Bogleheads.org

Thank you all, especially Stinky! Stinky, that is brilliant! A couple of initial questions: Should we look into that UBS, or do we need to get in touch with Equitable/Hancock? The information looks very limited on the UBS site, and the original "advisor" is no longer there. Is the smaller annuity worth it, since the death benefit and the contract amount aren't that far apart? Thank you all again! You definitely need to be in touch with Equitable/Hancock. UBS was just acting as a "salesman" for the contracts, and doesn't have the technical knowledge needed to deal with this. Please read the second message I just posted in the last few minutes about the GMDB. I'm sorry that I hadn't noticed that the annuity was in an inhe...

In looking back at the long answer that I posted yesterday, suggesting that the annuity be left in place with a minimal balance so that the death benefit can be eventually corrected, I totally overlooked your mention that the annuity was in an inherited IRA. It would seem to me that at the time of death of the original annuitant (the person from whom you inherited the IRA), a death claim could (or maybe should) have been submitted to the life insurance company. Was a death claim filed with the insurance company at that time? I'm not personally familiar with all of the twists and turns of GMDB riders on variable annuities. But general common sense would indicate to me that a death benefit could have been paid when the original annuitant died...

First-time poster. We currently have some of our retirement accounts at UBS. They are charging us $175 a year per account, and have us in expensive investments. We’re finally taking a look at what’s there, and looking for a smarter approach. The goal is to make this as simple as possible, and reduce unnecessary costs. While we have other financial concerns and assets, we want to clean this mess up first. Especially the annuities, which are a total mystery to us. We’ve included what, we think, is the relevant/available information on the annuities from the UBS website. Husband is 63, wife is 64 (not working). Account 1: Inherited IRA Positions: FAFRX: $24,670 PAUAX: $41,410 Equitable Annuity: $34,200 (Details below) Total: $103,700 Equitabl...

I suspect a lot of retirement savers may not be aware that stable value is underperforming money market or t-bills that can be purchased through brokerage window now. Therefore, I wonder if there should be more awareness of this issue and if companies should consider providing money market options in 401k plans in addition to or in lieu of stable value funds. I was on the 401k committee at my former employer. My employers plan offered both a money market fund and a stable value fund. The stable value fund provider prohibited direct transfers from the money market fund, as I believe is common in most funds. That “equity wash” (any money moving between those two funds had to be invested in equities for a period of time first) prevented the s...

Hi, I wanted to get some advice what are optimal instruments employers can offer savers & for savers to park cash in 401k accounts. I believe in many 401k plans, the employer-provided option only has a stable value fund and no money market funds. Providers of stable value investment options may even require company plans to not provide a competing money market option. According to Vanguard, "Stable value funds benefit from a unique accounting standard that allows contract value accounting as opposed to mark-to-market accounting" - that reminds me of SVB. With the yield curve inverted as it is now, money market funds may provide better returns short-term vs stable value. Are employers better off offering money market options v...

They are the salt of the earth people. The author did an excellent job of double and triple fact checking, but an article cannot convey all of the details regarding their retirement and lives. I do find it interesting the 2 areas of intrigue seems to be the heat and tithing. Tithing is fundamental in their lives. It is not a choice and not a this vs that in their budget. Tithing is supposed to be from the heart and done with joy. That is what they do. They already know what studies show - spending your money on giving and experiences (spending time with family for them) bring the most happiness - not things. As far as the heat, although oil prices have certainly pinched their budget, they were doing this well before heating oil prices went...

HappyPappy wrote: ↑Sat Mar 25, 2023 11:15 am
So basically, as revenue comes into the business, I should have an account that’s a debt representing the income and SE taxes owed. And when I pay estimated taxes I am paying down that debt, right? If done accurately, is the objective to avoid paying back taxes in 2023 for income earned in 2022?

I did setup this kind of debt account for the sales tax that we collect and need to pass on to the county on a quarterly basis.

Also, the final payment for estimated taxes on 2022 income is due in 2023. That payment is an expense for 2023?

Yes, you should be setting up liabilities on your books for all accrual items, including taxes.

Estimated tax payments for 2022 income for should accrued on your 2022 financials.

