L1: recalculationsI have been told by a prospective client thatanother Advisor told him he could set up 3 different IRA rollover accounts with his Lump Sum payment and begin a 72(t) distribution from one of them using the value of all 3 accounts for the calculation. I don’t question that, but he said if the income wasn’t sufficient from the one, he could begin taking SEPP distributions from one of the others and use the values of all 3 accounts again to calculate the distribution amount. I don’t believe this is accurate. In the current SEPP interest rate environment I am having difficulty meeting some of the income needs of younger retirees but am told that other Advisors are able to do it. Any assistance would be appreciated. 2009-07-01 20:57, By: tmck3123, IP: [188.8.131.52]
L2: recalculationsIf all three IRA accounts were used to make the initial calculation, then all three are part of the initial SEPP andmay not be re-used. Distributions in excess of the original planned distribution would bust the entire plan and bring on the 10% penalty and interest on the penalties.
If he/she was really told that, tell the prospective client to run – as fast as possible – from the other Advisor.
Feel free to also tell the prospective client to freely post questions here – since we have no financial interest, all he/she will get are factual answers.
2009-07-01 21:36, By: Gfw, IP: [184.108.40.206]
L3: recalculationsActually, I think I e-mailed him the link to this web site already. btw … the “Other Advisor” was also recommending Equity Indexed annuities with 12 year surrender charges; in the 6th year it was still 10%. Thanks so much for the response. 2009-07-01 21:41, By: tmck3123, IP: [220.127.116.11]
L4: recalculationsbtw … the “Other Advisor” was also recommending Equity Indexed annuities with 12 year surrender charges; in the 6th year it was still 10%.
Enough said! Get your client away from the other “advisor,” then do some real planning for him!
BTW, remember that the EIA is guaranteed by “the claims paying ability of the insurance company issuing the annuity.” I don’t want to know the name of the issuing company, but typically long-term surrender contracts like this one are issued by weaker companies. Have you heard of any insurance companies having financial difficulties in the last year?
Also, a couple of years ago NASD (now FINRA) added some significant “oversight” requirements on Broker / Dealers for reps selling EIA’s / FIA’s. With my B/D a contract like you have described would not be a legal sale. Check with your B/D for your restrictions, and then you might be able to use that to enhance your standing with the client.
Jim2009-07-02 13:44, By: Jim, IP: [18.104.22.168]