Fido Deferred Fixed Annuity

[SlowMovingInvestor]

blueprintincome.com or immediateannuities.com should be able to help you out.

What are the logistics of buying an annuity through one of these sites ? How you transfer money to the insurance company ? Do you get an account on the insurance company's web site after purchasing the annuity ?

[indexfundfan]

blueprintincome.com or immediateannuities.com should be able to help you out.

What are the logistics of buying an annuity through one of these sites ? How you transfer money to the insurance company ? Do you get an account on the insurance company's web site after purchasing the annuity ?

I'm currently in the process of buying from Blueprint. Blueprint provides a FedEx label for you to send the money (check) directly to the insurance company.

I think most insurers let you set up an online account for you to see your policy. I don't know for sure though since my policy has not been issued yet. Blueprint told me there is a backlog at the insurer.

[SlowMovingInvestor]

blueprintincome.com or immediateannuities.com should be able to help you out.

What are the logistics of buying an annuity through one of these sites ? How you transfer money to the insurance company ? Do you get an account on the insurance company's web site after purchasing the annuity ?

I'm buying from Blueprint. Blueprint provided a FedEx label for you to send the money (check) directly to the insurance company.

I think most insurers let you set up an online account for you to see your policy. I don't know for sure though since my policy has not been issued yet. Blueprint told me there is a backlog at the insurers.

Thanks. How much time do you have to fund ? Also, do insurance companies run a credit check or 'insurance check' ? I suppose since they're getting $$$ from you, they don't really need a major check.

If one buys at Fido, I suppose one can buy direct from one's brokerage account ? it's a shame Fido doesn't have what seems to be the best annuity deal right now -- National at 2.40% for 3 year.

[indexfundfan]

Thanks. How much time do you have to fund ? Also, do insurance companies run a credit check or 'insurance check' ? I suppose since they're getting $$$ from you, they don't really need a major check.

If one buys at Fido, I suppose one can buy direct from one's brokerage account ? it's a shame Fido doesn't have what seems to be the best annuity deal right now -- National at 2.40% for 3 year.

I think you have 30 days to fund. But obviously the rate will only be locked and policy issued if the insurer receives the money. I don't believe they run a consumer report. But Blueprint does want to make sure you are aware of the early surrender penalties.

Don't know about Fido, but I did ask TDA. They said they only sell MYGAs from insurers rated AM Best A+ and A++.

[SlowMovingInvestor]

Don't know about Fido, but I did ask TDA. They said they only sell MYGAs from insurers rated AM Best A+ and A++.

I'm looking at National, which is A+. I can ask TDA or Fido, but I'm reluctant to do so, because I might get a lot of calls from their annuity sales department trying to sell me annuities I'm not interested in

[AlwaysaQ]

You can look at annuity information at Fidelity without logging on.

[indexfundfan]

Don't know about Fido, but I did ask TDA. They said they only sell MYGAs from insurers rated AM Best A+ and A++.

I'm looking at National, which is A+. I can ask TDA or Fido, but I'm reluctant to do so, because I might get a lot of calls from their annuity sales department trying to sell me annuities I'm not interested in

I emailed TDA. They only replied to the questions I asked. So far no further solicitations.

[hudson]

I looked at Fidelity Guaranteed Rates for Deferred Fixed Annuities for my state.
The highest rate for a Jumbo was 1.8% as of July 1st....The Principal Insurance Company....
I don't know if this link will work without logging in: https://www.fidelity.com/annuities/defe ... es/compare

[indexfundfan]

Use this link to see the MYGAs offered by Fidelity that are available in your state

https://fundresearch.fidelity.com/annui ... refann=001

The rates are not as good as those that you can get from Blueprint since Blueprint also offers insurers with lower AM Best ratings.