This is sort of an accounting question I guess. When we make tax payments in March 2023 because we owed the IRS money on income earned in 2022, should I count that as an expense for 2022 or for 2023? Really I'm asking related to a sole proprietorship more than for our personal records. But the question would apply to both. In the case of the business, we underpaid taxes in 2022 so had a relatively large-ish payment to make in 2023. So when I look back at 2022 to see how the business did, I see an over-estimate of the business's net profit. Conversely, when I look at how the business is doing so far in 2023, I see a gaping hole of negative profit :o because we paid a wallop (relatively) in March 2023. Yes, it is an accounting issue question...

So, it is for sleep-at-night reasons mostly in the next decade that I want the life insurance at the end of the life-cyle of the current term policies. I appreciate that others might not wish to pay the commissions etc. that come with this trade-off. Again, thank you so much for taking the scenario seriously, even as I know the potential approach is anathema to virtually everyone on these boards. You’ve received a lot of thoughtful (and pointed) comments on this thread. I hope that they’ve been helpful to you as you continue to firm up your thinking as to how to proceed. At the end of the day, it’s most important that you and your wife can “sleep well at night” with the financial decisions that you make. That’s all that really matters. It ...

I'd sell, take the tax loss, reinvest in the fund that you desire, and move on.

No reason to waste any more time on this (minor) mistake.

Jonezez wrote: ↑Fri Mar 24, 2023 3:11 pm

Stinky wrote: ↑Fri Mar 24, 2023 2:58 pm At a $1,000 annual donation “spend”, I wouldn’t bother with a DAF.

Is opening and/or administering one very burdensome? Honest question.

I do see the point that the "financial" benefit is minimal with such a small donation at < $1000. What is a reasonable amount where the benefits outweight the hassle assuming high marginal tax bracket in a high tax state?

I have a Fidelity DAF.

No particular hassle in opening and administering the account. But Fidelity charges a minimum annual fee of $100, which would be pretty burdensome for your fund. (Their fee is the greater of 0.60% of assets and $100).

At a $1,000 annual donation “spend”, I wouldn’t bother with a DAF.

Thanks for everyone's responses. Through their investment advisor, I asked again what the effect of turning on the income would be. I didn't ask at the specific question level as recommended by and received the following response: "We received the following back from Brighthouse: If they are taking their annual free withdrawal amount in the form of the SWP payment the death benefit will not fall off until the account value reduces to zero (which triggers annuitization). If they define “taking income through the rider” as annuitizing then at that point the death benefit will fall off. Most people will take the annual free withdrawal amount as long as possible in order to keep the death benefit active and then annuitize once the account...

I don’t know if hybrid is the “Boglehead” way to buy a car.

But i have had a 2020 RAV4 hybrid for over 3 years now, and I just love it. Toyota has a lot of experience with hybrids going back to the original Prius, and it shows in this car. We’re averaging 33 mpg in almost exclusively in town driving.

I haven't looked in a for a week or so but my taxable gains are slightly less than $100k. The taxable gain would push me into the 35% tax rate, my state tax in Ma. 5% , and then we have the IRS 10% penalty. I'm thinking a 1035 exchange would be in my best interest until my tax rate is lower. That’s a REALLY stiff tax. Paying $50k in taxes to get out of the annuity now is a real kick in the behind. If you can nudge that tax rate down by 10%, plus save the penalty tax, that will cut your tax bill by $20k. In my book, that’s worth rolling into the Fidelity product and letting it sit for at least 8 years. You can then draw down over a period of years to further stretch out your tax bill, if you’d like. One further thing to mention. Realize tha...

I've been doing lots of reading and digesting alot. How to decide to surrender the annuity or do a 1035 transfer? As exodusNH said upthread, the first thing to do is to learn what your taxable gain is. The insurance company can tell you that. Whether to surrender now or 1035 exchange depends on whether you want to pay income taxes, including the 10% penalty, now, or continue to defer paying taxes by keeping the funds in an annuity. As I’ve stated many times, taxable annuities defer, but do not avoid, taxes. By surrendering now, you’ll be out of the annuity world and can invest the proceeds however you like. But exchanging to another product can avoid the 10% penalty tax, assuming you keep the annuity for at least 8 years. You might also ex...

ttravaille wrote: ↑Thu Mar 23, 2023 1:19 pm Americo. Agent submitted my application 1/27, Americo promising to get review / approval done each week. Still waiting. Does not instill confidence on the WD side. So - I'm going with SBLI instead. Note: My experience with American Equity, Ocean, and SILAC was positive. Americo definitely an outlier - something is wrong.

