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Old 05-18-2018, 01:05 PM   #21
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As CD rates rise so do MYGAs.

OFF Topic: The secondary market Fixed Annuities provide in some cases higher/attractive returns but I could never go there due to the legal risks see this:
"Secondary Market Annuity" Investors Screwed out of $152,833.37 and Incur Legal Bills to Fight NJ Vendor - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary, Now in 13th Year!
I agree that the MYGA and CD rates should move together, but I guess what I'm saying is that the MYGA option is more attractive when FDIC CD rates are pitiful as they have been the last few years. Now that they are not-quite-so-pitiful, I am less inclined to reach for the yield of the MYGA products.

That link to structured settlement blog is scary as hell. Although it looks like a hazard specific to SMAs based on structured settlement derivatives which is not something I would consider, I think it would be easier to just stay away.
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Old 05-18-2018, 01:30 PM   #22
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That link to structured settlement blog is scary as hell. Although it looks like a hazard specific to SMAs based on structured settlement derivatives which is not something I would consider, I think it would be easier to just stay away.
Has nothing to do with MYGAs but yes SMAs can be scary if not handled by professionals.
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Old 05-18-2018, 01:33 PM   #23
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L (Long Term Care): You’re not buying that type of annuity so, no advantage over CDs; and Stan recommends LTCi if you can qualify.
Talked to Stan before and he sent me to a specialist in LTC and he recommended hybrid for couples that want a lifetime benefit vs short duration (3-6 years) and for shorter durations non-lifetime than LTCi maybe more attractive.
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Old 05-18-2018, 01:51 PM   #24
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I agree that the MYGA and CD rates should move together, but I guess what I'm saying is that the MYGA option is more attractive when FDIC CD rates are pitiful as they have been the last few years. ...
FWIW, I used to work in the industry and for a period of time was in charge of financial management for our annuity line of business so I am very familiar with the product.

From what I have seen, MYGA and CD rates for similar terms are pretty close... especially for A+ carriers.... IMO if they are similar, then I would prefer CDs because of slightly lower credit risk via FDIC insurance and significantly better liquidity (EWPs are typically less than surrender charges and CD liquidity can be improved by just buying multiple CDs rather than one... I split my PenFed CDs in 20% increments in case I ever needed the money).
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Old 05-19-2018, 06:03 AM   #25
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FWIW, I used to work in the industry and for a period of time was in charge of financial management for our annuity line of business so I am very familiar with the product.

From what I have seen, MYGA and CD rates for similar terms are pretty close... especially for A+ carriers.... IMO if they are similar, then I would prefer CDs because of slightly lower credit risk via FDIC insurance and significantly better liquidity (EWPs are typically less than surrender charges and CD liquidity can be improved by just buying multiple CDs rather than one... I split my PenFed CDs in 20% increments in case I ever needed the money).
I pretty much agree with all of the above. I am leery of ratings and I am not familiar with many of the insurers offering slightly higher MYGA rates (even the A rated ones), but I do know FDIC so it feels OK to do business with a bank I never heard of as long as they have this designation.

I split my PenFed CDs into 20% increments also...........and then I realized they allow partial withdrawals so I don't think it helped me except it did feel like a good thing to do. Live and Learn. That's one more thing on my checklist when reviewing disclosure forms. Older PenFed IRA CDs waive the early withdrawal penalty but the newer ones no longer include that exception in the disclosure.
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Old 05-19-2018, 06:12 AM   #26
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I wasn't aware that they allowed partial withdrawals... would have saved me some bookeeping.
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Old 05-19-2018, 06:20 AM   #27
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What other ways are there to defer income to qualify or ACA and be fully insured (In Florida)?
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Old 05-19-2018, 06:45 AM   #28
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I didn't realize that income deferral for ACA was part of the decision... that would tilt the playing field to the MYGA.
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Old 05-19-2018, 07:39 AM   #29
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I wasn't aware that they allowed partial withdrawals... would have saved me some bookeeping.
The rules have changed over the years so it's important to read the applicable disclosure. Currently, I understand that IRA CDs permit partial withdrawals but taxable (e.g. Moneymarket) CDs do not. The wording in these disclosures tends to be imprecise.
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Old 05-21-2018, 07:45 AM   #30
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Here is some of the Logic for the OP. (I am the OP)

Really would like to take SS at 65 because of poor family longevity. Let us Say $26k a year.

DW needs ACA for 5 years assuming it is still there.

Have non qualified cash that currently generates $40k in interest from CDs (Taxable).

Have Non qualified cash to last at least 5 years in addition to the above.

Want to use cash for 5 years and shelter the rest from being counted as MAGI for 5 years.

A 5 year Fixed Annuity does this and can get 10% PA out if needed. That is $100k on every $1m invested. Again only if really needed as it is a FIFO with respect to interest and it would defeat the object to take the penalty free withdrawals. I do not mind paying taxes later to get good ACA subsidies now for DW. I may not be around to care anyway.

What other choices do I have?
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Old 05-21-2018, 07:59 AM   #31
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What about parking what you need for the next 5 years in a low interest bearing account (admittedly inefficient but the subsidies make up for it) and the rest in some low or no dividend equity funds or ETFs or low/no dividend equities like Berkshire?

Then if needed, rebalance through your tax-deferred and tax-free accounts.
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Old 05-21-2018, 08:06 AM   #32
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What about parking what you need for the next 5 years in a low interest bearing account (admittedly inefficient but the subsidies make up for it) and the rest in some low or no dividend equity funds or ETFs or low/no dividend equities like Berkshire?

Then if needed, rebalance through your tax-deferred and tax-free accounts.
Unfortunately, I am not interested in ANY stock market risk at all. I think I mentioned that before, maybe.
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Old 05-21-2018, 08:13 AM   #33
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How much is the ACA benefit? IOW, is it really worth restructuring your taxable money as you are considering doing for the ACA benefit?
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Old 05-21-2018, 09:26 AM   #34
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How much is the ACA benefit? IOW, is it really worth restructuring your taxable money as you are considering doing for the ACA benefit?
For both of us this year was $2200pm. Next year with DW most likely half of that or more with increases.
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Old 05-21-2018, 11:10 AM   #35
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Have non qualified cash that currently generates $40k in interest from CDs (Taxable).


What other choices do I have?
$40k/yr interest @ 3% is $1.33M, which is a lot of cash.

What about muni-bonds or muni-bond fund? That’s non-taxable income (currently @ ~2.5% return). Keep it for 5 yrs, then adjust if necessary. Plus, you maintain control & liquidity, which most folks value quite a bit.
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Old 05-21-2018, 11:32 AM   #36
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Muni bonds don't work... it is one of the add backs for ACA.

http://laborcenter.berkeley.edu/pdf/..._summary13.pdf
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Old 05-21-2018, 11:37 AM   #37
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What about muni-bonds or muni-bond fund? That’s non-taxable income (currently @ ~2.5% return). Keep it for 5 yrs, then adjust if necessary. Plus, you maintain control & liquidity, which most folks value quite a bit.
"Municipal bonds can be a sweet deal for tax-conscious investors. ... While you aren't taxed on muni bond income, you do need to include it when calculating your modified adjusted gross income, or MAGI, in certain situations."
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Old 05-21-2018, 12:14 PM   #38
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Muni bonds don't work... it is one of the add backs for ACA.

http://laborcenter.berkeley.edu/pdf/..._summary13.pdf


OK. Well forget that idea.
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