[khart23]

Having been with Fido as an advisor for years I can corroborate the 10% liquidity, waiver of redemption charge for inheritor and tax-deferred speaking points mentioned. Having discussed that, MYGAS give you some extra birth risk-wise (as an example even AIG MYGAS didn’t default in 2008). Outside of the 10% they provide as a “loophole” to access without penalty there is very little upside to them in retirement accounts. Did you consider the managed bond SMAs? They offer something like a .3% Management fee with individual bonds you would be the owner of and short-term arbitrage that they can use to sell bonds near maturity to short-term bond-funds at a premium where applicable due to the institutional management. Just a consideration in the big picture?

Also, unfortunately Fido doesn’t allow advisors to touch taxes with a ten foot pole (there can’t be true financial advice without it) but that $ could have been perfect for strategic Roth conversions as an aspirational/legacy bucket and better protect them from the SECURE Act inherited IRA tax impacts along with the 2026 TCJA tax sun setting. This was a potentially major missed opportunity for your planning due to their approach unfortunately Hence why I moved onto starting an RIA and acting as a fiduciary not a sales rep

[tj]

They offer something like a .3% Management fee with individual bonds you would be the owner of and short-term arbitrage that they can use to sell bonds near maturity to short-term bond-funds at a premium where applicable due to the institutional management. Just a consideration in the big picture?

Can you expand on that please? I don't recall anyone sharing such a strategy before.

[capjak]

tj:

In my IRA:
I own Fidelity Separate Managed Account (Core Bond). The minimum buy in is 350,000 and they manage individual bonds in your account. They charge .4% for this. You own the individual bonds and if you stop the service than it yours to deal with selling etc..

I also called the bond desk and had them recommend bonds for purchase (350K) at a cost of $1 per $1,000 in individual bonds and currently expect to hold these to maturity.

In addition I purchased BND.

All approximately 1 month ago.

They all seem to be performing almost identical % price appreciation (1.32%-1.46% 1st 30 days)

[SlowMovingInvestor]

Does it matter which annuity site you use (among the reputable ones) to purchase a MYGA ? Blueprint or Stan the Annuity man or ... ?

Once your annuity is setup, I presume you have no further relationship with the annuity site, but deal directly with the insurance company ?

[Stinky]

Does it matter which annuity site you use (among the reputable ones) to purchase a MYGA ? Blueprint or Stan the Annuity man or ... ?

Once your annuity is setup, I presume you have no further relationship with the annuity site, but deal directly with the insurance company ?

All of the annuity sites can get you the same rates. There may be different lineups of companies and products between sites.

I expect that the insurance company will be the primary contact after sale. However, I would expect that the marketing company will make you aware of new product offerings, trying to turn you into a repeat customer.

[SlowMovingInvestor]

I noticed that Midland National Life Insurance Company, which is available at Schwab, has the same rate as North American Life (which I was looking at previously). Furthermore they have the same parent company, same credit rating etc.

Can I assume that these are essentially the same annuity branded differently ?

[Stinky]

I noticed that Midland National Life Insurance Company, which is available at Schwab, has the same rate as North American Life (which I was looking at previously). Furthermore they have the same parent company, same credit rating etc.

Can I assume that these are essentially the same annuity branded differently ?

Yes, those two companies have the same parent company and have similar financial strength, which is why they have the same ratings. I believe that they also share back office functions like policy administration and product development.

The two annuities you’re looking at are probably the same product, just offered by different companies. However, I’d carefully check out the two products side by side. Pay special attention to the credited rate itself, how long it is guaranteed for, and the surrender charge schedule.

[Nate79]

I noticed that Midland National Life Insurance Company, which is available at Schwab, has the same rate as North American Life (which I was looking at previously). Furthermore they have the same parent company, same credit rating etc.

Can I assume that these are essentially the same annuity branded differently ?

I was not aware Schwab offered fixed annuities. Where do you get access to these products?

[SlowMovingInvestor]

I noticed that Midland National Life Insurance Company, which is available at Schwab, has the same rate as North American Life (which I was looking at previously). Furthermore they have the same parent company, same credit rating etc.

Can I assume that these are essentially the same annuity branded differently ?

