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Old 02-29-2008, 01:38 PM   #41
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Originally Posted by FinanceDude View Post
The "deal" comes at a price. I would need to know the name of the VA before I could comment on all the vagareties of it.............
I have looked through past statements that are online and tried to read through the prospectus. This VA is through Pacific Life. Like 2B says it is not easy to figure out all the fees and costs for withdrawals. I received a one time "credit enhancement" as they call it.

It looks like I would have a 5% withdrawal charge if I did it right now. There is approximately $280,000 in that VA, so that would be a $14,000 hit. Maybe it would be worth it for that much. Now that I sit down and type it out and figure it, it seems like it might be worth doing.

I have another VA that I am taking the RMDs out of that didn't get the enhancement and it doesn't have a surrender charge.

I think I'll play with some spreadsheets and see how I would have done with Vanguard after the surrender charge and see if it would be worth it to take it out now.

Thanks everyone. I see there are quite varied opinions on annuities. For my age and since it is an inherited IRA, I think it was a bum deal.
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Old 02-29-2008, 02:00 PM   #42
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Gworker, I wouldn't take it out now if it were me. Perhaps, if the market goes on a run, you might want to consider a 1035 Exchange to avoid having to pay taxes and to lock in the value and get a living benefit, but other than that, Pac Life is a decent company and taking a $14k hit seems silly. JMO.
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Old 02-29-2008, 04:20 PM   #43
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Quote:
Originally Posted by Gworker View Post
I have looked through past statements that are online and tried to read through the prospectus. This VA is through Pacific Life. Like 2B says it is not easy to figure out all the fees and costs for withdrawals. I received a one time "credit enhancement" as they call it.
It's called an "extra credit" product. Because they "gave" you some extra money, those contracts typically run up to 8-9 years as far as a holding period.

Quote:
It looks like I would have a 5% withdrawal charge if I did it right now. There is approximately $280,000 in that VA, so that would be a $14,000 hit. Maybe it would be worth it for that much. Now that I sit down and type it out and figure it, it seems like it might be worth doing.
Is the Pacific Life VA qualified or non-qualified money? Either way, $14,000 is a LOT of money........

Quote:
I have another VA that I am taking the RMDs out of that didn't get the enhancement and it doesn't have a surrender charge.
Many VAs have a non-surrender option that clients can purchase. It depends on if the FA told you about that feature or if it was available on that contract.

Quote:
I think I'll play with some spreadsheets and see how I would have done with Vanguard after the surrender charge and see if it would be worth it to take it out now.
After today's performance, might be a good idea to hold off............

Quote:
Thanks everyone. I see there are quite varied opinions on annuities. For my age and since it is an inherited IRA, I think it was a bum deal.
My late sister's 403B was in TIAA-Cref. My kids are the beneficiaries, so I have to take RMD's on them. TIAA-Cref would not allow me to transfer those assets out unless I spent a lot of money setting up a guardianship for them. So, until they are of age, they both own annuities too. It happens.........
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Old 03-02-2008, 06:10 PM   #44
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I was about to make a rude reply to someone that didn't read my post before replying but I decided that driving 12 hours today doesn't make it likely my response would have been considered "positive" in any way.

I will summarize my opinion of the various comments to my comments with a few points.
  • Annuities are masterfully constructed with many pages of small print that are designed to hide fees and penalties. Everyone I've looked at is a byzantine work of art.
  • Fixed annuities are only worthwhile for those incapable of managing their own affairs that have no competent person available to do it for them (IMHO).
  • The best deals in fixed annuities are available only to those able to sort through the options available to find the lower fee options. If you just let yourself be "sold," you'll be skinned and gutted.
  • Variable annuities never "give" you anything. What may be an increase in value at the time of purchase is taken away in fees during the life of the contract. If the contract is terminated, all of the "gifts" are more than fully recovered.
  • VAs are very lucrative to the person that sells them. That's why they are pushed so hard. If you ever want to stop someone from selling you a VA ask about their commissions and fees. Force them to be specific. They won't be but they will go away.
  • My opinions are based on numerous examples I have seen that have "proven" (to me at least) my prior statements.
I know there are numerous FAs that are contributors to this forum. Some may mean well. I hope they do and aren't just salesman justifying their line of work. I can assure everyone I don't make any money if you don't buy a fixed or variable annuity. Also, I do own companies in my index funds that make lots of money when someone buys an annuity so I'm here telling you to not buy something that would increase my personal wealth (an infintesimal amount).
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Old 03-03-2008, 08:52 AM   #45
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Annuities are masterfully constructed with many pages of small print that are designed to hide fees and penalties. Everyone I've looked at is a byzantine work of art.
Can't argue with you there, I have a finance degree and struggle to read them at times.........
  • Quote:
    Fixed annuities are only worthwhile for those incapable of managing their own affairs that have no competent person available to do it for them (IMHO).
I disagree, people buy them when the rates on them are quite a bit higher than CD's. They are still quite popular. You must not know a lot of older retired folks like I do. Many of them own them, and although I don't sell them, and you and I never would own them, it doesn't mean they are a)incompetent, or b)too lazy to find someone competent to help them.
  • Quote:
    The best deals in fixed annuities are available only to those able to sort through the options available to find the lower fee options. If you just let yourself be "sold," you'll be skinned and gutted.
Show me the "fee structure" in a fixed annuity,and we can talk. The only "fees" are the fact they have to be held for a certain number of years and some companies pay more than others. There is NO M&E charged, and no "ER expense". You give the annuity company money, and they keep it for a number of years........
  • Quote:
    Variable annuities never "give" you anything. What may be an increase in value at the time of purchase is taken away in fees during the life of the contract. If the contract is terminated, all of the "gifts" are more than fully recovered.
The reasons VA's are "bigger than they have ever been" are the following:

1)Virtual elimination of all defined benefit plans.
2)Development of living benefits that guarantee income streams to the owner.
3)Uncertainty about Social Security going forward.

Like I always say, the REALITY on this forum is NOT the reality with the general populace. Here's an example: Just because the folks on here are able to manage their own affairs and that of their older family members, doesn't mean average Joe American does. I'm sure Scott Burns and Clark Howard and others have radio audiences of 2 million or so. However, there are about 170 million adults in the USA, so I don't think the message is being received by the masses........
  • Quote:
    VAs are very lucrative to the person that sells them. That's why they are pushed so hard. If you ever want to stop someone from selling you a VA ask about their commissions and fees. Force them to be specific. They won't be but they will go away.
I see Fidelity is offering a "low cost"living benefit VA, there's always that option....... I for one agree that they are not cheap. The "cheapest" one I know of is 2.5% all inclusive, most are around 3%..........
  • Quote:
    there are numerous FAs that are contributors to this forum. Some may mean well. I hope they do and aren't just salesman justifying their line of work. I can assure everyone I don't make any money if you don't buy a fixed or variable annuity. Also, I do own companies in my index funds that make lots of money when someone buys an annuity so I'm here telling you to not buy something that would increase my personal wealth (an infintesimal amount).
I appreciate your opinion. I find a lot of what I do on here is provide additional info on financial topics. or instance, there was a LONG thread last month about "loads" on mutual funds. A fair number of folks on here were CONVINCED that whether you invested $1000 or $1,000,000 into "load" mutual funds, you paid 5.75%. That is simply NOT the case. I don't mind folks on here being critical of my industry, it comes with the territory. However, there is a lot of misinformation out there, and I try to provide clarity, whether folks on here believe that or not...........
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