Annuities
If you’re looking for Principal Protection, Lifetime Income, leaving money for your spouse or beneficiaries, tax efficiency, Annuities might be right for you.
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---For Lifetime Income an Annuity is a great way to create your own Pension!
SPIA- Single Premium Immediate Annuity
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Like the name suggests, a SPIA is a way to turn on income quick, as soon as 30 days or as far out as a year.
You give your money to the Annuity company, they pay you monthly income for as long as you live, or if joint for as long as your spouse lives.
A SPIA is a simple transfer of risk, no annual fees, a contractual guarantee to pay, starts as soon as you want.
DIA- Deferred income Longevity Annuity
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A DIA is just like a SPIA only the income payments can be deferred out from 13 months to a max of 45 years.
Like a SPIA you can fund it with
non-qualified money, a ROTH IRA, a traditional IRA.
Taxation of the income depends on what account you use to start it.
QLAC- Qualified Longevity
Annuity Contract
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In 2014 the IRS and the Treasury approved the use of a longevity annuity in a qualified account like and IRA (and more recently 401K’s).
You can defer the income start date out as far as age 85 and there may be some good tax reasons to do that.
Another appealing attribute of a QLAC is you can defer RMD’s (Required Minimum Distribution) on the portion you move from the IRA to the QLAC. The maximum amount you can move as of 2024 from an IRA into a QLAC is $200,000.
One last thing, we could keep going, you can add a spouse to the QLAC so if one passes away it will keep paying, even though your spouse didn’t contribute to the IRA.
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---If you are looking for Principal Protection and maybe turning on income later SIBG can offer MYGA’s and FIA’s.
MYGA- Multi Year Guaranteed Annuity
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Unlike SPI’s, DIA’s and QLAC’s MYGA’s are not for income and do not annuitize. You give your money to the insurance company and in return you get a contractual guarantee and annual yield on the duration you choose.
A MYGA is very much like a CD, but unlike a CD or Bonds the MYGA is not callable. You may also have some liquidity features like an interest only return, 5%, 10% that you can take out annually.
With interest rates up MYGA’s are a great option for principal protection and if you want you can roll them into a SPIA or DIA when the term is up.
FIA- Fixed Index Annuity
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A FIA is a fixed annuity where interest is calculated using an INDEX like the S&P 500, NASDAQ, etc.
You will have some upside gains potential when the index is doing well but no downside risk in bad years. Along with principal protection, legacy, and retirement income you can add a rider to the FIA.
An income rider can be added to a FIA (and a Variable Annuity) to guarantee the lifetime income you are looking for.
You can also add a Long Term Care adder to the policy