I was not aware Schwab offered fixed annuities. Where do you get access to these products?

See this
https://www.schwab.com/public/schwab/in ... rates.html

[rich126]

Annuities, especially variable ones, have their issues but I think someone who bought one a few years ago with a higher payout than now, it probably sitting pretty for the next 5 years with the likelihood of poor market returns, near zero or lower fixed income rates and a world of problems.

The interest rate worries here I can understand but I can recall when people were excited for a mortgage rate under 9% and how bad variable rates were. And yet most of the last 25+ years, rates just keep dropping. Will they go up again, sure. In the next 5, 10, 20 years? No guarantee of that.

Just think of those that scoffed at locking up money in low CD rates of 3-4% not long ago and now you are looking at 1.5% or less in many cases.

[SevenBridgesRoad]

I know we hate Annuities...

As a Boglehead Forum culture, are we ready to move beyond opening statements like this? It seems as if anyone daring to mention annuities feels obligated to duck and grovel. This thread is a great example. Folks are learning something new here. Why should anyone feel they have to open with such a statement? (I understand why you did, Aruba Joe. I've seen the knee jerk responses when folks mention annuities.)

[SlowMovingInvestor]

Any gotchas I should look at when deciding which annuity to purchase ? So far I think these items are what I need to look at

1) AM Best and Credit rating of Insurer
2) Rate
3) Surrender Charges
4) Any extra benefits in the annuity (likely not too meaningful)

Anything else ?

[Stinky]

Any gotchas I should look at when deciding which annuity to purchase ? So far I think these items are what I need to look at

1) AM Best and Credit rating of Insurer
2) Rate
3) Surrender Charges
4) Any extra benefits in the annuity (likely not too meaningful)

Anything else ?

Not only the rate, but also the term of the MYGA. I expect that your rate will go up as the term goes longer.

Otherwise your points are fine.

[hudson]

Any gotchas I should look at when deciding which annuity to purchase ? So far I think these items are what I need to look at

1) AM Best and Credit rating of Insurer
2) Rate
3) Surrender Charges
4) Any extra benefits in the annuity (likely not too meaningful)

Anything else ?

Understand your state guaranty association and its limitations
Are the state guaranty associations backed up by the states? I don't think so.

https://www.immediateannuities.com/stat ... ociations/

[indexfundfan]

Any gotchas I should look at when deciding which annuity to purchase ? So far I think these items are what I need to look at

1) AM Best and Credit rating of Insurer
2) Rate
3) Surrender Charges
4) Any extra benefits in the annuity (likely not too meaningful)

Anything else ?

I would also check that the rate quoted includes the "death benefit" (beneficiary can surrender policy without surrender fees). Some insurers do not include the death benefit automatically and the benefit is available for purchase as a rider.

[khart23]

They offer something like a .3% Management fee with individual bonds you would be the owner of and short-term arbitrage that they can use to sell bonds near maturity to short-term bond-funds at a premium where applicable due to the institutional management. Just a consideration in the big picture?

Can you expand on that please? I don't recall anyone sharing such a strategy before.

@tj sorry I hadn’t realized you responded. Here’s the link, they are 0.35-0.4%

https://www.fidelity.com/managed-accoun ... s/overview

Core bond
Municipal Bond
Breckinridge

[SlowMovingInvestor]

My state's insurance guaranty association says

With respect to any one insured individual, regardless of the number of policies or contracts, the Association will pay not
more than $500,000 in life insurance death benefits and present value annuity benefits, including net cash surrender and net
cash withdrawal values. Within this overall limit, the Association will not pay more than $100,000 in cash surrender values for
annuity benefits, $500,000 in life insurance death benefits or $500,000 in present value of annuities – again no matter how
many policies and contracts that were with the same company, and no matter how many different types of coverages.

The rest seems straightforward, but I'm not sure I understand what 'cash surrender value' means for a deferred fixed annuity. Is the coverage 500K for a MYGA or 100K ?

