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Purchasing SPIA through Fidelity
Old 09-03-2010, 09:34 AM   #1
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Purchasing SPIA through Fidelity

A substantial percentage of my retirement funds are in an IRA at Fidelity and I think that at least a part of my withdrawal strategy will consist of a SPIA. Fidelity seems to offer immediate annuities (or maybe just facilitates securing same) through insurance company business partners.

Is it reasonable to purchase the SPIA directly from the IRA?

I have to admit that this is a bit of a mystery to me. What are the best alternatives?
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Old 09-03-2010, 09:52 AM   #2
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Pen Fed 5% 10yr CD starting in January.
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Old 09-03-2010, 09:59 AM   #3
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Quote:
Originally Posted by 73ss454 View Post
Pen Fed 5% 10yr CD starting in January.

Do you need to be a member at Pen Fed?
Is there a minimum?
Is the deposit insured?

Thanks,

mP
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Old 09-03-2010, 10:04 AM   #4
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Quote:
Originally Posted by Disappointed View Post
Do you need to be a member at Pen Fed?
Is there a minimum?
Is the deposit insured?
Yes - see #7 here: https://www.penfed.org/howToJoin/overview.asp
Not sure about a minimum - check the PenFed website
Yes - to $250K
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Old 09-03-2010, 10:24 AM   #5
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Originally Posted by Disappointed View Post
Do you need to be a member at Pen Fed?
Is there a minimum?
Is the deposit insured?

Thanks,

mP
I think REW gotcha covered.
You need to be a member and it costs $20 one time fee
I'm not sure about the minimum.
The deposit is insured.
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Old 09-03-2010, 10:39 AM   #6
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How can Pen Fed be paying 5% interest when everyone else is actually loaning money out at 4%?

Doesn't that rate seem too good to be true in this environment?
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Old 09-03-2010, 10:40 AM   #7
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It's guaranteed, why do you care?
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Old 09-03-2010, 10:46 AM   #8
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I am a new-ish Penfed member and as far as I can tell, the 5% 10-yr CD deal is not available to new members.
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Old 09-03-2010, 10:58 AM   #9
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I am a new-ish Penfed member and as far as I can tell, the 5% 10-yr CD deal is not available to new members.
Well, pfffft...
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Old 09-03-2010, 11:50 AM   #10
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I have nothing against using an SPIA for part of one's retirement income stream, but interest rates are so low now that I think this is a terrible time to open one. When the Fed has called off the "war on savers" and rates increase, it might be worth a look then.
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Old 09-03-2010, 11:53 AM   #11
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Probably the worst internal SPIA rates in forever.............
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Old 09-03-2010, 11:58 AM   #12
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I purchased an SPIA in mid-2007 via Fidelity with a portion of my 401(k) rollover funds.

If you wish to discuss off-line, I'm here.

I don't want to post anything on-line, since I'm sure we'll get plenty of remarks from the "opinion" crowd who have never gone through the research process nor even have an SPIA or understand the reasons of getting one early in retirement (regardless of current interest rates) ...
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Don't need yet - just planning for the future
Old 09-03-2010, 12:12 PM   #13
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Don't need yet - just planning for the future

Quote:
I have nothing against using an SPIA for part of one's retirement income stream, but interest rates are so low now that I think this is a terrible time to open one. When the Fed has called off the "war on savers" and rates increase, it might be worth a look then.
Maybe I should have mentioned that I'm not ready for a SPIA right now - just trying to plan for the future. Ideally, if/when I'm ready to act on this, interest rates will have increased.
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Old 09-03-2010, 12:17 PM   #14
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Originally Posted by misanman View Post
Is it reasonable to purchase the SPIA directly from the IRA?
Yes. This might help: How to Buy an Annuity With Your IRA - WSJ.com
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Old 09-03-2010, 12:22 PM   #15
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Because it doesn't make any sense.

I don't want to buy a CD on the assumption that it will have to be bailed out by the government. It's kinda like guide rails on a road-- I'm glad they are there, but I'd prefer to avoid situations that require their use.

I can't imagine a way for Pen Fed to survive if they are willing to borrow money at 5% in this environment.


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It's guaranteed, why do you care?
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Old 09-03-2010, 12:35 PM   #16
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I can't imagine a way for Pen Fed to survive if they are willing to borrow money at 5% in this environment.
I suspect they are offering this rate because they believe interest rates will change markedly over the 10 year term of the CD - or that the surrender penalty will compensate them if the CD is terminated early. In any case, I doubt they will sell enough of these CD's to place the financial well being of the credit union in jeopardy...
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Old 09-03-2010, 12:44 PM   #17
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Remember that 10 years is a long time and at some point based on the past the interest rates will rise. When the rates rise it will even the playing field. This is what they are betting on. I wouldn't worry since it is guaranteed money up to I think 250K.
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Old 09-03-2010, 01:09 PM   #18
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I have been a member for several years, and have current CDs, but when I go to the website, all I find is CDs up to 7 years.

Can someone give a link?

Ha
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Old 09-03-2010, 01:12 PM   #19
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Ha, check this thread: PenFed CD reservation offer
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Old 09-03-2010, 01:40 PM   #20
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I have been a member for several years, and have current CDs, but when I go to the website, all I find is CDs up to 7 years.

Can someone give a link?

Ha

Go to "account actions", then "certificate options". You should see a link at the top right corner of your screen.

Correction from my previous post: as a new member, I opened my first CD at PenFed yesterday (I could only get the 7-year CD at 3.49%) but today I was able to see (and take advantage of) the promotional CD offer after logging in to my account. So it looks like it is available to anyone with at least one CD at PenFed.
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