I'd like to highlight this article in the Tampa Bay Times (2-6-12) but can't find it online in their business section. It is a reprint from the New York Times and talks about a new method the Fed has come up with to deal with old age. They are hyping it as a way for retirees to save money by allowing withdrawals from your 401k or IRA (tax free) to buy an annuity to cover you in your old age. I'm talking 85 years old and up. They say one big problem is people outliving their money and one way to help this is to allow this type annuity purchase. It's also being called "longevity insurance".
One example cited is that a 65 year old would have to pay $277500 for a $20000-a-year annuity that started immediately. However, it would only cost $35200 for an annuity that started at age 85. I guess the major point here is that one could take this $35200 out of an IRA or 401k tax free. Maybe I don't care what happens at age 85. And what happens to the money if I die at 84?
The Treasury Dept is also changing the way it calculates MRD's to exclude any money used for longevity insurance or an annuity. Some of these changes will take place immediately and others are in the public comment period. Sorry I can't hook you into the article but maybe y'all have heard something along these lines.
One example cited is that a 65 year old would have to pay $277500 for a $20000-a-year annuity that started immediately. However, it would only cost $35200 for an annuity that started at age 85. I guess the major point here is that one could take this $35200 out of an IRA or 401k tax free. Maybe I don't care what happens at age 85. And what happens to the money if I die at 84?
The Treasury Dept is also changing the way it calculates MRD's to exclude any money used for longevity insurance or an annuity. Some of these changes will take place immediately and others are in the public comment period. Sorry I can't hook you into the article but maybe y'all have heard something along these lines.