Talk of The Villages Florida
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Talk of The Villages Florida (https://www.talkofthevillages.com/forums/)
-   Investment Talk (https://www.talkofthevillages.com/forums/investment-talk-158/)
-   -   Inheriting non-spousal annunity (https://www.talkofthevillages.com/forums/investment-talk-158/inheriting-non-spousal-annunity-322942/)

Ameliafay 08-18-2021 06:42 AM
Parady Financial has hundreds of clients here in The Villages. You really should talk to them before making a decision.

Petersweeney 08-18-2021 06:45 AM
Cash good….
Annuities bad!!!!
Ask any caveman….

will1546 08-18-2021 06:49 AM
Don’t worry about what the agent makes. Look for principal protection, low taxes on gains and if it meets your goals.

retiredguy123 08-18-2021 06:51 AM
Quote:
Originally Posted by Ameliafay (Post 1990709)
Parady Financial has hundreds of clients here in The Villages. You really should talk to them before making a decision.
Parady will try to sell you another annuity.

BumpaOompa 08-18-2021 06:55 AM
Good God man! You’re all over the place here. Seek the advice of a qualified financial planner. A negligible cost considering the asset. If instead you prefer to take the guidance of strangers on an anonymous message board then I have a bridge for sale.

valuemkt 08-18-2021 06:56 AM
Look up a Gentleman by the name of Wade Pfau. He has written several books on retirement planning, and the one titled "Safety First" Retirement Planning has about half the book dedicated to the discussion of various types of annuities. While I am definitely not an annuity fan, I read the book on the advise of others to expand my knowledge on the various types of annuities. While I somewhat agree on hiring a fee based financial planner, I believe what you need first is to find a good tax accountant who can give you definitive advice on the tax based aspects of your situation. I believe that Pfau has a blog where you can ask questions pertinent to you situation.

richs631 08-18-2021 06:58 AM
Quote:
Originally Posted by Gigi3000 (Post 1990350)
I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...
In general, annuities are not your friend. But banks and brokers love them because of ongoing commissions.

Mohawksin 08-18-2021 07:00 AM
Source?
 
Quote:
Originally Posted by Gigi3000 (Post 1990350)
I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...
OP -- where did the money come from?. Did you inherit it? If so, the rules change and have not been mentioned. The question initially lies with a CPA in your state, then with a CFP.

richs631 08-18-2021 07:00 AM
Quote:
Originally Posted by Gigi3000 (Post 1990397)
Really? I don't know alot about taxes but I looked at the tax table for that amount and I saw 37%. There definitely is no other income. I sold a condo and am living off those proceeds. Thanks for your info
The tax table is misleading. You will not pay 37% on the full amount

BlackHarley 08-18-2021 07:01 AM
Hmmm....FINRA regulator bait?..Just sayin'

tklloop 08-18-2021 07:03 AM
The best option is to give me your money and trust me to do what’s best for both of us!! OH,, and take Social Security AS SOON AS you can!!

MrFlorida 08-18-2021 07:11 AM
Whenever somebody wants to sell me an annuity, I RUN..... commissions, fees, riders..... they are not what they seem..

Hopeful Returnee 08-18-2021 07:29 AM
Closing an annuity
 
Quote:
Originally Posted by retiredguy123 (Post 1990466)
Any income that you make in an annuity and withdraw will be taxed as ordinary income. That is one of the major disadvantages of annuities that many advisors neglect to tell you when they sell it to you. They claim that you are investing in the stock market but you don't get the advantage of the lower capital gains rate that you would normally receive outside of an annuity. But, all short term gains (less than a year) are taxed as ordinary income. So, to benefit from the lower capital gains rate outside of an annuity, you need to hold the investment for at least one year.

I would seriously consider just paying the capital gains tax and invest the money in a conservative portfolio of Vanguard index mutual funds. 30 percent S&P 500 Index Fund, 30 percent Short Term Bond Index Fund, and 40 percent money market fund. Then, do some independent research on investing before making any more financial decisions.
If your annuity is non-qualified that means some of the money was taxed and some was not. In my case the original investment was taxed and the profit made over the years has not been taxed. I was told by the company that the profit will be taxed as regular income and not as capital gains.

Singerlady 08-18-2021 07:35 AM
Quote:
Originally Posted by Gigi3000 (Post 1990350)
I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...
Consult a financial advisor! Plenty here for you…or wherever you are. Don’t consult an annuity guy. They’ll take their huge chunk up front. I had only annuities until I moved here. New hubby and financial advisor talked me into not buying more. They were RIGHT! Financial advisor put me in a moderately risky set of investments without annuities. Doing well! Monitored constantly. Waiting until my annuities ‘mature’ in order to get out of them or keep some depending on their growth. They’re only getting 2% now and I’m getting 8% in my other investments. Also consult your tax advisor.

drstevens 08-18-2021 07:36 AM
Quote:
Originally Posted by Gigi3000 (Post 1990350)
I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...
Contact Ric Edelman's office at www.ricdelman.com for a free consultation.

