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immediate fixed annuity

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Byjohn

L1: immediate fixed annuityCan I fund a 72(t) with an immediate fixed annuity , time specific ,say 5-7 years? I will be retiring later this year at 55 , have approximately $275,000 to rollover, and using these proceeds as supplemental income to my pension , which will be $28k/yr. Using your calculators to achieve my desired monthly outlay ,I’ll have about $100,000 remaining in the IRA after i fund the 72(t).I’m just not sure if i can use this type of annuity , and if i can ,where is the best place to conservatively invest the remaining IRA balance? Any help and advice is greatly appreciated!2009-01-21 17:50, By: john, IP: [70.107.173.74]
L2: immediate fixed annuityCan you use an immediate annuity? Yes. Can you use a 5-7 year immediate annuity as the only plan funding? No. Start by using the calculators and determine the SEPP distribution based on one of the 3 acceptable methods. At age 55 and a 3.57% interest rate, it would require about $506,621 to fund a $28,000 SEPP distribution. You would have to allocate $506,621 to the SEPP plan and with a part of that amount you could purchase an immediate annuity required to generate $28,000/year. Based on age 55, a 3.57% interest rate and allocating the full $275,000 in your IRA, the maximum SEPP payment would be $15,198.73/year.2009-01-21 19:22, By: Gfw, IP: [216.80.125.206]

L3: immediate fixed annuityThank you for the reply , but i think my ‘wording’ may have misled you…My fault!….What i meant was my pension will be $28k/yr , not the SEPP allocation. I ‘m only looking to generate about $1000/month income from the 72t to supplement the pension. Now , did you mean ‘no’ as in I didn’t have enough money to fund the 72t or ‘no’ as I’m not allowed to fund it solely with an immediate annuity??….Thanks again!2009-01-21 20:07, By: john, IP: [70.107.173.74]

L4: immediate fixed annuityYou can not fund it with an immediate annuity with a period certain of 5-7 years.Allthree of the acceptable methods involve life expectancy. At age 55, your life expectancy is 29.6 years – you could fund it with an immediate annuity payable over 29.6 years.Youcould also fund itwith an immediate annuity if you select an immediate annuity payable over your life expectancy. >>I will be retiring later this year at 55 , have approximately $275,000 to rolloverIf the funds are comming from a 401(k) plan and the plan allows systematic withdrawals, merely make withdrawals from the 401(k) plan. Then you wouldn’t need a SEPP plan.2009-01-21 21:10, By: Gfw, IP: [216.80.125.206]

L2: immediate fixed annuityjohn,If you are retiring at 55 or later, you can withdraw directly from your current plan without penalty, and can then roll it over once you reach 59.5.Check with your plan administrator if you can take flexible payments directly from the plan rather than a lump sum distribution. This is both more flexible than an annuity and it avoids the requirements of a 72t plan.2009-01-22 00:03, By: Alan S., IP: [24.116.165.60]

L3: immediate fixed annuityHey guys…thanks so much for the solid advice….it presents more options than I knew I had….fortunately I won’t be retiring until June so I have lots of time to go over various scenarios….thanks again!2009-01-22 02:20, By: john, IP: [162.84.184.155]

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