from Your Old 401k’s, IRA’s and Lump Sum Pension Rollovers

Millions of Americans are faced every year with what to do with their old 401k’s, IRA’s and lump sum pension rollovers.

What many people don’t know they can do is roll over or transfer these accounts into a Fixed Index Annuity and create a guaranteed lifetime pension. Better yet, there is no tax consequence or penalty when you move your qualified retirement money into a fixed index annuity.

Why are millions of future retirees creating guaranteed pensions via Fixed Index Annuities?

Well, for years retirement options were limited to either choosing the safe route, one that guaranteed your principal with a minimal interest rate, or a risky investment route that offered the possibility of high yields. Fixed index annuities combine the best of both worlds. That’s one reason why sales of fixed index annuities last year topped $30 billion.

Here are 4 big reasons people are moving record retirement assets into Fixed Index Annuities:

1. They’re safe. The account balance of a fixed index annuity is guaranteed to never go down regardless of how the market performs. Conversely, other methods of investment, including mutual funds and securities, carry the risk of losing what you’ve invested.
2. They offer growth potential. Index annuities offer the potential for increased interest earnings through stock market-linked interest credits. You get to participate in market gains without the risk of losing your investment. Indexing refers to an investment method that follows certain indices, such as the S&P 500. However, because you don’t invest directly in the stock market, you avoid market risk.
3. Earnings and premiums are tax deferred. The money you invest in your index annuity and the interest it earns is tax deferred until you start withdrawing. In fact, a portion of your final withdrawals will be considered a return of your premium, decreasing the amount of income tax you pay on your annuity payments. Additionally, the interest compounds, allowing you to increase your balance over a shorter period of time with money you would otherwise be paying taxes on.
4. Lifetime income is guaranteed. Since fixed index annuities guarantee your principal, you are assured an income stream for the rest of your life. Annuity plans differ and payment structure can be customized to meet your financial needs. Additionally, many contracts allow for annual penalty-free withdrawals of up to 10 percent of the total annuity value, and some offer an up-front bonus of 10% or more.

Like any investment, fixed index annuities are not for everyone. But for the right person, a fixed index annuity can be a powerful retirement planning tool.

Call or email today to see how a fixed index annuity can help you achieve your guaranteed retirement income goals. After all, who is going to replace your company paychecks in retirement if it’s not you?

* Annuities are designed for long term financial planning and are not designed for short term investment strategies. Guarantee periods or annuity payments may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.

Today’s annuities remind me of the old car commercial: ”This is not your father’s Oldsmobile.”

Many of today’s annuities have features that were not available years ago. If you have an existing annuity, it may be time to look at the options provided by today’s newer annuities to see if they offer features that better serve your retirement income needs.

There are possible advantages and disadvantages that have to be considered on a case-by-case basis. Some things you may want to consider when deciding to upgrade your annuity include:

Current Surrender Charges
In most cases, if you have a surrender charge on your existing annuity it may make sense not to move it. The good news is most annuity policies we see the surrender period has expired.

New Contract Guarantees:
If your existing annuity guarantees a higher return than what is currently available, it also may not make sense to replace your existing annuity.

If, however, better guarantees are available with a new annuity and there are newer features that better meet your retirement goals, it may be worth exploring.

For example, a fixed index with an annuity rider may offer lifetime income guarantees that provide more money during retirement.

Tax Considerations
In order to avoid creating a taxable event, the IRS requires the exchange of one annuity for another to be done as a 1035 exchange. The only requirement is, the new annuity must be on the same insured.

When you roll an “old” annuity into a new one within a 1035 exchange, you maintain the cost basis you had in the original annuity. A 1035 exchange can be done to consolidate more than one annuity into a new annuity contract.

Whether you should upgrade your existing annuity or keep the one that you have is something that can only be determined by reviewing your current contract. If you have old annuities and want to find out if today’s new features better meet your retirement needs, call or email us today to get a free annuity review.

* Annuities are designed for long term financial planning and are not designed for short term investment strategies. Guarantee periods or annuity payments may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.

Fixed Index Annuity with an Income Rider

Baby boomers are buying annuities in record numbers today to supplement their guaranteed income in retirement. There are very good reasons for this.

All working people who have accumulated 40 credit units will receive a social security annuity in retirement. Most government employees also have government annuity pensions for retirement.

That said, the days of full corporate pensions in the private sector are long gone. As a result, most people want additional guaranteed income to supplement their social security and small corporate annuities.

That’s where personal annuities come in. It’s a way for people to create their desired guaranteed pension in retirement. But first, a few basics on annuities and income riders.

What is an Annuity?
An annuity is a contract with an insurance company to pay you an income for the rest of your life. Think of it as a personal pension plan or paycheck for life – a safe, guaranteed income stream you can never outlive. Your personal pension plan can be used to:

• supplement Social Security or other retirement income
• accumulate assets for retirement
• receive guaranteed lifetime income

What is a Fixed Index Annuity?

A Fixed Index Annuity (FIA) is a fixed annuity with an interest rate linked to the performance of a stock index, for example, the S&P 500. A fixed index annuity allows you to participate in market gains according to your contract, while avoiding market losses if the market declines. Unlike a variable annuity, a FIA offers safety of principal and a guaranteed minimum return. Some fixed index annuities offer an up-front bonus as well.

Many fixed-indexed annuities have caps that limit your investment gains. Additionally, fixed-indexed annuities have a surrender charge, a penalty for making an early withdrawal above the free withdrawal amount. In most cases you’re allowed to withdraw 10% every year without surrender charges.

Fixed Index Annuity Features and Benefits:

• Protection of principal
• Guaranteed minimum returns
• Provides a paycheck for life
• Tax-deferred growth
• Guaranteed death benefit for your beneficiaries
• No penalties for mandatory distributions at age 70 1/2
• May avoid probate (depending on your state’s laws)

What is an Income Rider?

Available for a fee, an income rider provides the owner of the annuity contract with a guaranteed income stream for as long as you live. It’s a way to take the worry out of your retirement years and insure a certain lifestyle.

Having an annuity with an income rider means the insurance company is contractually obligated to provide you with a certain level of income for life — regardless of how the annuity performs, regardless of what’s going on in the economy, regardless of how the stock market performs, and regardless of how long you live.

Who buys a fixed index annuity with an income rider?

• People concerned about outliving their retirement savings.
• Those planning to be retired for 20 years or more.
• Investors who want to protect their retirement portfolio from market downturns like we saw in 2000 and 2008.
• Pre-retirees who expect to need more income during retirement than what Social Security and other pensions provide.
• Individuals who want to transfer wealth or leave a legacy for family members or to a favorite charity.
• Men and women who choose to spend their retirement years enjoying life rather than worrying about the ups-and-downs of the stock market.

Call or email today to see how a fixed index annuity can help you achieve your guaranteed retirement income goals. Remember, they are not your father’s annuities.

* Annuities are designed for long term financial planning and are not designed for short term investment strategies. Guarantee periods or annuity payments may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.