MandoMan 08-18-2021 07:53 AM
Quote:
Originally Posted by Gigi3000 (Post 1990350)
I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...
Indexed mutual funds are a great place to put your money. In my opinion, annuities are among the worst places to put your money. They won’t give you that big an annuity, and usually when you die, it is gone. With a mutual fund, when you die, it can be passed on to your heirs. Put the money in the fund and leave it there. Don’t try to play the market. Don’t get nervous if it drops—it will go back up. You can arrange to have a certain amount put in your bank account every month, just like with Social Security, but better if you just let it grow. I like T Rowe Price New Horizons Fund right now. My mutual funds have doubled in value since the Fall of 2016. That’s 100% in five years. Don’t listen to the people who say that at your age you should put part of it in bonds, and part in the money market, etc. that’s how brokers get their fees and get rich. With a good indexed mutual fund from a company with a very good reputation, you pay very little in fees. By contrast, some of these brokerages and money managers will charge you a lot in fees, like thousands a year.

Hiltongrizz11 08-18-2021 07:56 AM
An annuity is an insurance product.
Exist for a reason and some people can make sense out of them for their situation.

Notsocrates 08-18-2021 07:58 AM
[QUOTE=Gigi3000;1990445]
Quote:
Originally Posted by CoachKandSportsguy (Post 1990414)
OK, a commercial finance manager here, and this board is not the place to find the best answer for your particular situation. Please find a fee only, independent CFP, and ask him to build you a model of your cash flow versus your assets and your tax situation. Living off of assets versus living off of income is not the best situation

finance guy who to just get a tax question answered. Also I'm staying liquid to possibly buy a small farm in the next year or two. Monthly expenses are only $1200 mo currently.
Then consult an accounrant.
Advice is wortth what you pay for it.

DaleDivine 08-18-2021 08:19 AM
Quote:
Originally Posted by tklloop (Post 1990734)
The best option is to give me your money and trust me to do what’s best for both of us!! OH,, and take Social Security AS SOON AS you can!!
Best answer yet...
:1rotfl::1rotfl::MOJE_whot:

waynehal55 08-18-2021 08:27 AM
[QUOTE=Gigi3000;1990350]I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...[/QUOTE

NEVER buy a variable annuity, I purchased one almost 20 years ago.
The commission the seller makes and annual maintenance fees are outrageous.
I am a Vanguard investor for 4 decades and should have known better, I listened to a "friend". I periodically make withdrawals and was lucky that the stock market was very strong. I should have just put the money in a S&P fund, Vanguard charges only 4 basis points, a year.

HJBeck 08-18-2021 08:45 AM
Agree with this assessment.

FredJacobs 08-18-2021 08:48 AM
Quote:
Originally Posted by retiredguy123 (Post 1990356)
I would never buy an annuity. The advisor is recommending it because they want to make a commission on your money that will be about 10 percent of the cost. So, if you invest $360,000 in the annuity, the advisor will make about $36,000. I very nice pay day. Don't do it without doing a lot of research on annuities. They are almost never a good investment.

On a $200,000 long term capital gain, the tax should only be about $30,000, which is 15 percent, unless there are other circumstances.
Sorry, gains from annuities are taxed as ordinary income not capital gains. If you have no other taxable income, your gain of $40,000 would be reduced by the standard deduction - $12,550 - leaving $27,450 as taxable income. The tax on $27,450 for a single person, under age 65, is roughly $3,000.

I am no longer licensed to give investment advice. From a tax standpoint and that you need income it might be a good idea to surrender the annuity and find a vehicle to provide some annual income.

Fred Jacobs
Expert Tax Prep

billthecpa 08-18-2021 09:06 AM
I find it mind-boggling that someone would ask this question of anyone other than a qualified, experienced, professional financial or investment advisor (who does not sell annuities).

dewilson58 08-18-2021 09:14 AM
Quote:
Originally Posted by billthecpa (Post 1990823)
I find it mind-boggling that someone would ask this question of anyone other than a qualified, experienced, professional financial or investment advisor (who does not sell annuities).
I would inject "tax".

A qualified, experienced tax professional.

Investment advisors can not practice in front of the IRS.

