Portfolio and Annuity Help

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Portfolio and Annuity Help

Postby RupertSM » Thu Feb 14, 2013 6:22 pm

Hi all. Thank you in advance for your time and consideration. My father in law (62 yo) is retired, my mother in law (58 yo) works, makes about 75k/yr, but job is not stable. They have the following and was looking for advice with the Variable Annuity, especially as that is the bulk of their assets.

Emergency funds: Three months
Debt: no debt, townhouse paid off. Property taxes, maintenance 10k/yr
Tax Filing Status: Married Joint
Tax Rate: 25% Federal, 6.37% State
State of Residence: NJ
Age: 62 him, 58 her
Current Asset allocation ALL in TAXABLE: $300K split 60% stks/40% bonds*
*account currently at ML/BoA in active managed MFs, not sure which funds*
Desired Asset allocation: 30% stocks / 70% bonds
*I suggested moving account to Vanguard and holding 20% Total Stk Mkt Idx, 10% Total Intl Stk Mkt Idx, 35% Total Bond Idx, 35% Inflation Protected (VIPSX)
Desired International allocation: 33% of stocks
Allianz Variable Annuity $800k, purchased in 1995, held at ML/BoA


As noted, I suggested he transfer his taxable account to Vanguard and allocate as above. The big question is what to do with the VA? Keep where it is or perhaps roll it into an IRA?? ML/BoA rep suggested he exchange the VA into a new annuity. I didnt think that was prudent and would involve a lot of fees especially on a 800k balance. Thanks again for your collective help.
RupertSM
 
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Re: Portfolio and Annuity Help

Postby Dale_G » Thu Feb 14, 2013 6:53 pm

You need to find out more info about this VA. It is probably well past the time when there are any surrender fees, but the on-going expense ratios are probably significant.

If it is a "qualified" annuity (IRA or other tax deferred) it can be rolled into an IRA. If it is a "non-qualified" annuity purchased with after tax money, it can be moved (via 1035 exchange) to a lower cost annuity such as offered by Vanguard.

But the devil is in the details. You need to find out exactly what this annuity is, what riders are in force, and what benefits might be locked in. As a start you can post the exact name that Allianz uses for this annuity.

This is a big chunk of change for your in-laws. Take the time to get it figured out.

Don't Exchange the annuity with the help of a commissioned sales guy at Ml until you are positive that it is the right thing to do!

Dale
Volatility is my friend
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Re: Portfolio and Annuity Help

Postby RupertSM » Thu Feb 14, 2013 9:36 pm

Dale,

Thank you for the initial response. Have asked in laws for more info about the VA and it turns out it is a qualified. Looking into riders involved in contract.

Thanks,
Rupert
RupertSM
 
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Re: Portfolio and Annuity Help

Postby Dale_G » Thu Feb 14, 2013 10:19 pm

Rupert, when you get more info, post again on this thread, it will bump it back up to the top. A bunch of people here are pretty well versed in these things.

Dale
Volatility is my friend
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