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Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 7:19 pm
by zetsui
I typed up long posts twice but they got deleted?
TLDR
Father has a Jackson life annuities. Both in Rev II Jackson Life around 300k. Physician. He I fear was targeted by a someone who I am sure preys on ethnic communities like my father’s as an ‘advisor’ (seems all too common reading a forum like bogleheads). Anyways, my father, with [expletive removed by admin LadyGeek] near no financial literacy, signed another 7 year commitment last year. Account has high fees, and probably a broker fee attached to it. He met this ‘advisor’ through his work.

And I wonder if his boss gets a cut from this as my father swears he cannot roll his IRA from his current employer without getting [(removed)] from his boss, to me this doesn’t sound right, but who knows, maybe it’s a policy?

problems: #1 my father’s ego. He also didn’t keep track or documentation of what [(removed)] he signed, didn’t consult anyone with financial literacy including family members before doing this.



My plan of action:
I want to 1. Roll over into a vanguard ira 2. Want ot avoid surrender fees for the first two years in case a very likely recession continues.

My question is, is there a way to transfer to Vnaguard without the surrender fees? From what I understand I should be able to roll over the ira without triggering a fee, as the basket, the IRA is mine and mine alone? I can’t find his original contract, so it’s difficult for me to understand this, on top of variable rate annuities being compolex, but with Jackson what is the typical route for rollovers and consequences? How should I approach the surrender fees, he is getting ripped off really hard right now. His other assets include three rental properties two of which are around 600k. He has a salary of 300k right now as a physician.

It's also confusing what the holdings for the perspective II are and how well they would hold in a recession? I am guessing not well, which almost makes me want to surrender them sooner than later.

He has a double bypass years ago but has been doing well since then.

My dad has an ego, and I’ve tried to suppress mine while we discuss this, but for my little brother’s (med school) and mom’s financial future, I want to help him. He has a VERY big ego, and I think it hurts him that others, maybe at work, will wonder how he is doing because his boss/him/his ‘advisor’ are from a very tight knit ethnic community. But he is getting ripped off and I am trying to get him out of this mess. I know one can say its ‘his money’ but he’s still my father.

To date his larger account:
PERSPECTIVE II REV.
CONTRACT VALUE
$258,129.48
SURRENDER VALUE
$239,566.72
DEATH BENEFIT
258,129.4
Ends in 2025

started at 274 (2012), at 353(Right now).

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 7:40 pm
by zetsui
One thing I forgot to ask...is there any value of calling vanguard and asking them about my situation? Like what value do they offer in a situation like this, do they charge fees, etc?

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 7:57 pm
by Dottie57
Maybe this is what he has.

https://www.jackson.com/annuities/varia ... osure.html

You really need the contact he signed. The product is sold via contract which is what is legally binding.

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 8:12 pm
by alex_686
Contacting Vanguard is probably not a good first step.

Vanguard keeps its price low by offering bare bones customer service. They are not sales people.

Next, whoever you talk to is bound by confidential rules. So if you direct them to talk to your dad they can’t report back.

What you need to do is figure out how to talk to your father. Then you probably need to hire a hourly CFP.

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 8:16 pm
by clip651
If your father isn't looking for help, and isn't willing to cooperate, I don't think there's much you can do. You don't have any standing with the annuity company to even make any inquiries unless your father gives you that permission for his account.

While I (truly) understand your frustration with this type of investment product and the associated fees, bringing that frustration into conversations with your father is unlikely to be helpful.

If he's looking for help, as Dottie mentioned, first step is to figure out exactly what he signed up for, and what the terms and conditions are, including any terms for cancellation. Your father should also think about why he picked this product, and whether it suits his purposes (for instance, perhaps he is planning to annuitize it for income, vs. using it as a vehicle to park money for now, etc).

My parent was sold a different type of Jackson annuity, and wanted help to extricate the funds. Due to the timing and surrender fees, we ended up having them take the annual limit of "free" withdrawals (10% in my parent's case) so that we could reinvest that appropriately elsewhere, and then when the surrender fees were low or zero several years later, cashed the rest of it in. No idea if this would be helpful in your father's situation, it's just an example that even when one wants to get out, it can take several years of patience to do so.

best wishes,
cj

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 8:18 pm
by 000
Giving unsolicited advice to parents usually does not work out. Unless your father is legally incompetent, you may want to let sleeping dogs lie.