:popcorn:

retiredguy123 08-18-2021 09:25 AM
Quote:
Originally Posted by billthecpa (Post 1990823)
I find it mind-boggling that someone would ask this question of anyone other than a qualified, experienced, professional financial or investment advisor (who does not sell annuities).
The problem is that most financial "advisors" are not qualified to provide unbiased advice because they make most of their money on commissions. So, they have a built in conflict of interest. There are "fee only" advisors, but that is not the norm in the financial industry. Many people feel like they will not get their money's worth by paying a fee just for advice. Annuities are the most recommended product because they offer the highest commissions for an advisor.

arbajeda 08-18-2021 09:30 AM
GREAT ZOT!! Break down and talk to a real financial adviser! And not the one who stands to benefit from selling you something that will benefit him more than it does you! Or you can listen to that banker or whichever of these "experts" confuses you the least. But following the advice of either of them likely will put you in need of a proctologist to deal with the aftereffects.

Aces4 08-18-2021 09:33 AM
Quote:
Originally Posted by HJBeck (Post 1990809)
Agree with this assessment.


Which assessment, there are pages of assessments here. When responding to a certain post, hit the “quote post” button first and it will bring the statement you agree with into your conversation. Hope this helps you, it will help us understand your comment.

Aces4 08-18-2021 09:39 AM
Quote:
Originally Posted by BumpaOompa (Post 1990720)
Good God man! You’re all over the place here. Seek the advice of a qualified financial planner. A negligible cost considering the asset. If instead you prefer to take the guidance of strangers on an anonymous message board then I have a bridge for sale.
I beg to differ, first talk to a CPA for accurate tax consideration and then a fiduciary advisor. (I’d really buy the farm:icon_wink:)

Gigi3000 08-18-2021 10:10 AM
Quote:
Originally Posted by Mrprez (Post 1990550)
My financial advisor (who hates paying taxes) rolled my inherited annuity into an annuity at Lincoln Life. There were several options there. I have it setup to generate a monthly taxable income with a life insurance component for my wife or other beneficiaries.

I paid no tax on the rollover but I do pay income tax on the monthly income. I have been taking these distributions for two years now and there is more in the annuity than when I started.

Others may disagree, but for me this is perfect.
Would it be the Lincoln Advantage indexed variable annunity?

Gigi3000 08-18-2021 10:21 AM
Quote:
Originally Posted by Boomer (Post 1990602)
Sloooooow down -- and take a deep breath. When coming into money, it is best to take your time and learn what you can. Never buy anything that you do not understand.

Of course, you are not going to take financial advice from a bunch of strangers on the internet. But, if I were you, I sure would not be taking advice from a bank advisor. Any advisor is in business to sell. They are not doing charity work. But I am particularly not a fan of bank advisors -- based on stories I have heard from others, including a couple of friends who worked at banks.

If I were you, I would first find a good CPA. (A couple of other posters here have said that, too.)

Your first issue is how to handle tax implications and how to minimize the hit. I think the SECURE Act (1/01/20) might have made some changes to the tax law as it affects inherited annuities. There could also be the possibility of a stretch to help with taxes.

I have done only cursory reading on the SECURE Act and on inherited annuities. But I am not in your situation. Give these things a Google. I think Kiplinger might have some good articles that are not too involved but can help you start to understand what you're in for.

Sometimes we have to get to the point of looking for answers by first understanding what our questions should be. Get yourself some of the vocabulary of taxes and find that CPA and learn what to do to be able to keep as much of your money as you can. You have a lot of things to figure out. If I were you, I would not buy into any investments right away. While it can be painful to sit on cash in the bank with hardly any interest, it can also let you sleep at night. (I give all investments the sleep test.)

Your idea of buying a small farm sounds like it could be something you have thought about for a long time. My assumption is that you are not thinking of a huge operation but of several acres, zoned agricultural, where you can pursue whatever it is you want to do on your very own land.

If that farm is your dream and you can make it work, there is nothing wrong with sitting on cash until you decide for sure what to do.

I am not a financial advisor, nor do I want or pretend to be.

But I have been at it for our own purposes, for a long time.

I do not pretend to always win or to be making a killing in the market. I never tell anyone else what stocks to buy.

My investment and tax vocabularies are limited to just the things I need to know. (Btw, Investopedia is a good online source for defining and explaining any investment terms you do not understand.)

I believe in keeping a moat of cash around stock investments.

I also believe that it is important to never get yourself into a position where you have to sell stock to pay taxes.

Do not let some "advisor" envelop you in smoke and mirrors language to try to make you feel like they know a whole lot of stuff that you don't. If you decide to go with an advisor, interview several. But, for now, think about finding a CPA and figure out what to do about the taxes. Then think and think and think and then proceed.

I wish you the best.

Boomer

PS: Advisors, for the most part, can now brag about big returns. This old bull market has been running for a looooong time. I think my dog could have been getting impressive returns for the past decade or more.
I've been advised of the Secure Act yep. Probably what I'll do is cash out and put the money toward the farm for my.kids to run while I romp in Florida in the winter :). I know I'll pay $70000ish in taxes but property in Cental Ohio is booming and with Columbus growing so rapidly, it'll probably be my best bet. Then I'll heir it to them and feel better that they'll eat the rest of their lives them Armagendon comes :).

