"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message
news:qce9p0tcs5n14km5ug1194gaovmlc2mchs[at]4ax.com...
- quote -

Gene E. Utterback, EA

On Thu, 11 Nov 2004 18:08:08 CST, "Gene E. Utterback, EA"
<eagent[at]alliancetax.com> wrote:


- quote -


Gene I did not mean to suggest that consumers should avoid VAs,
rather, my intent was to inject some of the negatives into a thread
over-weighted with positives.

I enjoyed your post - as long as folks consider both sides I feel we
serve our purpose. Unfortunately, that does not always happen.


-HW "Skip" Weldon
Columbia, SC

"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message
news:jur6p05bheasorig9e8etlkuofssh8lomc[at]4ax.com...
- quote -

I disagree, but maybe I'm splittin hairs. The primary benefit of an
ANNUITIZED contract is a lifetime of income. But most of today's annuity
contracts do NOT have to be annuitized.

- quote -

Be careful about throwing around that 15% MAX CG tax rate. This applies to
gains related to the sale of an investment providing it was held more than a
year, it also applies to qualified dividends. But if the investment was
held less than a year, or if the fund has a high turnover rate and throws
off short term capital gains, then the tax rate won't stop at 15%.

- quote -

Liquidity - with a C share annuity the client can get in and out anytime
without penalty. When you talk about surrender charges make sure to compare
them to B or C share CDSCs for similar mutual funds.

Higher Taxes - Not sure I agree with this either. Nonqualified money in an
annuity does NOT throw off taxable capital gains with no cash distribution
so the taxes could actually be lower while the investment is being held.
When money is taken, we do tend to think of taxes as they related to a
MARGINAL bracket, but the reality is we need to consider the EFFECTIVE tax
bracket. A married couple with $65K in taxable income pays less than 15% in
overall Federal taxes even if all the money comes from an annuity. So a
retired taxpayer whose only income is from his investments, whose mutual
fund portfolio allows him to take $65K annually will pay the same amount of
tax as a similar investor who takes his money from an annuity - with the
benefit that the annuity holder is getting hit with phantom capital gain
distributions every year.

Higher Costs - maybe, but likely not so much as to dissuade an educated
investor. Non annuity investments have costs that we are all familiar with,
expense ratios, 12-b fees, loads and such. But they also have some other
indirect fees and intangible, non-dollar costs. These include recording
keeping and reporting costs. To determine which shares to sell and report
which ones are sold, someone has to do the record keeping. Most of the
discount houses will provide an average cost basis that may not be the most
beneficial. There is usually some added cost for the preparation of a tax
return when a significant number of investment trades are involved.

Estate Planning - I see no more problems in planning with annuities than
with any other investment. If the estate is large enough to have an estate
tax problem, an annuity can be gifted to a beneficiary during the owners
life. The owner reports the gain in the contract on their return and the
recipient gets the annuity with a stepped up basis. Any growth after the
transfer belongs to the recipient.

- quote -

This I agree with. Though for many annuity owners, with the newer
contracts, a guaranteed minimum income can be assured without annuitizing
the contract and while still retaining the ability to stay invested in the
market and enjoy the positives without any of the negatives.

- quote -

Gene E. Utterback, EA

Brent, thanks for the education! I was just concerned that the OP
had his money in a 401k, so presumably a reliable stream of
income is not needed, at least at this time. I was thinking he
needed simple long term growth according to his personal risk
tolerance and time frame before starting withdrawals at 59.5 or
older. If that's what he wants, wouldn't a simple appropriate
stocks/stock funds/index funds + bond/bond funds allocation in
a rollover IRA do the trick? Please let me know what sorts of
riders would make an annuity in an IRA be a good thing for a
40-year-old.
thanks,
Joe

Brent D. Gardner, ChFC wrote:

- quote -


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding.

On Thu, 11 Nov 2004 04:07:32 CST, "Brent D. Gardner, ChFC"
<bgardner20[at]cox.net> wrote:

- quote -

I agree with Brent on this one. With the recent change in how stock
dividends are taxed (like capital gains, max rate of 15% federal), the
idea of "tax deferral" with a non-qualified annuity lost much of its
lustre.