Oh. and the annuity I was looking at was cited today by Barron's as the best MYGA. I am not sure if I should take that as a positive or a negative

[Stinky]

My state's insurance guaranty association says

With respect to any one insured individual, regardless of the number of policies or contracts, the Association will pay not
more than $500,000 in life insurance death benefits and present value annuity benefits, including net cash surrender and net
cash withdrawal values. Within this overall limit, the Association will not pay more than $100,000 in cash surrender values for
annuity benefits, $500,000 in life insurance death benefits or $500,000 in present value of annuities – again no matter how
many policies and contracts that were with the same company, and no matter how many different types of coverages.

The rest seems straightforward, but I'm not sure I understand what 'cash surrender value' means for a deferred fixed annuity. Is the coverage 500K for a MYGA or 100K ?

Oh. and the annuity I was looking at was cited today by Barron's as the best MYGA. I am not sure if I should take that as a positive or a negative

For a MYGA in your state, the limit would be $100k. That would be a cash surrender.

If you owned a SPIA, you would be covered for up to $500k present value of benefits; that is, the purchase price today for the future benefits provided by the SPIA.

Glad to hear that Barron’s likes your MYGA.

[SlowMovingInvestor]

For a MYGA in your state, the limit would be $100k. That would be a cash surrender.

If you owned a SPIA, you would be covered for up to $500k present value of benefits; that is, the purchase price today for the future benefits provided by the SPIA.

Glad to hear that Barron’s likes your MYGA.

Thanks ! This would be an argument for splitting annuity purchases across providers the same way one does with CDs (but with a lower limit than for CDs).

So any annuity offered by Sammons (whether branded as North American or Midland) would count towards the 100K limit (i.e. you can't get double the coverage by buying annuities with different brands from the same provider) ?

[Stinky]

So any annuity offered by Sammons (whether branded as North American or Midland) would count towards the 100K limit (i.e. you can't get double the coverage by buying annuities with different brands from the same provider) ?

No. Different legal entities, so separate treatment. Parent is irrelevant (in this case).

You could buy $100k from each company and be covered.

[BlackcatCA]

I want to thank everyone for the information about MYGA, which I would have never learned about if not for this forum. I appreciate learning the pros and cons from discussions in these threads. Thank you in advance for the wisdom on questions below.

I am looking for something to replace a bunch of CDs maturing in Dec and early next year, in taxable account. The rates for 3-5 years are pretty good now, and the tax deferred feature is nice too. But are the rates going to drop quickly like we see in CD rates? I am wondering if i should break CDs to buy MYGA now, versus waiting 6-9 months and miss the options.

I also read in another thread that filing taxes (in taxable account) for MYGA will be a nightmare. Current plan is to keep rolling them into new ones until retirement, so maybe that is not a concern then? Is there reporting requirement when the roll over happens (form 1035?)

Finally, can MYGA be owned in a joint account? If so, if one of the owners is over 59.5 when the term comes due, can it avoid the 10% penalty?

[Stinky]

I am looking for something to replace a bunch of CDs maturing in Dec and early next year, in taxable account. The rates for 3-5 years are pretty good now, and the tax deferred feature is nice too. But are the rates going to drop quickly like we see in CD rates? I am wondering if i should break CDs to buy MYGA now, versus waiting 6-9 months and miss the options.

I also read in another thread that filing taxes (in taxable account) for MYGA will be a nightmare. Current plan is to keep rolling them into new ones until retirement, so maybe that is not a concern then? Is there reporting requirement when the roll over happens (form 1035?)

Finally, can MYGA be owned in a joint account? If so, if one of the owners is over 59.5 when the term comes due, can it avoid the 10% penalty?

As to the rates that MYGAs might pay in the future - who knows? I expect that rates will continue to drop. Insurers reset the interest rates on these products on a regular cycle, taking into account the expected earnings on assets that will match the liabilities they will write. You can click on the “rates changing soon” feature on Blueprint to see that North American, AIG, and Principal have recently announced rate reductions. I’d suggest that you check back on the Blueprint site frequently, maybe at least twice a week, to watch for rate drops. Also be ready to know which CDs you’d cash in if you want to pull the trigger.

