Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 10-19-2011, 02:15 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Don't they need to send a 1099 to IRS annually? Look for you Mom's last tax return paperwork.
__________________

__________________
Duck bjorn.
Brat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-19-2011, 02:15 PM   #22
Recycles dryer sheets
 
Join Date: Oct 2010
Posts: 392
Quote:
Originally Posted by JohnP View Post
No matter how you would like to handle the money you will need to follow the IRS and IRA rules since your mom used IRA $$ to pay for these annuities. Any distribution from these annuities will be a 100% taxable event. I suspect you would do well to talk to a tax expert.

JohnP
Yes I know they are income, the insurance company withholds, etc. They state in the docs about all of this and allow you to specify how much to withhold (over the minimum they are required to) and can input the amt for your state.

I do not need to pay a tax expert to know this. :-)
__________________

__________________
BellBarbara is offline   Reply With Quote
Old 10-19-2011, 02:48 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by chinaco View Post
What if the company has a low financial strength rating or is a small company? Do you know if those funds are guaranteed by any other entity if the insurance company has problems?
Most states have a guaranty program in place, in Wisconsin its $300,000 per insurer.
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 10-19-2011, 03:00 PM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Survivors of service men and women are told they'll get a $400,000 life insurance payout. They don't. Instead, Prudential — which has a government contract to provide life insurance for military families — keeps their money.
Families are surprised when they receive what looks like a checkbook. In documents, Prudential promises to hold the money in safekeeping for as long as families would like, saying it will pay them 0.5 percent interest. What Prudential doesn't disclose is that it is keeping survivors' money in Prudential's own corporate investment account, where the company is earning five to 10 times as much as it pays to families. The so-called checks have JPMorgan Chase printed on them, but they cannot be used as regular checks. Instead, they are to be submitted back to Prudential to get any money
Looks like NPR needs to do some due diligence before they publish such crap. Prudential CAN NOT keep death benefits, that's illegal! Most if not all insurance companies send a checkbook to the beneficiary. I got one from American Family when my sister died. I filled out a beneficiary claim form, and sent it along with a legal copy of her death certificate to American Family, and got a check 4 days later. I threw the checkbook away, and that was that.

Every insurance company keeps their money outside of the reserve required by law, invested in things that get as high an interest rate as they can, be it corporate bonds, municipal bonds, equipment leasing contracts, stocks, etc, etc. Pru could pay a higher rate than .5% but that's what most banks are paying for a liquid account.

I have had plenty of issues with insurers over the years but articles like this full of wrong statements are not worth the paper they are written on. Prudential is not going to cut a check for $400,000 to someone on the phone just because they say they are the beneficiary. Beneficiaries have to do a death claim form in order to get the funds released to them. Of course, the article "forgets" to mention that.
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 10-19-2011, 03:00 PM   #25
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,375
Quote:
Originally Posted by BellBarbara View Post
My mom died a few weeks ago....
So sorry for you.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 10-19-2011, 05:44 PM   #26
Recycles dryer sheets
 
Join Date: Jul 2008
Posts: 136
Quote:
Originally Posted by mickeyd View Post
I am sorry for your loss BellBarbara.

Insurance companies went to this way to pay off beneficiaries years ago. As I recall the $ goes into a MMF and you get checkwriting priviledge to get at your own money. You can write a check to yourself for the entire amount on day one so there is not really much of a hassle.
Yup. Write a check for 100% and close it out.

The money is safe. They might actually pay a higher rate than the bank account (usually do). There are all sorts of protection plans in place for cash accounts at an insurance company. I wouldn't lose sleep over this.
__________________
TN_INVEST is offline   Reply With Quote
Old 10-19-2011, 07:23 PM   #27
Recycles dryer sheets
justplainbll's Avatar
 