TNLAKEPANDA 08-18-2021 10:33 AM
Quote:
Originally Posted by Gigi3000 (Post 1990350)
I'm 63, cost basis $160000, gain $200000. Bank advisor offered indexed variable annunity, 10 year spread. Anyone familiar with these? I have no experience with annunities. Trying to figure out whether to take lump sum and just pay the $70000 tax bill or do the annunity. If I take the annunity I'd put it into index mutual funds. My situation is very simple...I have no income, lots of savings, no mortgage on home, no tax deductions. If take annunity, goal.would be income I guess. Not taking social security, maybe take at 65.or wait until 70...
I would strongly suggest that you go talk to the folks at Parady Investments. They will give you good advice and no sales pressure! Don’t do anything until you have gotten solid advice.

dewilson58 08-18-2021 10:34 AM
Quote:
Originally Posted by TNLAKEPANDA (Post 1990869)
I would strongly suggest that you go talk to the folks at Parady Investments. They will give you good advice and no sales pressure! Don’t do anything until you have gotten solid advice.
WOW.


:popcorn::popcorn::popcorn:

Gigi3000 08-18-2021 10:48 AM
Quote:
Originally Posted by Mohawksin (Post 1990728)
OP -- where did the money come from?. Did you inherit it? If so, the rules change and have not been mentioned. The question initially lies with a CPA in your state, then with a CFP.
It's a non spousal inherited annunity, not an IRA. A relative passed and.left it.to.me

Boomer 08-18-2021 11:09 AM
Quote:
Originally Posted by Gigi3000 (Post 1990860)
I've been advised of the Secure Act yep. Probably what I'll do is cash out and put the money toward the farm for my.kids to run while I romp in Florida in the winter :). I know I'll pay $70000ish in taxes but property in Central Ohio is booming and with Columbus growing so rapidly, it'll probably be my best bet. Then I'll heir it to them and feel better that they'll eat the rest of their lives them Armagendon comes :).

Aha! :) I know the territory of which you speak. It is that lovely, flat, green belt across the middle of Ohio with a good share of beautiful farmland.

It sounds like you are really liking the idea of owning a farm and played right, I think that might possibly have some tax advantages, too. (But I really don't know anything about how taxes and/or incentives can work for farms. But I am sure you can find out.)

I am not sure you are going to have to pay as much as $70,000ish in taxes. Like I said earlier, get a CPA who knows about this stuff. The annuity has your money imprisoned. You want to spring it. Find out the best plan for how to do that.

Happy growing -- whatever it is. :)

Boomer

PS: To my fellow Ohioan -- and don't fall for any of those investment guys who want to buy you dinner first.

ML Smith 08-18-2021 11:13 AM
Annuity and investments
 
Find a good investment/financial advisor and get a couple of opinions. Don’t necessarily take the first one. Compare and make your decisions from there.

Mrprez 08-18-2021 11:16 AM
Yes it is. I’ve had it for over four years now.

JoelJohnson 08-18-2021 11:24 AM
Quote:
Originally Posted by Gigi3000 (Post 1990404)
Yeah, I've read that the market is suppose to take a dive. Banks removing lines of credit etc. I'll probably take lump sum if only have to pay $30000 in taxes.
Depends on your time frame (never try to time the market, the market can stay irrational longer that you can stay solvent).

Talk to a financial accountant to figure out how to avoid paying too much in taxes.

Gigi3000 08-18-2021 11:49 AM
Is that bridge in central ohio?

Gigi3000 08-18-2021 11:56 AM
Quote:
Originally Posted by glennl0159 (Post 1990683)
I work in the insurance/investment world. Because of the SECURE Act and that it is a Inherited annuity you will have 2 options.
If it was an IRA account you have 10 years to pay the taxes you decide how all now, a little each year, or all at once at the end of the 10 years.
If it was non-IRA, you have up to 5 years to pay the taxes either all now or equally over 5 years.
No matter what it is taxable ordinary income and your tax rate that goes with it.
If you have no current taxable income as you mentioned it would make much more sense to liquidate it over time and pay at lower tax rates as this would be your only income.
This is what I don't understand. It's not an IRA but the bank advisor said with Lincoln Advantage Variable Index Fund I can pick the number of years to spread it over? They downplayed the 5 year option to keep with with Nationwide, said it Is an older policy....

Gigi3000 08-18-2021 11:59 AM
Because I'd like to not sound like a complete idiot when I talk to them. Sounding like an idiot anonymously is so much better


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