You’re not the first to report ridiculously long processing delays with Americo.

Sounds like a company to stay away from.

I have a policy with SBLI. The time to issue the policy and service has been just fine.

Tom_T wrote: ↑Thu Mar 23, 2023 8:00 am My health is excellent. I exercise and I don't take any medications.…….

- Medicare Advantage from Blue Cross will cost me 420/year. Max OOP is 6700. Annual medical deductible is zero. I live in NJ, there are plenty of doctors around, and all my doctors are in this plan. It does include routine dental and eye care……

I feel like I'll end up spending a lot more on Medigap without really needing it, especially prescriptions.

I think that you’re an ideal candidate for Medicare Advantage.

My situation is similar to yours, and I chose MA from my local Blue Cross. I’m very satisfied with my decision.

As an update to prior posts on this thread, I fortunately ended up having a whipple rather than a total pancreatectomy. Unfortunately, this has not made getting additional life insurance any easier since there’s a risk of my remaining pancreas having further issues. After having discussions with a few different agents/advisors, a couple of them independent and one with NW Mutual’s private wealth group, there doesn’t appear to be a path forward on that front within the next couple of years. When presented with the scenario, all companies said it would be a No until 3-5 years have passed since surgery (which medically doesn’t make much sense given my risk increases as time goes on, but that’s a different story). My firm’s open enrollment per...

LVW Advisors, the firm whose founder was quoted in the WSJ, charges a fee of 1% on portfolios of up to $10 million per the firms SEC disclosures.

I’m sure that they’ll do an EXCELLENT job of picking individual stocks.

Is it possible your dad received two checks that total to the amount on the Form 1099-R? Asking the issuer to explain the amounts and to correct, if necessary, the Form 1099-R is the appropriate first step. If you believe it is incorrect and the issuer does not issue a timely corrected Form, read this IRS Tax Tip for guidance: https://www.irs.gov/newsroom/what-to-do-when-a-w-2-or-form-1099-is-missing-or-incorrect#:~:text=Taxpayers%20may%20need%20to%20file,U.S.%20Individual%20Income%20Tax%20Return. No, he only received one check. I actually dealt with Equitable on this in 2022 because my dad is elderly and cannot hear well on the phone. They had my dad verify that I was authorized to act on his behalf. Yesterday and today I explained what t...

Was there a policy loan on the policy? If there was, it would be netted from the gross cash value when the policy is surrendered.

muitu wrote: ↑Wed Mar 22, 2023 10:03 am I understand how a trust works. I understand how life insurance and LTC works. I was unsure if this is a common strategy.

My parent's lawyer worked with them over the past few months to create it - I have absolute faith in them that they chose the most effective and efficient plan. Again, just wanted to know if this is a common strategy.

I doubt that many Bogleheads have used this strategy.

Maybe some of the lawyers who post on this Forum will weigh in on the overall strategy compared to alternatives. (I am not a lawyer).

Bogleheads aren’t generally fans of buying permanent life insurance except in very limited situations. And you’ve given no information that your parents NEED life insurance protection.

Further, most Bogleheads aren’t fans of adding LTC riders to permanent life insurance.

Thst being said, have your parents asked for your help in assessing their purchase? And did they have competent legal advice when they set up the trust?

I’d tread pretty carefully in offering unsolicited advice.

My brother (32) and I (25) just signed as trustees on my parent's (63) trust. I tried to consume as much information as I could but all the legal jargon had my head spinning by the end. Regardless, the strategy that (from what I understood) was purposed was: - Parents use available assets for all retirement expenses (401k, 403b, pension, etc.). - As a replacement for the amount of assets that may be used, a LTC policy was purchased that will grant my brother and I the equivalent of their retirement funds that pays out upon 2nd death. The LTC policy is acting as the source of assets that will be passed down. - My parent's house is also in the trust as well. Is this a common trust strategy or did their financial advisor swindle them with a L...

