Best CD, MM Rates & Bank Special Deals Thread 2022 - Please post updates here

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if you buy an annuity, and withdraw the interest annually is that a taxable event?
 
frank said:
if you buy an annuity, and withdraw the interest annually is that a taxable event?
Click to expand...
Generally yes, the interest withdrawn is taxable.

If the annuity is in a tax-deferred account like a tIRA and the withdrawal stays in the tax-deferred account then it would not be taxable. Similarly, if the annuity is in a Roth IRA then interest withdrawn would not be taxable if you're over 59-1/2 or meet other criteria.

The other thing to remember about annuities is that other than life contingent payouts, withdrawals from annuities are interest first and principal second.
 
do annuities have any kind of protection like fdic? or is it a state by state thing? I live in iowa.
 
frank said:
do annuities have any kind of protection like fdic? or is it a state by state thing? I live in iowa.
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It appears to be a state thing tied to insurance. For Iowa, Google led to this website containing some useful FAQs for your question: https://www.ialifega.org/FAQ. 7 and 8 seem especially related to your question. I live in WA and the guarantee seems similar but with different limits.
 
pb4uski said:
Generally yes, the interest withdrawn is taxable.

If the annuity is in a tax-deferred account like a tIRA and the withdrawal stays in the tax-deferred account then it would not be taxable. Similarly, if the annuity is in a Roth IRA then interest withdrawn would not be taxable if you're over 59-1/2 or meet other criteria.

The other thing to remember about annuities is that other than life contingent payouts, withdrawals from annuities are interest first and principal second.
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Bolded by me - interesting. I was told by Fidelity that if one takes out the 10%, and repackages it as a 1035 transaction into another MYGA, then it is prorated between principal and interest.
Perhaps if the withdrawal is not repackaged, then it is interest first, then principal.
 
CD rates are still too low relative to treasuries. Corporate bonds yields are also too low. When the 2,5,10, and 30 all break through 3%, a new wave of liquidation of bond funds will be triggered. Get ready to back up the truck later this year as tax loss selling will result in yields not seen since March 2020 during the last round of panic selling. I'm only looking at 2-5 year durations now and still see no bargains but yields are moving in the right direction. If I can lock in 8-10% YTM on 2-3 year notes like I did in March 2020, I will be more than happy with that.
 
Dtail said:
Bolded by me - interesting. I was told by Fidelity that if one takes out the 10%, and repackages it as a 1035 transaction into another MYGA, then it is prorated between principal and interest.
Perhaps if the withdrawal is not repackaged, then it is interest first, then principal.
Click to expand...

I sounds like what they are saying is if you withdraw 10% free and roll the proceeds into another annuity through a 1035 exchange then the principal/interest basis follows the money that is 1035 exchanged... that seems to make sense.

I was talking about real withdrawals where the money leaves an annuity and goes to an individual (for example, to your taxable bank account).
 
Am waiting for 4-5% 5 yr brokered CD's soon. June? July?
2.9% now. Credit unions are slow to follow, 2.5% at Pen Fed. is in the lead.
At this time.
Raising rate environments historically last 2-3 years. Will see how it goes....
Am curious if we will see normal rates going forward? Or more of the artificial stuff?
After the hikes....
 
pb4uski said:
I sounds like what they are saying is if you withdraw 10% free and roll the proceeds into another annuity through a 1035 exchange then the principal/interest basis follows the money that is 1035 exchanged... that seems to make sense.

I was talking about real withdrawals where the money leaves an annuity and goes to an individual (for example, to your taxable bank account).
Click to expand...

Yes agree on both points.
 
Freedom56 said:
CD rates are still too low relative to treasuries. Corporate bonds yields are also too low. When the 2,5,10, and 30 all break through 3%, a new wave of liquidation of bond funds will be triggered. Get ready to back up the truck later this year as tax loss selling will result in yields not seen since March 2020 during the last round of panic selling. I'm only looking at 2-5 year durations now and still see no bargains but yields are moving in the right direction. If I can lock in 8-10% YTM on 2-3 year notes like I did in March 2020, I will be more than happy with that.
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Freedom56,

I share your view on rate picture. Can you elaborate on 8-10 pct YTM on 2-3 yr notes?
 
1.923% on today's 12 month T bill auction. Good start to moving cash from banks to treasury ladder.
 
Montecfo said:
Freedom56,

I share your view on rate picture. Can you elaborate on 8-10 pct YTM on 2-3 yr notes?
Click to expand...

When bond funds are forced to liquidate holdings during market selloffs they sometimes sell at steep losses and since it's other peoples money, the people or BOTs managing the funds don't care. Here is an example:

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C642369

A 2025 note with a 5.75% coupon from Ally financial sold down to 82 cents on the dollar during the last big sell-off. It could and probably will sell off down to the low 90's at some point this year and investors like me will be buying and getting a nice 9%+ YTM on a short term note with a very low risk of default.

Here are some more examples:

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C641381

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C641381

Many of the notes I bought in March 2020 at steep discounts have matured of have been called early. I have a long shopping list of corporate notes that I will buy when the bond market really starts to panic.
 
Oh, Ok…..when you said 2-3 yr notes, i was thinking treasuries.
 
Dtail said:
Bolded by me - interesting. I was told by Fidelity that if one takes out the 10%, and repackages it as a 1035 transaction into another MYGA, then it is prorated between principal and interest.
Perhaps if the withdrawal is not repackaged, then it is interest first, then principal.
Click to expand...

Exactly, but one normally does that at the end of the term as opposed to annually. MYGA to MYGA transfers are not taxed until the funds are taken out then it is processed as LIFO, "Last in First Out". (Assuming not in a qualified account and the owner is not currently 72, and not subject to RMDs)
 
Fidelity now offers a 4 yr call protected Brokered CD for 3.05% from Live Oak Bank.
 
So Marcus just raised the money market rate base to 0.6% if you add the referral bonus in the AARP bonus you get an effective 1.2% able to withdraw any time not bad better than buying a T-bill for short term.
 
I don’t have the link in front of me but Marcus gives you an additional 0.1% for 18 months you just need to enter in your AARP membership number and fill out a form I think you can search on it.
 
T-Mobile Money has a 1% Checking account and a 1% Savings account. You don't have to be a T-Mobile customer. It's FDIC insured. The compromise is that you cannot have a joint account or a beneficiary.

This is associated with Customers Bank, a real brick and mortar bank in a few states.

We've had the checking and savings for a while and I've been very happy with it. The sign up was easy and I transfer in and out all the time.


https://join.t-mobilemoney.com/customertype
 
ShokWaveRider said:
Exactly, but one normally does that at the end of the term as opposed to annually. MYGA to MYGA transfers are not taxed until the funds are taken out then it is processed as LIFO, "Last in First Out". (Assuming not in a qualified account and the owner is not currently 72, and not subject to RMDs)
Click to expand...

True, but my mom has 2 current MYGA's with yields under 2%, so will take the 10% each year before maturities which is only 2023 and 2024.
 
Maybe that's "and" not "in". We're getting an extra 0.1% interest because we are AARP members, so 0.7% for us, no referral bonuses. bonusus. bonia?
 
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