Father in law died, what did he have? (MetLife Annuity)

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letsgobobby
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Father in law died, what did he have? (MetLife Annuity)

Post by letsgobobby » Sat Feb 09, 2019 5:06 pm

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HEDGEFUNDIE
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by HEDGEFUNDIE » Sat Feb 09, 2019 7:08 pm

She’ll probably get a check for $195k but she’ll probably have to pay taxes on it as income.

Globalviewer58
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by Globalviewer58 » Sat Feb 09, 2019 7:45 pm

Is a 5 year payout option available for the MIL? This could reduce total taxes paid.

mbres60
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by mbres60 » Sat Feb 09, 2019 7:48 pm

I agree that she will probably get a check and she will probably have to pay taxes. The TSP is the 401k if you are a federal government worker (or military). You can only have payroll deduction, rollover a former employer's 401k, or rollover a tIRA. I think that is all. MetLife would know more. If her English is not that good, then maybe you can do a 3 way call with her and MetLife.

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Kenkat
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by Kenkat » Sat Feb 09, 2019 7:58 pm

Hopefully the 401k was rolled into an individual IRA rollover account at MetLife and not cashed out and then put into the variable annuity. If the variable annuity is held as an IRA *, she should be able to roll it into her own IRA account and/or potentially into the TSP. Can you get a hold of a statement and see how it is titled?

* I know this doesn’t make a lot of sense but it’s surprisingly not that uncommon.

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letsgobobby
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by letsgobobby » Sat Feb 09, 2019 8:12 pm

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Info_Hound
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by Info_Hound » Sun Feb 10, 2019 12:32 pm

One thing you should carefully read up on regarding the TSP is how the account will be distributed upon her death to her beneficiaries, since they will be non-spousal beneficiaries. It is an important piece of information that can be of great impact to her heirs.

The thought of rolling money into the TSP means those funds will be subject to the TSP distribution restrictions as well. I know we are waiting on the new TSP withdrawal options to be enacted in the Fall of 2019, but it too should be considered in the larger picture.

whyamihere
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by whyamihere » Sun Feb 10, 2019 2:25 pm

letsgobobby wrote:
Sat Feb 09, 2019 8:12 pm
hmm. I doubt he cashed out his 401k because he has been taking RMDs from the account and they are labeled as such on the statement. As such I was hoping the entire $195k would be tax protected, but the RMD appears to be calculated on the $145k, so maybe the extra $50k would be taxable? Or perhaps it would be an insurance payout in which case it would be tax free.

MIL is retired USPS and has her own TSP account, she smartly wants to roll FIL's IRA into her TSP. If he has an IRA. Normally the surviving spouse has the option to rollover an inherited IRA into her own retirement account or at least retitle it as her own. This advantages her because she would not have to take out RMDs for a few more years.

Obviously going to have to do a conference call, unfortunately she is in another state so not easy.
Sounds like a variable annuity inside of an IRA. Assuming your MIL is listed as the beneficiary:
A) the death benefit ($195k) is paid inside of an IRA and therefore pre-tax,
B) she should retitle it into a beneficiary IRA or her own,
C) if she takes it as her own MetLife likely will require re-registration before transferring out but she can combine it with her TSP post re-registering.

So
1) claim death benefit,
2) retitle in MIL's name @ MetLife (no annuity purchase required)
3) trustee-to-trustee transfer to TSP.

My condolences.

This type of death benefit is a feature that costs money (aka a fee is charged while living) but it can leave a larger inheritance on a guaranteed basis. It may have done better in the stock market but is sounds like FIL didn't want to take that chance.
--------------------------------------------------------- | caveat lector

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letsgobobby
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by letsgobobby » Sun Feb 10, 2019 3:28 pm

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Kenkat
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Re: Father in law died, what did he have? (MetLife Annuity)

Post by Kenkat » Sun Feb 10, 2019 4:49 pm

I believe that the children would be non-spouse beneficiaries and be allowed to transfer the distribution to an inherited IRA in their names and take distributions based on their life expectancy. I don’t know the specifics of the TSP, but there is wording in the PDF that indicates that is allowed. My wife was able to do this with an IRA in her father’s name at Fidelity, transferred to her mother’s IRA on his passing, and transferred into Inherited IRAs on her mother’s passing - taking future RMDs, two so far, based on my wife’s age (and her siblings’ ages for their portions). We worked through this with Fidelity, where her dad’s original IRA was held and they stepped us through the process.

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