Deferred Annuities

[NitroZ7]

I do not know much about these but I am exploring the possibility of trying to save additional money for retirement tax deferred. I will max out my 401k and the plan would be to make an initial purchase of an annuity and then contribute an amount to it in excess of my 401k contribution so that I could invest more tax deferred. I won't have a Roth IRA so this seemed like the only other alternative for tax free growth. Has anyone used these an an alternative? I will likely go through Fidelity or Vanguard for the lower fees.

[TritonMJM]

Im very familiar with annuity products. One note, keep in mind that cash value and protected benefit value are not the same. All the guarantees and step ups are on the benefit value, not the cash. Happy to review or answer any questions.

[NitroZ7]

Is there a way to set it up where I can defer the annuity and then leave it to my wife or kids if I die before drawing on it? My ultimate goal is to try and live off the income of all my investments when retired and leave the rest to my two children.

[TritonMJM]

Annuities have death benefits, but will differ. Some offer a enhanced death benefit.

[NitroZ7]

I'm going to call Fidelity tommorow morning. Looks like I can open up a deferred personal annuity and pick the funds and then when last owner dies it can be converted into income stream. I'll get some more information but this looks like the next best retirement savings option if a Roth IRA is unavailable.

[TritonMJM]

Just be mindful of total fees and surrender penalties. Lots of good annuities out there, but i have not head much about the Fidelity product. Biggest thing is to understand how they really work. You may look into fixed indexed annuities as well. Less expensive than variable.

Did you explore a back door roth? May or may not be feasible.

[NitroZ7]

Just be mindful of total fees and surrender penalties. Lots of good annuities out there, but i have not head much about the Fidelity product. Biggest thing is to understand how they really work. You may look into fixed indexed annuities as well. Less expensive than variable.

Did you explore a back door roth? May or may not be feasible.

The Roth backdoor where you contribute to a traditional IRA and then don't make any money on it and then convert it immediately over to a Roth? That is the only one I have heard about. I may check with vanguard to see if they can do that.

[TritonMJM]

Correct. Make a traditional contribution them convert to a roth. There are some tax considerations to consider. May or may not apply. Btw, there are some new annuities that only focus on deferring taxes, not on future income streams. The fees for these are very reasonable.

[janky]

I am not a fan of variable annuities and I am licensed to sell them.

[TritonMJM]

Agreed. Thats why i recommended looking at fixed indexed annuities as another option to VAs.

[Bassin08]

What are the thoughts on having your IRA in a fixed annuity at 3% interest. I am past the cash surrender date and can move it now to other investments, or continue at 3%. I am having to take RMD's out now and the 3% does not cover them.

[Bamaman]

I always go to a bass fishermen website for investment advice. My best investment so far has been that non-depreciating bass boat.

All kidding aside, the annuities often come with large commissions paid on front end. I always just put in the max in a 401K and the max in an IRA every year, and time was on my side. I also played the stock market pretty aggressively in mutual funds and invested in the best performers.

If I was trying to build a porfolio today, I'd still do the same thing, but I'd be using more ETF's--many of which have charges 1/7th that of a mutual fund.