I wouldn’t say that MYGA taxes are a “nightmare”. However, you will have taxable income whenever you pull the income out. I believe that the income will be reported to you on a Form 1099. The “1035 exchange” is what happens when you do a tax free exchange of one product for another - in this case, one MYGA for another. The insurance companies will handle all of that.

I believe that you can own MYGAs in a taxable account. However, there can only be one “annuitant” on any contract, and I believe that person’s age will govern the 59.5 year threshold.

Please post back or PM me with any more questions.

[indexfundfan]

I want to thank everyone for the information about MYGA, which I would have never learned about if not for this forum. I appreciate learning the pros and cons from discussions in these threads. Thank you in advance for the wisdom on questions below.

I am looking for something to replace a bunch of CDs maturing in Dec and early next year, in taxable account. The rates for 3-5 years are pretty good now, and the tax deferred feature is nice too. But are the rates going to drop quickly like we see in CD rates? I am wondering if i should break CDs to buy MYGA now, versus waiting 6-9 months and miss the options.

I also read in another thread that filing taxes (in taxable account) for MYGA will be a nightmare. Current plan is to keep rolling them into new ones until retirement, so maybe that is not a concern then? Is there reporting requirement when the roll over happens (form 1035?)

Finally, can MYGA be owned in a joint account? If so, if one of the owners is over 59.5 when the term comes due, can it avoid the 10% penalty?

MYGA rates have dropped some, but I think the drops would be less severe compared to CDs. I also have CDs coming due next year, but I don't intend to break them, especially considering the CD early withdrawal penalties.

As Stinky mentioned, there is no tax reporting unless a MYGA has matured or you do an early withdrawal. In this respect, during the period before maturity, there is less reporting for MYGAs compared to CDs (a 1099-INT is issued each year for each CD, regardless of whether the CD has matured or not).

I think for a MYGA, it is better to add your spouse as a beneficiary, rather than relying on joint ownership. See

https://www.kitces.com/blog/joint-owner ... ligations/

[BlackcatCA]

Thanks for the replies, Stinky and Indexfundfan. I will likely read and learn for a few more weeks while monitoring the rates in Blueprint. I will probably not break the CDs at this time. Many things can happen in the market before the CDs are due.

Does Blueprint essentially function like a “brokerage” for MYGAs? It asks to set up an account, and presumably one can then ACH funds into it to buy MYGAs from different insurance companies? This appears similar to buying t-bills in Vanguard and the tax handling is also similar (i.e. only taxable event is when the contract matures).

[Stinky]

Thanks for the replies, Stinky and Indexfundfan. I will likely read and learn for a few more weeks while monitoring the rates in Blueprint. I will probably not break the CDs at this time. Many things can happen in the market before the CDs are due.

Does Blueprint essentially function like a “brokerage” for MYGAs? It asks to set up an account, and presumably one can then ACH funds into it to buy MYGAs from different insurance companies? This appears similar to buying t-bills in Vanguard and the tax handling is also similar (i.e. only taxable event is when the contract matures).

Look at this from the Blueprint website. It walks you through the buying process.

https://public-static-content.blueprint ... _Guide.pdf

[indexfundfan]

Does Blueprint essentially function like a “brokerage” for MYGAs? It asks to set up an account, and presumably one can then ACH funds into it to buy MYGAs from different insurance companies? This appears similar to buying t-bills in Vanguard and the tax handling is also similar (i.e. only taxable event is when the contract matures).

Blueprint submits the application for you. Setting up an account let's you input information which Blueprint then enters into the MYGA application that you are interested in. Blueprint will reuse the information if you subsequently purchase another MYGA. so you don't have to re-enter all the information.

At no point does Blueprint handle your money -- if you are paying by check, Blueprint provides you with a Fedex label to mail your check directly to the insurer.