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 8:29 pm
by pkcrafter
zetsui wrote: Sun Aug 30, 2020 7:19 pm I typed up long posts twice but they got deleted?
TLDR
Father has a Jackson life annuities. Both in Rev II Jackson Life around 300k. Physician. He I fear was targeted by a someone who I am sure preys on ethnic communities like my father’s as an ‘advisor’ (seems all too common reading a forum like bogleheads). Anyways, my father, with [expletive removed by admin LadyGeek] near no financial literacy, signed another 7 year commitment last year. Account has high fees, and probably a broker fee attached to it. He met this ‘advisor’ through his work.

Typical.

And I wonder if his boss gets a cut from this as my father swears he cannot roll his IRA from his current employer without getting [(removed)] from his boss, to me this doesn’t sound right, but who knows, maybe it’s a policy?

An IRA is an Individual Retirement Account. These are not offered through an employer. He may have some other form of company provided account which cannot be moved.


problems: #1 my father’s ego.


Yep, problem #1. You may not be able to help him.


He also didn’t keep track or documentation of what [(removed)] he signed, didn’t consult anyone with financial literacy including family members before doing this.



My plan of action:
I want to 1. Roll over into a vanguard ira 2. Want ot avoid surrender fees for the first two years in case a very likely recession continues.

The real question is: what does your father want to do. Is he willing to let you help him?


My question is, is there a way to transfer to Vnaguard without the surrender fees? From what I understand I should be able to roll over the ira without triggering a fee, as the basket, the IRA is mine and mine alone?

The IRA is in your name? If so, you should be able to move it.


I can’t find his original contract, so it’s difficult for me to understand this, on top of variable rate annuities being compolex, but with Jackson what is the typical route for rollovers and consequences? How should I approach the surrender fees, he is getting ripped off really hard right now. His other assets include three rental properties two of which are around 600k. He has a salary of 300k right now as a physician.

I suggest you re title your post to Physician invested... Click on your post and an edit option will appear on the right. There are several physicians on the forum who can help.

My dad has an ego, and I’ve tried to suppress mine while we discuss this, but for my little brother’s (med school) and mom’s financial future, I want to help him. He has a VERY big ego, and I think it hurts him that others, maybe at work, will wonder how he is doing because his boss/him/his ‘advisor’ are from a very tight knit ethnic community. But he is getting ripped off and I am trying to get him out of this mess. I know one can say its ‘his money’ but he’s still my father.
Paul

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 8:56 pm
by zetsui
yes can assume i have the same control over his account as he does

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 9:13 pm
by sd323232
Your father is right, he cant legally roll over from 401k to ira if he is still working for that company. He needs to separate from his employer and only then he can do roll over.

This is not a financial problem here, its relationship problem. Unfortunately, nothing u can do here. Ur father thinks he is the smartest guy in room, good luck dealing with that kind of mentality, its impossible

Re: Father invested 300k in Jackson Annuities

Posted: Sun Aug 30, 2020 9:52 pm
by pkcrafter
zetsui wrote: Sun Aug 30, 2020 8:56 pm yes can assume i have the same control over his account as he does
? You said your father has a big ego, so how do you have any control over his accounts?

Paul

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 4:43 am
by Stinky
zetsui wrote: Sun Aug 30, 2020 7:19 pm
My plan of action:
I want to 1. Roll over into a vanguard ira 2. Want ot avoid surrender fees for the first two years in case a very likely recession continues.

My question is, is there a way to transfer to Vnaguard without the surrender fees? From what I understand I should be able to roll over the ira without triggering a fee, as the basket, the IRA is mine and mine alone? I can’t find his original contract, so it’s difficult for me to understand this, on top of variable rate annuities being compolex, but with Jackson what is the typical route for rollovers and consequences? How should I approach the surrender fees, he is getting ripped off really hard right now.
Zetsui,

Welcome to the Forum!

