L1: qualified annuityIf I annuitize my qualified annuity with a joint and 50% survivor option and it produces a higher payment than the 72t calculation does it avoid the 10% penalty?2009-10-09 13:58, By: sky, IP: [220.127.116.11]
L2: qualified annuityStart by checking with the insurance company. If the annuity is using
the same assumptions that are valid for all SEPP plans, then you should be
fine. If not, you may be taking a risk – will the insurance company make the compliance
guarantee in writing signed by an officer of the company?
Since the SEPP assumptions contain no sales charges, loads, commissions,
etc. I really don’t see how a commercial Joint and 50% to survivor
annuity could produce a higher distribution than a SEPP which is based only on mortality and interest.
An equally good question… why would anyone use a commercial annuity in a
SEPP? 2009-10-09 14:17, By: Gfw, IP: [18.104.22.168]
L2: qualified annuityHave you considered the higher single annuity, and buying a 20 year term life insurance policy as an alternative ? I usually recommend this when clients are making a decision concerning their pension.Remember that the IRA distributions are taxable, while life insurance proceeds are not taxable.2009-10-13 16:26, By: dlzallestaxes, IP: [22.214.171.124]
L3: qualified annuityI agree with Gfw that you should check with the plan or insuror to confirm that the annuity payments will be coded for the penalty exception. I expect that they would be, because the joint survivor format is commonplace with defined benefit pension plans. In addition, note that the mortality tables used by qualified plans produce higher payouts than NQ annuities because the NQ annuity tables assume adverse selection, ie buyers would have an above average life expectancy or they would not be annuitizing. This generally means that if you need or want to annuitize more of your retirement assets, you will get a better deal using the qualified plan as a source. But remember that your SS benefits are also lifetime annuities in determining how much of your assets you want turned over to an insurer in exchange for an income flow. In most cases, a defined benefit annuity does NOT have a COLA like SS contains.2009-10-14 00:40, By: Alan S., IP: [126.96.36.199]
L2: qualified annuitySky… I think we need more information. Where are the funds now? Are they in an IRA or part of your employer’s pension plan. What is age as of 12/31 of this year? Have you terminated your employment?2009-10-14 14:13, By: Gfw, IP: [188.8.131.52]