How and where did you buy your SPIA

[nun]

I'm thinking about converting a portion on my IRA into a SPIA to cover basic ER expenses. Can you do this inside an IRA and take income out before 59.5 without the 10% penalty as it's a stream of substantially equal payments?

If you have an SPIA how is it organized and who did you buy from?

[East Texas]

I am waiting to convert our IRAs to SPIAs because the rates are just too low right now. When we do convert, it will be with USAA.

[Independent]

There's an explicit exemption for annuities.

Quote:

Exceptions: There are several exceptions to the age 59½ rule. Even if individuals receive a distribution before they are age 59½, they may not have to pay the 10% additional tax if they are in one of the following situations. ...... They are receiving distributions in the form of an annuity.

Retirement Topics - Tax on Early Distributions

You can own more than one IRA. An insurance company can "put an IRA wrapper" around an annuity. So one approach is to roll some of your IRA out of the mutual fund (or where ever it is now) into an annuity.

[FIREd]

My MIL converted an IRA into two SPIAs.

We looked at several companies. If you are looking for a fixed annuity or for an annuity with a fixed COLA, we liked what Penn Mutual and Mass Mutual had to offer. USAA would be another good choice. If you are looking for full COLA, then the playing field is much, much narrower. We had to go through Vanguard to find those.

[rescueme]

I'll give you my "experience", since I have:

- Prepared for retrement.
- Am retired.
- And have an SPIA...

I've been in retirement (fortunatly) for a bit over four years.

I was faced with the reality that I would not have a defined benefit (e.g. penson) in retirement.

I would retire before any "income streams" would be available.

I desired not not only to "take care of myself" but also insure that DW would get a benefit, regardless of my lifespan.

I also wanted to delay SS (primarily for the benefit of my DW) until age 70.

And most importantly, I wanted to ensure that if I (and DW) would die today, that the SPIA would remain of some value to our estate.

I started out with the traditional way of investiagation, both through Immediate Annuities - Instant Annuity Quote Calculator.
along with requested quotes by our investment companies (e.g. FIDO/Vanguard)

In our case, we were looking for a "life annuity" that would provide benefits for both of us, at 100% payments if each died.

We also wanted to ensure that if we died/passed before our anticipated "terminal date", that payments (both in monthly, or lump sum) would go to our estate.

We did not look at inflation protection, since the "offset" was delaying SS till my DW's FRA, and mine at age 70. If we were still alive (money is for the living, not the dead) our "upgrade" to SS would cover inflation in the future.

In our case (everybody is different) it wound up that Fidelity "fit our needs" and provided the highest initial monthly income. BTW not all insurance companies will give you what you require. For instance, FIDO no longer offers the policy we wanted.

IMHO, it's most important to specify your needs (which may be difficult). After that? Then start searching for available plans, via different companies...

I started my "search" two years before I retired. I execututed the contract six months after I retired. It's not something that can be done on the fly, IMHO (if you expect results that meet your plan)...

[nun]

Quote:

Originally Posted by rescueme IMHO, it's most important to specify your needs (which may be difficult). After that? Then start searching for available plans, via different companies... I started my "search" two years before I retired. I execututed the contract six months after I retired. It's not something that can be done on the fly, IMHO (if you expect results that meet your plan)...

Thanks. I need to fund the gap between ER and 59.5. I could do it with taxable accounts, but that would leave me with little liquidity by the time I got to 59.5. I could 72t from the IRA, but a small SPIA to cover basic expenses appeals to me because of the guarantee. I know it's breaking the "spend taxable first" rule, but I want to keep a fair taxable cushion until I get to 59.5. No survivor benefit, and no payments to estate after death. It sounds like buying one within an IRA is the way to go. Then I can take withdrawals without the 10% tax.

[jdw_fire]

Quote:

Originally Posted by nun Thanks. I need to fund the gap between ER and 59.5. I could do it with taxable accounts, but that would leave me with little liquidity by the time I got to 59.5. I could 72t from the IRA, but a small SPIA to cover basic expenses appeals to me because of the guarantee. I know it's breaking the "spend taxable first" rule, but I want to keep a fair taxable cushion until I get to 59.5. No survivor benefit, and no payments to estate after death. It sounds like buying one within an IRA is the way to go. Then I can take withdrawals without the 10% tax.

remember, it has to be a life annuity if you buy it with ira funds and you want to avoid the 10% penalty.

[chinaco]

Haven't yet. DW is not financially savvy so I think a SPIA is a good idea for us. We have ample assets.... so it is purely a risk reduction strategy.

Intention is to make a series of buys (ladder) using a small amount of our portfolio to create a guaranteed income. Nominal SPIA ladder (purchased before age 60) + Nominal Pension +SSx2 (62/70). This will provide a guaranteed base income.

Why nominal SPIA... more money in the early years (takes some potential strain off the portfolio). We will use our portfolio to cover inflation.

Depending on what happens between now and 70-75... We may make a late in life SPIA purchase. But it depends.... Too soon to tell and many variables to know at this point... plus there may be new products available to mitigate some of the risks.



Is It Time to Buy an Annuity?

http://online.wsj.com/article/SB1000...rementPlanning


Which Annuity Is Right For You?

http://blogs.smartmoney.com/encore/2...M_home_blogsum

[easysurfer]

When the time is right, I'd probably go with Vanguard Annuity Access

https://personal.vanguard.com/us/wha...ome?Link=facet

[zinger1457]

Quote:

Originally Posted by easysurfer When the time is right, I'd probably go with Vanguard Annuity Access

It's good to see Vanguard has spread out. For the longest time they only offered SPIA's through AIG.

[ziggy29]

Quote:

Originally Posted by zinger1457 It's good to see Vanguard has spread out. For the longest time they only offered SPIA's through AIG.

I think the recent shenanigans with AIG made both Vanguard and many of its customers uneasy enough that finding other "suppliers" made sense.