72t sepp as an annuity

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L1: 72t sepp as an annuityRetirement is getting closer and after much research and worry as to outliving my golden nest egg I”m pretty sure I will be rolling my 401k over to an IRA ( I”ll be 54 upon seperation ) and then splitting it into two income streams, one being from an immediate annuity and the second from from a diversified portfolio of stocks and bonds. My question, Are there any penalties associated with this combination? Is the annuity still part of my SEPP universe? Thanks ahead for any comments.Hadenough2007-01-06 06:35, By: Hadenough, IP: [74.192.67.195]
L2: 72t sepp as an annuityIhope you enjoy your retirement.
Will the annuity be part of your SEPP universe? That really depends on how the documents are set up. If the IRA is in a custodial account and the annuity is merely an investment of the account, then it would be part of the SEPP. If the annuity stands on it”s own, then it may not be part of the SEPP.
With that said, at the age of 54 and with interest rates at their current levels, an immediate annuity is the last place that I would put my money. I”m not trying to give you investment advice, just the benefit of my 30 years in the insurance business.
Why not just set up the SEPP and if you are looking for a ”floor” type investment use a CD or Treasury. Start by determining the amount that you need for for life style and allocate that amount.
2007-01-06 07:38, By: Gfw, IP: [24.148.85.129]

L2: 72t sepp as an annuityThanks for your response. I”ll be the first to admit I am totally confused about securing my lifetime of savings. The financial advisor I/m dealing with is big on annuities. I too have thought an annuity was not the route to take. Thanks aqgain and have a great year.Hadenough2007-01-06 08:20, By: hadenough, IP: [74.192.67.195]

L2: 72t sepp as an annuityI wonder if they would still advise an annuity ifthe annuity was a no-load, no-commission annuity.
I”m not saying anything bad about commission sales as long as the product being soldREALLY meets the needs of the person receiving the advice and paying the bill.
Please keep us all posted as you progress and feel free to post any additional questions.2007-01-06 08:28, By: Gfw, IP: [24.148.85.129]

L2: 72t sepp as an annuityAlso, take note of the age 55 exception to the early distribution penalty from employer plans. You do not have to be age 55, as long as you separate in the year that you will be 55. For example, if you are 54 now and turn 55 late in 2007, a separation this year would qualify because you will turn 55 this year.
On the other hand, if your expected retirement date still falls just short of meeting the above requirement, perhaps you can explore a short extension to meet that goal. In addition, if the company has a defined benefit plan of the traditional variety, hitting 55 before you retire can makea huge difference in those benefits. Many companies in the past have “rolled out” severance packages of those within a couple years of 55 to meet the requirement, and that also reduces the company”s risk of litigation based on canning people just short of 55 to save on their pension liabilities.
If you do qualify for the exception, then find out if they will set you up on an installment plan, which would not be a 72t. Some companies actually want to retain 401k assets now because they help control plan expenses at a time when these expenses are being scrutinized by regulators. Finally, if there is highly appreciated employer shares in your 401k, then you should investigate NUA (net unrealized appreciation). That could cut your tax rates about in half on the amount of NUA.
2007-01-06 14:59, By: Alan S., IP: [24.116.66.98]

L2: 72t sepp as an annuityUnfornuately I meet none of the above. I will turn 54 in February 2008 and do not plan on staying any longer. On the fornuate side however, my company still has an excellent pension plan ( thanks to a takeover in 2001 ) from which I will recieve a defined pension until I fall over. I took the maximum pension benefit of $3260 per mo. which did not include spousal option but I took out a $300,000 25 year life insurance policy to boost the pension amount and to give my bride a peace of mind. My 401k has 450k which does not include company stock any longer as I rid myself of it last year and invested it in various stock within the company 401k savings plan which so far has been the right thing to do as the company stock hasn”t made a dime since. I”m now leaning toward just stocks and bonds with some cash investments within an IRA/investment firm to supplement my pension. If I have it figured correctly, a minimum 5% to 6% return along with my pension should net me approx. 60k a year. Thanks again.Hadenough2007-01-07 12:40, By: hadenough, IP: [74.192.67.195]

L2: 72t sepp as an annuityThis doesn”t go directly to your original question and really doesn”t need to since your have already received excellent advice from others on this forum. But your comment about your financial advisor and annuities caught my attention. I agree with the statement made by someone else that I am not opposed to commissions as long as the product offered makes sense. But after 25 years in the accounting & tax business and having seen the nonsense pushed by some financial advisors over the years, I have told my wife that if I should die and she finds hereself making financial decisions without me,the following should be her first rule:
If any financial advisor strongly favors anuities of if annuties are the first products offered, she is to show that person the door without any further consideration of anything they have to say. No exceptions. None.2007-01-08 18:16, By: spectec, IP: [24.74.144.108]