From the numbers that you gave, it looks like there is about a 7.2% surrender charge currently on the larger annuity. If his annuity is like most that I am familiar with, there are only two ways to avoid paying a surrender charge: (a) wait until the surrender charge wears off, which may take 5-10 more years, or (b) have the annuitant die, in which case the surrender charge is often waived. The good news is that the surrender charge will fade over time; the bad news is that the contract will continue to pile up high expense charges while it remains in force.

I'm confused as to who is the owner of the IRA. Is your father the owner and you are the beneficiary? If so, I don't believe that you would have any contractual rights as the beneficiary until after your father dies. Therefore, I don't believe that you could move the IRA money to Vanguard without your father's permission.

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 1:17 pm
by zetsui
pkcrafter wrote: Sun Aug 30, 2020 9:52 pm
zetsui wrote: Sun Aug 30, 2020 8:56 pm yes can assume i have the same control over his account as he does
? You said your father has a big ego, so how do you have any control over his accounts?

Paul
because he called the broker (whose name is also on the jackson monthly statement) and said 'all power of the account i give to my son, listen to him and allow him to roll this into a vanguard if he wants"

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 1:20 pm
by zetsui
sd323232 wrote: Sun Aug 30, 2020 9:13 pm Your father is right, he cant legally roll over from 401k to ira if he is still working for that company. He needs to separate from his employer and only then he can do roll over.

This is not a financial problem here, its relationship problem. Unfortunately, nothing u can do here. Ur father thinks he is the smartest guy in room, good luck dealing with that kind of mentality, its impossible
so the annuities are in two rolled over iras...my dad does NOT have a 401k. In fact the IRAs were from his older employer (not the current one)

So I should be able to roll over, no?

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 1:21 pm
by zetsui
Stinky wrote: Mon Aug 31, 2020 4:43 am
zetsui wrote: Sun Aug 30, 2020 7:19 pm
My plan of action:
I want to 1. Roll over into a vanguard ira 2. Want ot avoid surrender fees for the first two years in case a very likely recession continues.

My question is, is there a way to transfer to Vnaguard without the surrender fees? From what I understand I should be able to roll over the ira without triggering a fee, as the basket, the IRA is mine and mine alone? I can’t find his original contract, so it’s difficult for me to understand this, on top of variable rate annuities being compolex, but with Jackson what is the typical route for rollovers and consequences? How should I approach the surrender fees, he is getting ripped off really hard right now.
Zetsui,

Welcome to the Forum!

From the numbers that you gave, it looks like there is about a 7.2% surrender charge currently on the larger annuity. If his annuity is like most that I am familiar with, there are only two ways to avoid paying a surrender charge: (a) wait until the surrender charge wears off, which may take 5-10 more years, or (b) have the annuitant die, in which case the surrender charge is often waived. The good news is that the surrender charge will fade over time; the bad news is that the contract will continue to pile up high expense charges while it remains in force.

I'm confused as to who is the owner of the IRA. Is your father the owner and you are the beneficiary? If so, I don't believe that you would have any contractual rights as the beneficiary until after your father dies. Therefore, I don't believe that you could move the IRA money to Vanguard without your father's permission.
father is the owner and beneficiary and told the broker I have the same control of father's account as father.

So I'm thinking. If I surrender these at 5%. I know have an IRA with 300k. Dad does NOT have current IRA/401k setup with current employer. The IRA should be rollable into a vanguard now, correct? I shouldn't have to worry about dad's current employer

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 1:33 pm
by Kitty Telltales
alex_686 wrote: Sun Aug 30, 2020 8:12 pm Contacting Vanguard is probably not a good first step.

Vanguard keeps its price low by offering bare bones customer service. They are not sales people.
Have to disagree here. After contacting Vanguard’s customer service with concerns about an annuity contract I had with another firm, we did a 3 way call with the other firm. Vanguard’s customer service asked many pertinent questions. Afterwards, the VG representative advised that the contract I already had was better than anything they could offer me. The only alternative was to take it out of the variable annuity contract and roll it over to Vanguard into a regular traditional IRA.

