Rob the 72T to start another 72T

L1: Rob the 72T to start another 72TMy husband and I have both been taking 72t distributions from an unprotected annuity product for several years. We’re not worried about it running out of money but we’d like to have the protection available from an equity indexed annuity – or fixed annuity. Can we leave enough money in this product to cover the remaining 72t distribution and start another 72t distribution in a different product (with a principle or income guarantee that we don’t currently have)? We still need the income, at least for the next five years. We would put the remaining funds for the existing 72t in a money market to ensure that it does not run out of money before the end of our 72t commitment.2010-07-30 00:43, By: cmchiker, IP: [184.96.161.83]
L2: Rob the 72T to start another 72TShort answer… No.If the funds were part of the original SEPP, then they must remain as part of that SEPP. Can you move some of the funds to another investment… maybe, but beware of partial transfers. However, moving the funds will not create a new distribution pattern or an additional distribution.Sounds like an insurance agent has convinced you that the annuityyou have is no good and he really hasa much better offering – and will also make a very nice commission – very often the only reason to start switching annuity products.2010-07-30 01:02, By: Gfw, IP: [24.148.10.164]

L3: Rob the 72T to start another 72TRob,
Makes sense… thanks for the quick reply.2010-07-30 02:17, By: cmchiker, IP: [184.96.161.83]

L4: Rob the 72T to start another 72TThe good part of EIA’s is the fact they never lose money when the market goes down. They perform quite well in a veryvolatile stock market like we have had for the last 10-years. The greater the volatility the better EIA’s perform. I saw a 10-year performance chart put out by a large EIA company which makes it clear that had you owned one of their EIA’s during the last 10-years the EIA would have performed quite nicely but the stock investment was a near “wash” for returns for the same period. Now if they would show the same chart for the 1990-1999 period the results would have been markedly different with the variable annuity or other stock investments blowing the EIA away. Strange how no such chart is available from the same EIA company.The bad part of EIA’s are many so I’ll just list a few. 1. When we return to a more stable stock market with more reasonable annual returns, 1990-1999 for example,a variable annuity or other stock investment will far out perform an EIA since the variable is NOT limited to upside returns like the EIA is limited. 2. EIA’s typically have very large surrender charges (10% to 17%) and very long surrender periods (10 to 18 years). This is not good for an older person to use and is especially not good, in my opinion, to fund a SEPP Plan.3. The “free withdrawal amount and frequency” may not be compatible with a SEPP Plan withdrawal schedule.I think that’s enough to demonstrate my point about EIA’s.One thing you might consider to provide some downside protection is to add a living benefit to your existing VA. It’s called a Guaranteed Minimum Withdrawal Benefit (GMWB) which limits the amount you may withdraw from your account each year but should be well within the withdrawal requirements for a SEPP Plan. The GMWB will “guarantee” this “minimum withdrawal amount” on a yearly basis for an extended number of years or for your lifetime.Take a look at this option.Jim2010-07-30 13:34, By: Jim, IP: [70.167.81.119]

L5: Rob the 72T to start another 72TI forgot to mention that my VA is still in its surrender period and the company I am with will not waive the surrender charge, even if I move to another one of their products. However, they do have a different product with a GMWB. I will consider it.2010-07-30 13:56, By: cmchiker, IP: [184.96.161.83]