[Stu from NYC]

Originally Posted by Caymus

I recently finished the audiobook version (free to me). It does contain useful information which is somewhat dated after 10 plus years. I was somewhat amused that she was against almost everybody (even Elmo from Sesame Street������). I may have missed the parts where she offered positive actions. That may be due to me using the audio version.

Does not like Elmo? Wow. Wonder what she thinks of Bert and Ernie?

[manaboutown]

Originally Posted by Stu from NYC

Does not like Elmo? Wow. Wonder what she thinks of Bert and Ernie?

She does not like prop 13 in California which saved numerous people from losing their homes. She wants it repealed so California can collect even more tax money to burn.

[Stu from NYC]

Originally Posted by manaboutown

She does not like prop 13 in California which saved numerous people from losing their homes. She wants it repealed so California can collect even more tax money to burn.

I will never look at Elmo in the same way ever again

[Boomer]

. . .

[Dusty_Star]

Originally Posted by Toymeister

I give the book a score of three out of ten.

It is dated by eleven years. It covers some of the financial gurus long gone. One was popular in the 1930s and died thirty years ago. It fails to cover the bad advice of some gurus. For example she briefly covers Dave Ramsey but doesn't mention the recommendations that he gives to high load but funds by agents which pay him a referral fee or that 12% annual return touted by Ramsey isn't realistic.

There are better books.

Do you have recommendations for those better books?

[CoachKandSportsguy]

Originally Posted by Robbb

Yea keep looking into that, I have never heard that an annuity would satisfy an RMD. Unless your advisor is saying you should hold an annuity in a tax deferred account. If that was the case I would get another advisor.

A qualified Annuity is an annuity inside a qualified account, like TIAACREF's 403(b) annuities, key word qualified. .

However, after cashing out my mom's TIAA annuities, I would stay far away from them. . I actually don't particularly like TIAA/CREF either, with their limited offerings, and one of the two primary offerings being an annuity

but YMMV

[Caymus]

Originally Posted by Robbb

How? Annuities are taxed as ordinary income, capital gains and dividends are taxed at a much lower rate, between 0 and 20%. So how would an annuity be beneficial when you reach RMD. In fact what does RMD have to do with it at all??

I am considering the pros/cons of a qualified fixed immediate annuity when (or if) I reach RMD age.

This article from 2017 indicates that it covers the RMD for that portion of the IRA. As I age, I will want more $ in guaranteed income and less in equities.

RMD Tips: When Your IRA Holds an Annuity | Kiplinger

[Toymeister]

Originally Posted by Dusty_Star

Do you have recommendations for those better books?

In general any of the "for dummies" books, such as "Personal finance for Dummies"

"A random walk down wall street", in specific

Let's see if others have sugestions\recommendations.

[Stu from NYC]

Originally Posted by Caymus

I am considering the pros/cons of a qualified fixed immediate annuity when (or if) I reach RMD age.

This article from 2017 indicates that it covers the RMD for that portion of the IRA. As I age, I will want more $ in guaranteed income and less in equities.

RMD Tips: When Your IRA Holds an Annuity | Kiplinger

My question is why would you even want an annuity in your portfolio. Do not like the idea of losing control of our funds. Look at surrender charges if you need money early.

[CoachKandSportsguy]

Originally Posted by Caymus

I am considering the pros/cons of a qualified fixed immediate annuity when (or if ) I reach RMD age. This article from 2017 indicates that it covers the RMD for that portion of the IRA. As I age, I will want more $ in guaranteed income and less in equities.

Ok, let's do this!

Single IRA, no other qualified accounts, lets just use round numbers, and decent size ones for effects:

$1,000,000 IRA . .
Spend $600,000 on a fixed immediate annuity, which is excluded from the RMD. .
And then you calculate and distribute the RMD on the remaining $400,000, correct?

The $400,000 can last your lifetime if you don't have any large medical bills, and you aren't frivolous spending your savings during retirement. . but lets say you use the non annuity all up by the time of your death, medical, etc.

Scenario A: you have a $600,000 +/- value remaining in the IRA. . uncertain as to the exact amount based upon annuity details, but its just for discussion. The $600,000 goes to your W, if she is alive, and it continues for your W, tax free.

Scenario B: $600,000 in the IRA and your W has pre-deceased you. . the $600,000 goes to your beneficiaries, say three children, just as an example. They then can't use the annuity as a shelter, and must take the distributions over X amount of time and are paying an increased tax bracket on that income.

Scenario C:
You don't put the $600,000 in the annuity, and money comes out via RMD. Assuming that you don't need the money to live on, as you wouldn't have had the same amount with the annuity, then you pay your taxes and put the money back into investments for zero inheritance tax when distributed to your three children, but depending upon the circumstances, you might pay up to some ungawdly amount for medical insurance, through means testing. not sure of the amount, all depends on a host of items

Scenario D:
You put all the money into the qualified annuity and now only take out the RMD amount to stay below the large increase in medical costs resulting from means testing.. . So you pay the least amount of taxes and the least amount for health insurance, and you keep the most wealth in the IRA (wealth maximization)

the downside is that the 1M gets distributed to your children and they pay taxes and potentially increased health insurance on their distribution at the increased incremental tax rate. . so they don't get tax minimization strategy

So scenario D is you live efficiently, but your beneficiaries may get a huge hit, and even more so if they are retired and on means tested health insurance.. . So the balance point is who and when and how much is the tax hit. The optimizer says to take out more earlier and reinvest it, and then there may be little / no income tax when its used as well as when passed to children with no state estate or inheritance tax and very high limit on federal estate tax. tax minimization strategy (example assumption). You can put it into a ROTH to avoid taxes, but you don't have to if you invest tax efficiently and don't use much of it unless needed for medical expenses.

I am not a tax professional, i am a finance professional who tries to look at the future investments, cash flows and tax impacts of money decisions, and tries to maximize wealth and cash flows through future decision making processes, regardless of what has happened in the past, that would be an accountant's job, dealing with the past.

comments / disagreements welcome

[Caymus]

Originally Posted by Dusty_Star

Do you have recommendations for those better books?

Her book is mainly a critique of the investment advisor industry (especially the Gurus). I am not aware if equivalent non dated books are available. In the distant past I have read two (now ancient) books: "Where are the Customer's Yachts" and "Reminiscences of a Stock Operator". They cover somewhat different topics.

Or, are you interested in books that cover investment strategies?

[manaboutown]

Originally Posted by Caymus

Her book is mainly a critique of the investment advisor industry (especially the Gurus). I am not aware if equivalent non dated books are available. In the distant past I have read two (now ancient) books: "Where are the Customer's Yachts" and "Reminiscences of a Stock Operator". They cover somewhat different topics.

Or, are you interested in books that cover investment strategies?

Another book from back in the day is "Confessions of a Stockbroker" by 'Brutus'. John D. Spooner