I know a number of advisors but the one i'm probably the closest with I met a number of years ago. We met at a golf outing through a mutual friend and now we do a number of fundraiser charity events fairly regularly and have a lot of time to talk. we have all sorts of conversations on mutual funds, etfs, stocks, the market, portfolio construction and he's basically like I don't know anything about this product or that. He only really had a wrong super simplified idea of what index investing or "bogleheading" entailed. Never seen a SPIVA report. He just knew he needed clients and these were the products they should be in. His mentor and the managing partner of the firm really only /knew/knows American Funds and he's been doing thi...

I think that nisiprius has an excellent idea.

You can make the individual transfers larger or smaller, and the spacing between transfers shorter or longer, as you see fit.

neilpilot wrote: ↑Wed Mar 22, 2023 1:59 am We must be doing something wrong. We own 2 deeded weeks, not points, with Marriott/Interval at Hilton Head. Bought on secondary market.

While maintenance fees have gone up, we have been able to trade into properties we wanted. Two weeks ago spent a week in SFO, and I’m posting this from Marriott Marbella in Spain. Next week we catch a cheap flight to Mallorca for a week in the Marriott TS there.

Maybe when we can no longer travel we’ll change our tune, but our TS has worked for us. A comparable AB&B or hotel would have cost way more.

Do you have any idea how what you paid compared to what the original buyer paid?

Somebody got “hosed” here. Maybe it just wasn’t you.

NavyIC3 wrote: ↑Tue Mar 21, 2023 3:06 pm I was told this many years ago by a salesman.
"If you can't screw your friends, who can you screw?"

Classic!

I have reviewed the "Required Disclosure Information" document for my plan. I notice the following fees: In-Service Withdrawal Fee: $25 per transaction (does anybody know what this means?) Minimum Required Distribution Fee: $25.00 per distribution year (an automatic $25 fee every year I need to do a required minimum distribution?) Looks like fees I will have to incur once I start withdrawing money. I get a generous match from my employer, which I max out, but I'm hesitant to put more money into the 401(k) for fear of getting fleeced with fees. I'm already 100% in a Target date fund to minimize transactions and the associated fees. Also the document says: "please keep in mind that fees are subject to change". Thank you f...

I’ve been retired from the insurance industry for several years now, but I still keep up with many aspects of the industry. I’ve just seen an annuity “new sales” report for 2022, and MYGA sales are soaring. Sales in the 4th quarter of 2022 were up almost 30% from the third quarter, and were up 217% from the fourth quarter of 2021. Sales for all of 2022 were up 105% from sales for 2021. Evidently, people were really liking the MYGA rates compared to alternatives like CDs. As I’ve mentioned upthread, this may go to explain (but not excuse) why some folks have reported slow processing times on MYGAs. Getting interest rates above 5% seems to have unleashed a torrent of MYGA business. Stinky, with all the new money flowing in at high interest r...

I’ve been retired from the insurance industry for several years now, but I still keep up with many aspects of the industry.

I’ve just seen an annuity “new sales” report for 2022, and MYGA sales are soaring. Sales in the 4th quarter of 2022 were up almost 30% from the third quarter, and were up 217% from the fourth quarter of 2021. Sales for all of 2022 were up 105% from sales for 2021.

Evidently, people were really liking the MYGA rates compared to alternatives like CDs.

As I’ve mentioned upthread, this may go to explain (but not excuse) why some folks have reported slow processing times on MYGAs. Getting interest rates above 5% seems to have unleashed a torrent of MYGA business.

Is there any income rider out there where the death benefit isn’t reduced by withdrawals/income? I don’t think so. I’m pretty sure you got the correct info above. I know Jackson has one, so I suspect there are others. Have your cake and eat it too. Take your withdrawals, and have all of them paid to the beneficiary too. I think that the question of "how much does the death benefit decline when income benefits are received" is of critical importance. And I expect that there is some diversity amongst policy forms and company practices. If the death benefit declines dollar-for-dollar as income benefits are received, I would regard that as "fair". If the death benefit doesn't decline at all (as Chardo mentioned above), that...

Thank you all, and Stinky, for that reply. The way you parsed out the questions about specific scenarios let's me know that I am thinking about this issue correctly now. I will ask the advisors questions that get the answers to these scenarios, but ultimately it seems like my best next step is to contact Brighthouse directly and get answers directly from them, in writing if possible. I assume they will be willing to talk with me and explain the numbers in all scenarios. Regarding the other statements above, I am indeed starting the process of getting away from these "advisors". Yes, contacting Brighthouse directly is what you need to do. The “advisors” are just salespeople, some of whom have very limited knowledge of the nuances ...

