QROC annuity?

[Souschef]

I am sorry, but I cannot find how to start a new thread, but I have a question.
Today my broker was pushing a QROC annuity that she claimed I can move part of my IRA to it, and not have to take RMD's on it.
Has anyone heard of this? When I hear annuity, I tend to run the other way.

 

[REWahoo]

Looks like a mod moved it to a new thread for you.

 

[braumeister]

Maybe you mean QLAC?

Why A QLAC In An IRA Is A Terrible Way To Defer The Required Minimum Distribution (RMD) Obligation

 

[nun]

Do you need a deferred annuity. You have pensions a SS and a 2% withdrawal rate.

You should not buy a QLAC just to defer RMDs, you should buy one if you want some longevity insurance and only then if the QLAC is a good deal. I fear that if your broker is pushing a QLAC it will be expensive and a better deal for them than you and the RMD deferral is mostly a gimmick to sell you a bad annuity. I would understand the fees and effective IRR before doing anything,

 

[Koolau]

Don't know your situation, but there are other ways to "manage" RMDs - especially if you have some time. For instance, converting your tIRAs to Roths can be a useful tool, especially if your tax situation is amenable. We went this route and have been happy with the results. Just took my first RMD and it's not quite as painful as I thought it would be. Actually, we needed the money to refund our cash bucket for the year. Since it was in the "plan", it has not caused too much heartburn. I continue to explore options to control future RMDs.

Using a vehicle that has fees may just exacerbate your situation. You WILL eventually pay those taxes and the fees (up front and hidden) will be a drag on your stash (whether you live to 101 and need it yourself or kick at 75 and leave it to others.)

I have sat through half a dozen "free-meal" seminars on annuities of one kind or another. I could never understand how they worked - especially what fees I would actually have to pay - so I have steered clear of them. I would be extremely careful of doing what your 'financial advisor' is suggesting. One thing is certain, SHE will do quite well if you participate.

 

[Souschef]

I would like to thank all of you who posted on this subject. There was NO WAY I was going to invest in this vehicle. I just wanted to understand what it was.
As far as Roth conversions, I believe you are limited to $5 K a year after retirement It would take 20 years to convert $100 K
I will just keep paying my RMD's as I go.

 

[braumeister]

As far as Roth conversions, I believe you are limited to $5 K a year after retirement It would take 20 years to convert $100 K

No, you're confusing Roth contributions with conversions. You can convert as much as you like, as long as you're comfortable paying the taxes on it.

 

[nun]

At age 53 I took $280k from a defined contribution plan and bought into my employer's COLAed defined benefit pension which just started at age 55. That will reduce my RMDs at age 70.5......of course I'm paying the tax on the pension payout now.

 

[RobLJ]

I don't think a QLAC is necessarily as bad an idea as other posters, although not to avoid RMDs. I would consider a deferred annuity in the future, although given low interest rates, I would prefer to wait until interest rate "normalization"--although abby-normal rates could continue ad-infinitum.
The other criticism is that not a whole lot of companies are offering QLACS, so it's not as competitive as for example buying an annuity from Vanguard or Fidelity. That could change over the next 5-7 years (or not).

Since most of our retirement savings are in 401k/403b, I would go this route to buy an deferred annuity rather than drawing down taxable accounts, but see the issues above.
(Edit--and look at the fees/costs, as Nun above posted, now that I read the thread.)

I am sorry, but I cannot find how to start a new thread, but I have a question.
Today my broker was pushing a QROC annuity that she claimed I can move part of my IRA to it, and not have to take RMD's on it.
Has anyone heard of this? When I hear annuity, I tend to run the other way.