401k help please...taking it out...

[DisOrBust]

My MIL turns 59.5 and her finnancial planner has a "deal" that if she sticks her 172,00o in she will get a 900 month annunity for the rest of her life and will not have to pay taxes. Is this true? What if she live to 102?? Or only 61??

Any ideas!!
TIA!
Sue

 

[chrissyk]

My MIL turns 59.5 and her finnancial planner has a "deal" that if she sticks her 172,00o in she will get a 900 month annunity for the rest of her life and will not have to pay taxes. Is this true? What if she live to 102?? Or only 61??

Any ideas!!
TIA!
Sue

Oh please tell her not to do this! Her "financial planner" is only giving him/herself a "deal" here. They love to sell those annuities because they get big, fat commissions off of them. My mother was locked into an annuity INSIDE her 403b by some dirtbag "financial planner". Luckily she had under 30K into it when I figured out what was going on and had her redirect the future contributions. The "financial planner" called her up pretty furious, because he wasn't getting his commissions anymore. DIRTBAG!!

If your MIL feels that she needs a financial planner, please find her a fee-based planner who does not sell products. Honestly a 172K lump sum is not so huge that she couldn't figure out how to invest it for income herself in quite a simple fashion.

 

[DisOrBust]

Thanks! Thats what I thought but I wanted to make sure...anyone with an other experiences....

 

[Dan Murphy]

ANY and ALL distributions from a 401(k) are taxable.

http://www.irs.gov/publications/p575/index.html

(not to be considered financial or tax advice)

 

[jennyl772003]

ANY and ALL distributions from a 401(k) are taxable.

http://www.irs.gov/publications/p575/index.html

(not to be considered financial or tax advice)

Unless it is an IRA annuity. At least I am pretty sure about that. I am just the admin assist.

 

[Dan Murphy]

Unless it is an IRA annuity. At least I am pretty sure about that. I am just the admin assist.

ALL and ANY

Adding.....unless it was from a post-tax contribution, of which there are very few plans or participant which or sho have those.


(not to be considered financial or tax advice)

 

[Simba's Mom]

I'm confused. Are all annuities bad, or just certain ones?

 

[AllyandJack]

My parents are in an account that pays them money....but, it's taxed. It's an account with a 7% rate of return, so they live off the interst, essentially. Recently, an "advisor" told them he could double their monthly payment. Sounds great, right? They get deeper into it and the trick is the principal.....they never get it. Once they both die, the bank keeps the money. My parents decided not to take that option, obviously.

It could be a similar scheme where they get to keep the principal upon the death of the holder. Why would someone want the bank to keep all their money?!?!

 

[DisOrBust]

Thanks again! I had the same questions are all anuities bad??? My gut saysshe takes it out and puts in a CD. My MIL is look for a short cut ALWAYS and I think if she does this she will be sorry and we will hear about it for the rest of her years. Death and taxes....

 

[chrissyk]

Thanks again! I had the same questions are all anuities bad??? My gut saysshe takes it out and puts in a CD. My MIL is look for a short cut ALWAYS and I think if she does this she will be sorry and we will hear about it for the rest of her years. Death and taxes....

Annuities are not ALWAYS bad, but they have a VERY limited time and place. IMHO they are oversold. They are not for someone with only 172K in retirement assets IMHO. That's just my personal opinion, so take it for what it's worth. I agree that she could put it in a CD and then maybe invest it in longer-term treasury bonds when the interest rates get high enough. There is just no reason to lock the money into an annuity, pay fees, give the "financial planner" a fat commission, etc. on such a relatively small sum of retirement money.

 

[Dan Murphy]

I'm confused. Are all annuities bad, or just certain ones?

All are not bad. Some are purchased, or sold, for the wrong reasons or anticipated benefits. In the right situation, they can be great, in the wrong, they can be terrible, same as any investment.

(not to be taken as financial avice)

 

[Simba's Mom]

Thanks so much!