead?

[Tampa Teddy]

Originally Posted by tranquility

And, while the products are constantly changing, unless you are quite rich and are really trying to shelter money, our office feels getting a 72 year old into an annuity should be punished by law.

Why? I would be getting a much better return than I'm currently getting. Deciding between an 8% tax deferred annuity and a taxable 3% CD doesn't take a genius. Why do you say it's a mistake?

[tranquility]

Annuitys have a high up front cost. While you may be promised certain returns, read the fine print. Quite frankly, in this market, an 8% return is awesome.

How does one get an awesome return? Think about economic theory.

I didn't say "mistake", I said "punished by law". Read and educate yourself on the matter. Don't rely on the salesman trying to get a commission to tell you about the product.

[anteater]

Originally Posted by Tampa Teddy

Why? I would be getting a much better return than I'm currently getting. Deciding between an 8% tax deferred annuity and a taxable 3% CD doesn't take a genius. Why do you say it's a mistake?

Whoa... You said a "fixed annuity" in your first post. Where are you getting a fixed annuity with an 8% return? Is this an index annuity? Otherwise known as an "equity index annuity" or "fixed index annuity?"

tranquility: I didn't say "mistake", I said "punished by law". Read and educate yourself on the matter. Don't rely on the salesman trying to get a commission to tell you about the product.

Hear, hear...! It looks like you've snapped at the bait and the hook has been set. You still have time to decide to spit it out before being hauled into the boat. If you decide that you want to be in the boat, that's fine. But understand what life in the boat is going to be like before you decide.

[Tampa Teddy]

Originally Posted by anteater

Whoa... You said a "fixed annuity" in your first post. Where are you getting a fixed annuity with an 8% return? Is this an index annuity? Otherwise known as an "equity index annuity" or "fixed index annuity?"



Hear, hear...! It looks like you've snapped at the bait and the hook has been set. You still have time to decide to spit it out before being hauled into the boat. If you decide that you want to be in the boat, that's fine. But understand what life in the boat is going to be like before you decide.

It's a fixed index annuity with a lifetime income rider that guarantee's 8% compound. Yes I know it only applies to income, but that is what I want it for. It also has the potential, although not the guarantee, to generate a significant return towards cash value without risk. If my understanding is incorrect please enlighten me.

[Tampa Teddy]

Originally Posted by tranquility

Annuitys have a high up front cost. While you may be promised certain returns, read the fine print. Quite frankly, in this market, an 8% return is awesome.

How does one get an awesome return? Think about economic theory.

I didn't say "mistake", I said "punished by law". Read and educate yourself on the matter. Don't rely on the salesman trying to get a commission to tell you about the product.

Saying that it should be "punishable by law" is implying that I am making a mistake. Please tell me why.

[anteater]

If my understanding is incorrect please enlighten me.

No, I am not going to try to comment on a product that I have not seen. There are simply too many varieties of FIA's with complex features.

As long as you understand all the moving parts, what the guarantees are
guaranteeing, and have checked the financial strength of the insurance company, it is your decision.

[tranquility]

I guarantee you no one is giving 8% with no risk.

[Tampa Teddy]

Originally Posted by anteater

No, I am not going to try to comment on a product that I have not seen. There are simply too many varieties of FIA's with complex features.

As long as you understand all the moving parts, what the guarantees are
guaranteeing, and have checked the financial strength of the insurance company, it is your decision.

The agent was very insistent that I understand how it all works and he was highly recommended by friends. I understand as well as I ever will. He did explain surrender fee's and bonus vesting, as well as the strength of the company. He would not give me tax advice however, which is why I came here. So do you know if I would have 60days to roll it over into another IRA and avoid taxes if I decided on that route?

[Tampa Teddy]

Originally Posted by tranquility

I guarantee you no one is giving 8% with no risk.

Either you are mistaken or a very large and well known company is printing lies. You seem to be very anti annuity. Are you by chance a stock broker? My stock broker was very insistent that we not move any money into fixed annuities as well. Just before he lost half of everything we had.

[anteater]

So do you know if I would have 60days to roll it over into another IRA and avoid taxes if I decided on that route?

Yes, but a trustee to trustee transfer is usually safer.

And remember to take your RMD before doing it.

You seem to be very anti annuity. Are you by chance a stock broker?

That is uncalled for. One does not have to be a stock broker to view annuities (especially index annuities) with skepticism.

My stock broker was very insistent that we not move any money into fixed annuities as well. Just before he lost half of everything we had.

If you lost "half of everything... That's what happens when you are dealing with a broker. It implies that you were allocated approximately 100% in equities. That's a totally improper asset allocation for a 72 year old. I can understand why you are jumping from the stock broker skillet into the life insurance agent fire. Unfortunately, quite a lot of that happening after the last year and one-half.

[tranquility]

I do taxes. Annuities are complex *investment* vehicles. Each is a private contract with different terms. You can spend a LOT of time in study and still not really understand the contract. Having the *salesman* tell you he wants you to understand the investment is to inspire confidence so he can get a big fat commission and to cover his backside in making sure you are not investing beyond your knowledge. Before purchase, you will sign something stating you understand the investment. You will be lying, but it will be great evidence against you if you later find the investment vehicle does not meet your needs.

And, for a 72 year old, unless you have a ton of free cash or have real needs to shelter income from taxes, our default position is that the investment is so clearly inappropriate that we've made legal threats against salesmen who recommend them to our clients in inappropriate situations.

Your mileage may vary, as do the terms of the annuities. They are always inventing new ones all the time and maybe your guy is at the forefront of a new age. Just remember:

--ALL the words in the contract are important.
--There is no way you will understand all the terms.
--A big portion of your investment will immediately go to the person selling you the product.
--There will be a managment/contract fee for each year of the contract. It may be hidden, but it's there.
--You will start with less "investment" then you put in, will be charged a fee for each year it is there, and will have profoundly limited options for turning the contract to cash. Even in today's environment a CD is "safe" unless we're all screwed anyway. If a truly safe investment is only worth 3%, why are these guys giving you a tax deferred 5% for free?

They can't. Basic rule, the more interest the more risk.