There are other plusses with a non-qualified annuity - namely
insurance and some asset protection features - but they must be
carefully weighed against the potential annuity negatives, namely
liquidity, higher taxes, higher costs and estate planning problems.

What easily can trump the negatives in many cases is a lifetime income
free of fluctuations and with an assurance that the elderly do not
have to be money managers indefinitely. In my opinion there's a lot
to be said for the KISS aspects of the guaranteed monthly income.



-HW "Skip" Weldon
Columbia, SC

"Joseph Weinstein" <joe[at]bea.com> wrote in message news:6.0.1.1.2.20041110150916.067a6a00[at]ussfex01.bea.com...

Hi, leave it at Schwab, or if there are any 401k management fees,
roll it into an individual IRA at Schwab (a fairly low-cost provider).
Vanguard would be another. You should not roll it into a variable annuity
in my opinion. Your money is already tax-sheltered, so the major putative
benefit of a variable annuity is superfluous. It will doubtlessly pay
good fees and commissions to vendors and brokers though...
If you think there are benefits to a variable annuity, at least
call Vanguard and ask about them, and the fees and commissions to watch for.
Vanguard is a low-cost provider of annuities too, so if you should choose
that route for some reason, you would at least get a better deal there.

If you want insurance, buy some cheap term-life insurance. Don't let
folks play shell games "it's an investment"... now "It's insurance"...
Joe
////////////////////////////////////////////////////////////

The above is pure, unadulterated mythology.

The primary benefit of an annuity is a lifetime income. There is no such thing as tax-deferral in a qualified annuity -- the qualified status is what grants the tax advantage, NOT the annuity contract itself.

Vanguard, as well as the other low balls, don't offer the current generations of riders, and are all but worthless in the QP arena.

There is ZERO comparison between term insurance and an annuity. The financial pornographers that invented that myth should be tarred and feathered for promulgating their ignorance.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go to heaven if you die dumb. Become better informed. Learn from other's mistakes. You could not live long enough to make them all yourself." - Hyman George Rickover (1900-86), Admiral, US Navy, advocated development of nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant (ChFC), designations owned and exclusively offered by The American College, signify the highest standards of academic study and professional excellence in the financial services industry.

"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> writes:

- quote -

Looks like his mail/news program is set to send HTML-ized mail.
Tell him to turn it off and have it send plain text mail.

How to do that is entirely dependent on what program
he's using.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

On Wed, 10 Nov 2004 18:09:25 CST, Joseph Weinstein <joe[at]bea.comwrote:

- quote -

I would appreciate comments on why Joseph Weinstein's posts appear
this way. Is there anything he can do to make his posts more
readable?



-HW "Skip" Weldon
Columbia, SC

Harsha wrote:

Hello-
I was recently laid off and have a choice of leaving my 401k savings
in the current plan at Schwab or roll it over. One advice I received
is to move it to a variable annuity. I have about $100k. Is this is a
good thing to do? Any other suggestions?
Thanks in advance.
Harsha
Hi, leave it at Schwab, or if there are any 401k management fees,
roll it into an individual IRA at Schwab (a fairly low-cost provider).
Vanguard would be another. You should not roll it into a variable annuity
in my opinion. Your money is already tax-sheltered, so the major putative
benefit of a variable annuity is superfluous. It will doubtlessly pay
good fees and commissions to vendors and brokers though...
&nbsp;&nbsp;&nbsp; If you think there are benefits to a variable annuity, at least
call Vanguard and ask about them, and the fees and commissions to watch for.
Vanguard is a low-cost provider of annuities too, so if you should choose
that route for some reason, you would at least get a better deal there.

If you want insurance, buy some cheap term-life insurance. Don't let
folks play shell games &quot;it's an investment&quot;... now &quot;It's insurance&quot;...
Joe
&nbsp; ======================================= MODERATOR'S COMMENT: In looking at the post through the moderator's software, it has an unusual appearance. If it looks different on the newsgroup, the moderators would appreciate input as to the cause. Please respond on the newsgroup.