Felt the VG rep was very straight forward and got the information I needed to make my decision. It can’t hurt to talk to them.

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 1:35 pm
by zetsui
who did you call and ask for on the vanguard side specifically?

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 3:54 pm
by Stinky
zetsui wrote: Mon Aug 31, 2020 1:21 pm
father is the owner and beneficiary and told the broker I have the same control of father's account as father.

So I'm thinking. If I surrender these at 5%. I know have an IRA with 300k. Dad does NOT have current IRA/401k setup with current employer. The IRA should be rollable into a vanguard now, correct? I shouldn't have to worry about dad's current employer
Vanguard doesn't sell annuities any more. So if you transfer to Vanguard, you'll be rolling into a regular IRA. (I don't think there's any reason to buy an annuity inside an IRA, so I'm fine with transferring to Vanguard).

I'd suggest that you call Vanguard first, tell them that you have some Jackson National annuities of your fathers' that you'd like to transfer to a Vanguard IRA. They can tell you what steps to follow. I'm not sure if they can reach out to "pull" the money from Jackson, or if you'll need to be in touch with Jackson to "push" the money to VAnguard.

Even though you have rights to your fathers' accounts, I expect that he'll need to be involved in signing some surrender forms for Jackson and some IRA application forms for Vanguard. But I expect that you can do the rest of it.

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 5:44 pm
by zetsui
so updated. called jackson life and got a lot of clarifications. they were suprisingly hepful in clarifying. my initial intuition was to keep one year into the next recession before surrendering, but on reading some of his statements he essentially had the same downside as the general market (ie shrinking principal on the next dip by 25-33% based on 2009) with very little of the upside. My intuition is its better to pay the $19k in surrender fees now and retain any principal he has to be invested into a Vanguard Index Fund, than lose 70k+ on the next recession.

Thoughts?

This is what March looked like

https://imgur.com/a/ZVlf8vs

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 5:51 pm
by clip651
How do you know there will be a dip of a certain percent in the stock market in the next year or few years? Sure could happen, but I sure wouldn't have predicted the current highs, so who knows.

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 5:54 pm
by Helo80
000 wrote: Sun Aug 30, 2020 8:18 pm Giving unsolicited advice to parents usually does not work out. Unless your father is legally incompetent, you may want to let sleeping dogs lie.
+1.

OP -- While you may not agree with what he did with his money, it's his money.

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 7:11 pm
by zetsui
Helo80 wrote: Mon Aug 31, 2020 5:54 pm
000 wrote: Sun Aug 30, 2020 8:18 pm Giving unsolicited advice to parents usually does not work out. Unless your father is legally incompetent, you may want to let sleeping dogs lie.
+1.

OP -- While you may not agree with what he did with his money, it's his money.
I understand people's concerns, but he trusts me on this and his ego is dissapating. He is open to listening

Re: Father invested 300k in Jackson Annuities

Posted: Mon Aug 31, 2020 7:13 pm
by zetsui
clip651 wrote: Mon Aug 31, 2020 5:51 pm How do you know there will be a dip of a certain percent in the stock market in the next year or few years? Sure could happen, but I sure wouldn't have predicted the current highs, so who knows.
I dont, and I feel you on the market timing

BUT

I am 1) a data scientist (stats/CS background from a T10 undergrad) and I've read some neat models. In the next year it's more likely than not

2) I ask becasue the downside would be huge with little upside to stay. This is NOT your index fund, its an annuity, less liquidity. And we can mitigate the difference now with 1 year of 7% market rate return.

its a weird sitaution where i think a small market loss with no potential upside gurantee is WORTH it, no? The fact he has NO LIQUIDITY at nearly 70 years old....doesn't sit well with me.

Truth be todl having this money in a vanguard account, uninvested, and him having the option to invest it in real estate (an investment he knows about and has been succesful with) seems like a better option than continuing in high fee annuities.

Re: Father invested 300k in Jackson Annuities

Posted: Sat Sep 12, 2020 7:48 am
by LadyGeek
The OP has a new question here: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Use that thread to discuss a path forward.