Deferred Annuity Puzzle

[TromboneAl]

My mom's coming to the end of her life, and I'm sorting out some of her finances. There's one thing I've come across that I'm having a hard time understanding. It's just about a thousand dollars, so it's no big deal, but I'd like to figure it out.

It's a Single Premium Deferred Annuity with Jackson National Life Insurance. It was signed in 1988, with my mom as the owner and the beneficiary, and with oldest sister, Gail, as the annuitant.

When Gail reaches age 80, in 2023, the annuity would pay her a monthly income.

Neither Mom nor Gail has any memory of this. My question is: "Why was this was set up?" Was my mom funding Gail's retirement? Was this just a tax shelter? Any ideas?

It looks like there have been a number of withdrawals over the years, and the value now is about $1K. I've had the company send forms for withdrawing the remaining funds.

Thanks for your ideas.

 

[brewer12345]

Mysteries abound. Most likely it was intended as a savings vehicle for your mom, with a nice bequest to Gail after your mom passed away. But sometimes people get funny ideas about insurance and annnuity products, so who knows?

 

[Texas Proud]

I agree with Brewer...

Probably someone at a S&L convinced her to put money into an annuity as 'the rates are better and you defer interest'... at least that is what they told my mom... they did this instead of a good ole' ordinary CD...

I at least found out about my moms in a few years and moved it to one with a life insurance wrap...

 

[FinanceDude]

Agreed............a lot of banks and S&L's push annuities, and most elderly folk don't know what they're buying...............not their fault, the products are complex and all have 100 page prospectuses your lawyer wouldn't understand.............

 

[kathyet]

My mom's coming to the end of her life, and I'm sorting out some of her finances. There's one thing I've come across that I'm having a hard time understanding. It's just about a thousand dollars, so it's no big deal, but I'd like to figure it out.

It's a Single Premium Deferred Annuity with Jackson National Life Insurance. It was signed in 1988, with my mom as the owner and the beneficiary, and with oldest sister, Gail, as the annuitant.

When Gail reaches age 80, in 2023, the annuity would pay her a monthly income.

Neither Mom nor Gail has any memory of this. My question is: "Why was this was set up?" Was my mom funding Gail's retirement? Was this just a tax shelter? Any ideas?

It looks like there have been a number of withdrawals over the years, and the value now is about $1K. I've had the company send forms for withdrawing the remaining funds.

Thanks for your ideas.

Can it just be rolled over to an IRA for your sister without penalty? Maybe your Mother was trying to get your sister to start an IRA for herself.  Especially if she didn't work. In 1988 weren't IRA's just starting out and only for people who worked? I know I couldn't  open one up for myself. I was a stay at home Mom. Just a thought.

We had one with Jackson National that was based n a 9 year indexed annuity and we were able to roll it over to vanguard into one of our existing accounts.

Kathyet

 

[TromboneAl]

Thanks for the responses, I think you've nailed it.

It looks like we can just take the money out -- taxes aren't an issue.