Join Date: Sep 2011
Location: Easten Long Island
Posts: 414
Quote:
Originally Posted by Dimsumkid View Post
I thought my estate attorney was expensive at $225/hr. Am I the only one here who thinks $2,000/hr is really out of whack? I'm hoping that was a typo!
Don't think I made a typo.
How many billable hours do you think an attorney can rack up for the filing of a state estate tax return and a petition to the probate court on an estate that consisted of Treasury Direct Bills, common stock certificates for ED & JPM, a $350K house, assorted bank CDs, and a couple of checking and savings accounts when the executor took care of closing the all bank accounts?
As I recall, the NYS Bar Assoc. published recommended fee for such an estate was 4% and that's what my fancy; Garden City, NY, Escalade driving attorney charged. (His kid's drove Hummers.)
__________________
justplainbll is offline   Reply With Quote
Old 10-19-2011, 10:54 PM   #28
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,649
Quote:
Originally Posted by BellBarbara View Post
YES! Clear they are trying to convert me to a customer. Most of the options are about this. I plan to get the money out and move it to a bank. My portion is not large, maybe 20-25K, we don't know, they won't tell us how much it is until we make our selection. Kind of funny.
BellBarbara....Not sure why the companies handling these annuities are different from the ones I handled with my mothers estate. I handled two IRA annuities. Granted that was back in 2003 but still. I suspect...as I am sure you do....that they are deliberately not telling you all the facts. These are inherited IRA's and unless the rules have changed you should have 3 choices.
1. Lump Sum pay out to the beneficiaries
2. Five year pay out to help defer taxation on the entire amount
3. Annuitize it based on your life expectancy. Of course that is the one they want you to do.

You can also transfer "your part" of the inherited IRA to an institution of your choice "in kind" and take your yearly RMD. In other words, if you want it to stay in tact, you don't have to leave it with the annuity company.

I took the lump sum because my financial institution told me they could not transfer in an inherited IRA. My sister transferred hers "as is" to her financial institution and is taking yearly RMD (required minimum distribution)

Start with this if you have not done so already. Scroll half way down to read about inherited IRA's.

Publication 590 (2010), Individual Retirement Arrangements (IRAs)

And remind "them" that they legally have to distribute based on the beneficiary designation. Setting up an account for you is not "distributing it". Nor do I think it satisfies the legal definition of distributing to beneficiaries. Doesn't keep them from trying. Challenge the heck out of them. That is what I had to do.
Best of luck !

p.s. I also suspect you might be speaking with their first level customer service person (whether in the pay out department or not). Tell them you want to speak with their manager and you want access to their legal department. Get names and numbers before they transfer you.
__________________
sheehs1 is offline   Reply With Quote
Old 10-20-2011, 06:06 AM   #29
Full time employment: Posting here.
 
Join Date: Jul 2011
Posts: 721
Quote:
Originally Posted by BellBarbara View Post
My mom died a few weeks ago, and for the most part, she had a trust set up and it has been orderly in terms of distribution. Now jump to these two annuities she bought with her IRAs - I can't understand the paperwork!

I consider myself above average in intelligence and relatively knowledgeable about financial matters. Having said that, I have read the documentation for distribution many times and I still don't get it. My sister (trustee) doesn't understand it either.

Once again, shows that these things are too difficult to understand. Luckily, they are a small portion of her estate. We are going to have to set up a conf call with the insurance company.

Also, and this is funny, they won't just send you a check. Instead they set up an account for you so you can write checks on the account. What? They probably will charge us for the checks (2 separate accounts) and fees, just to get the money out.
Sorry for your loss Bellbarbara.
Was the trust actually the beneficiary of these IRA annuities? Or did she have you as the direct beneficiary for these particular IRAs? There may be an opportunity to avoid being taxed all at once on the distribution (and possibly being pushed into the next tax bracket or higher) by rolling these over into an inheritied IRA and taking the distribution over an extended period. Again, it depends on the beneficiary designation and if there was one or more persons named. Be careful about taking the distribution quickly without fully understanding your options. Not sure how much we're talking about here, but it if you're not confident about it, it might be worth paying someone a few hundred to save yourself more in taxes.
__________________
panacea is offline   Reply With Quote
Old 10-20-2011, 07:22 AM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by FinanceDude View Post
Looks like NPR needs to do some due diligence before they publish such crap...

So they all got it wrong?

Here is another one.

