Is this a modification?

You are here:
< Back

L1: Is this a modification?
Individual with 3 years left on 72tfrom a fixed annuity product. Would it be considered a modification if they now choose to annuitize the fixed annuity for life?
2011-08-02 16:09, By: Kevin, IP: []

L2: Is this a modification?
Probably, but you need to provide a lot more detail before anyone can answer your question. What were the assumptions on the original SEPP? What was the annual distribution? Will the annual distribution amount change?
Need lots more details!
2011-08-02 16:45, By: Gfw, IP: []

L3: Is this a modification?
Started the 72t in September of 2007 at age of 53. Initial balance $459,945. Distributions of $2778/mo. Value of account is now $332,800. He has approximately 2 years until he reached 59 1/2. If he took advantage of the once per lifetime change to the
RMD method, the current account balance would generate approx $944/mo. If he annuitizes,the monthly income will be approx $1530.
If he chooses to annuitize the current annuity contract vs changing to the RMD method, it feels like this may beconsidered a modification, but I’m not seeing anything definitive.
Thank you!
2011-08-02 21:12, By: Kevin, IP: []

L4: Is this a modification?
We can obviously dismiss the chances of exactly matching up to either the current distribution or the RMD switch distribution.
Rather than locking ina lifetime annuity at record low interest rates when he is only a couple years short of completing his plan and thereby risking busting the plan, I think he would be better served to continue the current
distributions and save the amounts he does not need to subsidize the eventual one time RMD switch either 1/2012 or 1/2013. He will also have options for his final stub year to either take a full annual at the RMD rate or to take out nothing. Over the rest
of the plan term that way he could probably produce an average distribution not that far off from $1530.
After the plan has ended, if he still wants to annuitize for life, the interest rates will be higher and his life expectancy will be lower and both will increase his life annuity payout, although annuitizing at that young an
age remains a very questionable strategy at best.
2011-08-03 00:52, By: Alan S., IP: []