Extended Guaranty Annuity

[RE2Boys]

I've been searching for places to park cash portion of portfolio and came across an annuity product that appears to act like a CD. For example, pay in $50K with a guarantee rate of return of 5.6% for five years. Years 2-5 you can withdraw up to 10% with no surrender charges.

At the end of 5 years, you can choose various payout options that include a lump sum payment.

Sounds almost like a 5yr CD without the annual 1099s. Though if you chose the lump sum payment, you get 5 year accumulated income on a 1099 that year.

Besides the lump sum income, anyone see any risk or concerns? This is offered by a very solid insurance company - USAA.

Thanks

RE2Boys

[brewer12345]

You could do worse than dealing with USAA. Having said that, this type of fixed annuity is a dime a dozen and you have significant liquidity constraints on the money if you need more than 10% in any given year. If liquidity is potentially important to you, I would seriously consider something other than a fixed annuity.