Bimmer, you are in a strange situation, and it does not speak well of these products that they are so difficult to parse, even with the advisor who sells them. It is not clear to me exactly how the death benefit interacts with the income based on what you said. If it were me, my next step would be to identify specific factual scenarios and ask them: if mother starts income on her birthday, then if account value drops to $80K due to withdrawals and poor market performance two years later, then she passes away, what is the death benefit? Then repeat the same for dad, then maybe for a few years later, then maybe for 10 years later after the account value is 0, etc. I agree with Petulant that it’s really disappointing that the contracts are no...

As others have said, do nothing now.

Next year, strongly consider filing electronically. You’ll avoid the backlogs that exist with snail mail filing.

Just a few months ago, in November 2022, I decided to invest $200,000 in a MassMutual life insurance contract through Fidelity with a three-year term and a guaranteed return of 4.75% ($9,500 per year). At the end of 2022, I received an annual statement from MassMutual saying my investment had earned $943 in the 5-6 weeks since I purchased the contract. However, I subsequently received a 1099-R form that says I received a gross distribution of $9,422 in 2022. I had thought I would not receive any income until the three-year contract was ended (like a CD), and I do not see this large distribution reflected on my account. As a result, I supposedly owe approximately $2000 in federal income tax. Is this correct? Is this how investments in life ...

Merionman wrote: ↑Mon Mar 20, 2023 9:50 am I do not invest in junk bond funds because I realize the risk involved and choose not to take that risk. I just hope Vanguard will clearly tell shareholders in such funds if they were impacted and to what degree in the narrative of the next report on the fund rather than bury a loss deep in a profit/loss jumble of inscrutable numbers you would need a forensic accountant to untangle and understand.

If you don’t invest in junk bond funds, why do you care about what Vanguard communicates to shareholders of those funds?

White Coat Investor wrote: ↑Mon Mar 20, 2023 9:19 am I find it fascinating that I may be one of the most anti-whole life people on the internet and yet here I am on Bogleheads seemingly defending it.

That’s a really nice explanation of the sales tactic.

I don’t see what you wrote as a defense of the tactic - just a balanced, sober explanation.

I’ve bookmarked this thread for the next time that “Infinite Banking” comes up. And I’m sure that it will.

) Theoretically, since it's worth less and if the bank were to sell it ...could I make a cash offer less than $200K? Maybe I would need to assume the bank was in a liquidity crisis and needed immediate cash for this to be a practical question? Or maybe this would never happen? Sure you could make an offer to pay it off for less than $200k. And they wouldn’t accept it. If they were to offer to buy back individual mortgages for less than full balance, the word would get around. And everyone who is selling their house would pay back their mortgage just before the sale closed. People would actively “select” against the bank, with those who are selling their houses getting a discount on loan repayment and everybody else keeping their 3% mortgag...

I’ll take a minority position in this thread to say they this COULD be a situation where whole life makes sense, as a part of the fixed income allocation in a large, well balanced portfolio. OP has stated a number of interesting characteristics - —- An apparently very high income, with ample free cash flow —- Other tax favored investments have been maxed out —- Residence in a high tax state, which (a) reduces the attractiveness of alternative fixed income investments and (b) makes the income-tax-free nature of the death benefit more appealing —- A stated desire for life insurance coverage Of course, a whole life policy will usually underperform a strategy of buying term life and investing in equities. But might a minimum death benefit/maxim...

Whew certainly a lot to digest but I have a feeling there is a lot more to come. My advisor told me total fees are 5.4%. Maybe it's a scare tactic but I can't find a way to check them myself. -- Do you feel comfortable managing the investments yourself? Not totally. I do have an account through Etrade that I buy a little, but I don't think enough confidence to handle my whole portfolio. He does charge fee based on "assets under control" which is much too high (please dont scold me) and he'll lower to 1% if I put the annuity assets into the brokerage account Wow! The total fees on your variable annuity are 5.4%? That is the most ridiculously high fee that I have ever heard of. You definitely need to be out of that VA. (You probabl...