Fallen Soldiers' Families Denied Cash as Insurers Profit - Bloomberg


I don't think those articles questioned the legality of it so much... they seem to be questioning the ethics of it.
__________________
chinaco is offline   Reply With Quote
Old 10-20-2011, 07:42 AM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by chinaco View Post
So they all got it wrong?

Here is another one.

Fallen Soldiers' Families Denied Cash as Insurers Profit - Bloomberg



I don't think those articles questioned the legality of it so much... they seem to be questioning the ethics of it.
Uh, its the same article as NPR, it's called "piggybacking" in the media world, one source picks u a story, then another posts it, etc.

It goes back to people needing to become more financially aware of what to do when a loved one dies and you are an insurance beneficiary. It seems to me the media is getting all on the "hammer Wall Street" bandwagon a little too much.

In the OP's post, the annuities are in IRAs. There are tax implications when that happens. I am sure it is policy it enacted due to the "sue anyone anytime" environment we are in......... I could tell horror stories since I have seen a fair number of these go bad, but I digress.
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 10-20-2011, 08:15 AM   #32
Recycles dryer sheets
 
Join Date: Oct 2010
Posts: 392
Thanks everyone. My husband is a very high wage earner, so really doesn't matter on taxes, unless I defer until he stops working.

I do understand the options, I am saying the paperwork is very confusing - sort of like choose this option, but if you're standing on your right leg, go to page 5 clause 7, then you go there, and it seems totally unrelated. Why are you sending me there? The paperwork is terribly written (I am in the technical education field) and even the lump sum option which should be pretty clear, just isn't.

Thanks for your condolences. My mom was suffering from end stage dementia, so it while it came quickly at the end, we have been grieving over the last 18 months or so.
__________________
BellBarbara is offline   Reply With Quote
Old 10-20-2011, 08:36 AM   #33
Recycles dryer sheets
 
Join Date: Jul 2008
Posts: 136
Quote:
Originally Posted by chinaco View Post
So they all got it wrong?

Here is another one.

Fallen Soldiers' Families Denied Cash as Insurers Profit - Bloomberg


I don't think those articles questioned the legality of it so much... they seem to be questioning the ethics of it.
Media sensationalism.

DOn't know if I'd say they got it wrong, but I would like to consult with Paul Harvey and get "the rest of the story."

I know for a fact there are thousands of folks that have earned more money in those retained accounts than have ever been told they couldn't buy a camera at Target with those checks.



...........she had always believed that her son’s life insurance funds were in a bank insured by the FDIC..... they didn't get it wrong, but she got it wrong



I do really want to know (I'm willing to be open minded and educated) if there have ever been cases where folks couldn't get their money out of the retained asset accounts. Have any life insurance proceeds vanished because the insurance companies went under? That would stink big time. But to say there are policies and procedures in place...mmehhhh, that's not newsworthy.

Guess I'm just not in the mood for all the victim mentality stuff this morning (maybe i need another cup of coffee).
__________________
TN_INVEST is offline   Reply With Quote
Old 10-20-2011, 11:08 AM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by TN_INVEST View Post
Media sensationalism.

DOn't know if I'd say they got it wrong, but I would like to consult with Paul Harvey and get "the rest of the story."

I know for a fact there are thousands of folks that have earned more money in those retained accounts than have ever been told they couldn't buy a camera at Target with those checks.



...........she had always believed that her son’s life insurance funds were in a bank insured by the FDIC..... they didn't get it wrong, but she got it wrong



I do really want to know (I'm willing to be open minded and educated) if there have ever been cases where folks couldn't get their money out of the retained asset accounts. Have any life insurance proceeds vanished because the insurance companies went under? That would stink big time. But to say there are policies and procedures in place...mmehhhh, that's not newsworthy.

Guess I'm just not in the mood for all the victim mentality stuff this morning (maybe i need another cup of coffee).
+1
__________________

__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Milevsky: What Does Retirement Really Cost ? chinaco FIRE and Money 71 10-14-2011 05:05 AM
Managing a Retirement Portfolio: Do Annuities Provide More Safety? chinaco FIRE and Money 23 10-10-2011 05:57 PM
Calculator and annuities palomalou FIRECalc support 0 09-26-2011 03:28 PM

 

 
All times are GMT -6. The time now is 07:18 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.