Thank you Stinky Its a variable annuity No surrender charges, I have held it long enough. He told me he wanted to put the fund into the brokerage account. Unless I miss understood him. Yes. The advisor even though a fiduciary is still human and needs to look out for their own pocket. And I do question his "in your best interest" With that information, let me give you a few comments: --- If you surrender the variable annuity, you'll save the fees. Many variable annuities have base fees of roughly 1%, PLUS fees of roughly 1% on mutual funds that could purchased outside of the VA for almost zero fees, PLUS rider fees (if any). So you could be saving that 2% (or more) annual fee. --- Do you feel comfortable managing the investments y...

Welcome to the Forum!

My one word answer - UGLY!

(Others have already made most all of the points that I would make, so no need to repeat them).

So, I'm on my own out there in looking for one and at the risk of being sincere, I'm not the best in searching for such products; hence, asking the wonderfully, brilliant folks on this site. My suggestion above was to go to immediateannuities.com and blueprintincome.com, input your information, and get some on-line quotes. No obligation to buy anything from them, and no need to talk to them at this stage of the process. (Of course, if you want to talk to them now, you can call during business hours, and I'm sure they'll be happy to help.) When you've gathered your quotes, you can post your information here, including the names of the companies that you have quotes from, and folks can give you their comments. SPIAs are such a simple and com...

Thanks Cruncher for the annuity calculation it was helpful. My initial thoughts are it's a lot of work saving up for that annuity for 20 yrs. It probably works out financially better to do the annuity but a lot of effort to get there. IDK. After all the comments (thank you so much) I'm leaning towards the 100% Jt & Survivor. I think I'm leaving some money on the table as there may be a way via life insurance and/or annuities to get similar (but not exactly the same) coverage for cheaper then the $835 monthly I'm giving up if I went with the 50% Jt & Survivor which kind of bothers me. Why pay more for similar coverage? But in the end it is maybe more trouble and possible pitfalls with an annuity or life insurance product than it's w...

Many thanks to all for your responses and for also not chewing me out! Yes, a SPIA is the type of annuity I would like to purchase. Given we are still dealing with a rollercoaster market and could be for quite a while, I would feel comfortable with 1/3 of my retirement funds in this type of annuity with guaranteed monthly payouts. It's currently invested in a "Flexible Premium Annuity (fixed @ 3%) with Modern Woodmen of America which was purchased back in 2008 , but I haven't drawn any funds, but did rollover funds from an old employer's 401k. Actually, quite glad I did as I watched my 401ks and IRAs drop considerably while this grew at 3%. Since I've owned it for 10+ years there would be no penalties or fees for pulling it out and pu...

Hello all, long time lurker so much to learn. I have a non qualified Annuity my new financial advisor wants me to sell and put the money into a brokerage account because the high fees on the annuity. I am 51.5 yrs old and would like to retire in 10 to 15 years. I understand I have to pay taxes on the gains. My adviser tells me there is no IRS 10% penalty, in which I don't understand why there isn't since everything I read online says there is because I have not reached 59.5 yrs old. My take is my old adviser sold me the annuity and made the commission. Now my new adviser wants a piece of the pie and wants the money in the brokerage account so he makes money on it. I see his point due to the high fees on the annuity I have potential of maki...

WarAdmiral wrote: ↑Sun Mar 19, 2023 8:32 am What i learned about a good policy design:

Policy Design:10/90 split - 10% base premium and 90% PUA (Also includes term rider to increase the MEC limit)

Policy 1
100K per year (10K base, 90K PUA) for 5 years, nothing after. Cancel term rider after year 7.

Do you own such a whole life policy?

If so, that places you within the small sliver of Americans who have $100,000 per year of free cash flow to devote to the product. Presumably, you also live in a high tax state and have maximized all other tax-sheltered opportunities.

Congratulations on what I assume is your financial success.

blimp wrote: ↑Sun Mar 19, 2023 1:41 am I have a separate one for each kid, but as people have mentioned, it probably doesn't matter much. I psychologically like the idea of an account with each child's name on it. Then when they question me as teenager, I can say, "Listen punk. I have been saving for your college education since you were in diapers. Go clean your room."

Same here.

I rather like the psychology angle.