Purchasing MYGAs (multi year guaranteed annuities) - mega thread

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Wrench
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

A question for more experienced MYGA holders: how often do you get statements, and what information is on them? In particular, does it state
original principal
interest to date
penalty free withdrawal value as of statement date
Full withdrawal value as of statement date including penalties and MVA

My recently purchased Gainbridge MYGA only lists the first two on the web site. Since I am used to investing in vehicles that have mark-to-market values that I can use to establish my net worth, the last two would be valuable to me. Although I could calculate these I suppose, I would rather have the company provide the actual figures on a monthly or quarterly basis.

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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

Wrench wrote: Fri Sep 02, 2022 6:42 am A question for more experienced MYGA holders: how often do you get statements, and what information is on them? In particular, does it state
original principal
interest to date
penalty free withdrawal value as of statement date
Full withdrawal value as of statement date including penalties and MVA

My recently purchased Gainbridge MYGA only lists the first two on the web site. Since I am used to investing in vehicles that have mark-to-market values that I can use to establish my net worth, the last two would be valuable to me. Although I could calculate these I suppose, I would rather have the company provide the actual figures on a monthly or quarterly basis.
You have to drill down further to get all kinds of data.

Click on a contract, go to Account Value and Other Values. You will see everything you ever wanted to know there.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Wrench wrote: Fri Sep 02, 2022 6:42 am A question for more experienced MYGA holders: how often do you get statements, and what information is on them? In particular, does it state
original principal
interest to date
penalty free withdrawal value as of statement date
Full withdrawal value as of statement date including penalties and MVA

My recently purchased Gainbridge MYGA only lists the first two on the web site. Since I am used to investing in vehicles that have mark-to-market values that I can use to establish my net worth, the last two would be valuable to me. Although I could calculate these I suppose, I would rather have the company provide the actual figures on a monthly or quarterly basis.

Wrench
From what I’ve seen, all MYGA issuers prepare an “annual statement” each year, shortly after the contract anniversary. From what I’ve seen, Gainbridge and Canvas only send an email notice that it’s available, while most (if not all) other companies send out statements via snail mail. For IRA MYGAs, they also send out a notice shortly after the beginning of each calendar year showing the “fair value” (that is, account value before surrender charge or MVA) as of the prior year end, to help if the annuitant is required to take RMDs.

I’ve looked at the annual statements I’ve received so far in 2022. All of them show the beginning of policy year and ending account value, and the interest credited during the policy year. All of them show some estimate of the “surrender value”. But some statements appear to include MVA in the calculation of surrender value, while others don’t. Also, some statements show the surrender charge and MVA amounts as separate line items, while others don’t show them broken out.

I agree with HueyLD that information is available on each company’s web page, updated daily. That information is also of varying completeness. The only MYGA issuer that I know does not have a web portal is Pacific Guardian.

For my personal net worth tracking, I’ve constructed a tab in my master “Money” spreadsheet that shows the month by month growth of each MYGA, from its issue date to the end of the interest guarantee period. That can be definitively determined when the contract is issued. I don’t consider surrender charges or MVAs in my net worth tracking, since I don’t expect to ever incur such charges. I check my spreadsheet against annual statements when they come in.

Hope this helps.
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Wrench
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

Thank you Stinky and HueyLD! Very helpful. I had not dug deep enough in the Gainbridge web site. The values are indeed there. Interestingly, there is a statement there that says:
Guaranteed Minimum Surrender Value
"87.5% of total premium compounding at the Non-Forfeiture Rate adjusted for withdrawals".
Although I thought I had read the contract carefully, I missed the fact that there was a guaranteed minimum surrender value.
Also, my current cash surrender value about 5 weeks after purchase is only 3.8% less than the current account value. I thought there would be a bigger penalty for early surrender.
In any case, it is a bit of a moot point, since as you both and others have suggested, I am planning to hold until maturity, at most taking the allowed penalty free withdrawals. I am mostly interested in these values for contingency planning purposes should some unforeseen disaster occur and for some reason I cannot currently fathom, I need the money.

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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Wrench wrote: Fri Sep 02, 2022 11:27 am I had not dug deep enough in the Gainbridge web site. The values are indeed there. Interestingly, there is a statement there that says:

Guaranteed Minimum Surrender Value
"87.5% of total premium compounding at the Non-Forfeiture Rate adjusted for withdrawals".

Although I thought I had read the contract carefully, I missed the fact that there was a guaranteed minimum surrender value.
You should find the same “guaranteed minimum surrender value” language somewhere in your contract. I believe that it’s required by law.

I mentioned upthread that the surrender value on one of my contracts is pretty close to that guaranteed minimum. The combined impact of the surrender charge and the MVA would be a significant penalty if I were to surrender now. I would be getting just 91% of my initial premium back after two years in the contract - a very unattractive result.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by relativeratio »

For those inquiring minds, Nationwide's 7 year MYGA went up to 4.4% Funny there wasn't any notification from the agents I've kept in contact with.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by krisSA »

Do the rates for MYGAs change with Fed rates, just like bonds or CDs? I was planning to invest in the 7yr Nationwide MYGA, but maybe I should wait
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

krisSA wrote: Wed Sep 14, 2022 5:54 pm Do the rates for MYGAs change with Fed rates, just like bonds or CDs? I was planning to invest in the 7yr Nationwide MYGA, but maybe I should wait
My understanding is that the Fed only “controls” the very short term interest rates. And I expect that the only interest rates that will move directly in line with the next Fed funds rate increase will be money market funds, albeit with a lag.

Insurance companies adjust their MYGA rates at their discretion. They seem to like to maintain rate stability. Many rates that are currently being offered were set in July or even before.

Insurers invest primarily in corporate bonds and commercial mortgages. Their earned rates don’t change at the same pace as the daily movements in the Treasury market.

Just this week, we’ve seen a few companies raise rates. Gainbridge has increased by 0.20% across the board. SBLI is now paying 4.50% on a five year MYGA, and Sentinel Security and Atlantic Coast now have the highest rates on Blueprint Income. Meanwhile, Standard Life has announced a rate cut. But the vast majority of companies haven’t changed rates for at least a few weeks.

On your question, I don’t know if rates will be going up again in the near future. If you think they might be, you could hold off on your purchase. Alternatively, most companies will give you some time (often 30-60 days) to fund your contract after you apply. So you could apply for a contract, defer funding for a few weeks, and then grab the new rate if rates do go up during your waiting period.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by prozario01 »

My Aspidia MYGA got created fairly smoothly. Had to give info to Blueprints about my existing AXA Equitable that i wanted to exchange. Only confusing part - to reach the minimum i wanted to first exchange the AXA var annuity and take the remaining value from the checking account. Blueprint only allows percentages - so i put in 80% and 20%. In the end, my funding was $30 short of the minimum - but Aspidia opened the account and gave me the rate anyhow.

Pretty smooth process, although it takes about 2-3 weeks for all paperwork to be processed and the final account opening. I got the rate prior to the slight drop - Blueprint didn't promise it'll be on time, but said they'll try their best.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

krisSA wrote: Wed Sep 14, 2022 5:54 pm Do the rates for MYGAs change with Fed rates, just like bonds or CDs? I was planning to invest in the 7yr Nationwide MYGA, but maybe I should wait
MYGA rates definitely should correlate with the rate for the corresponding duration of Treasury bonds (not the Fed rate, which is a very short-term rate).

As I write this, Bloomberg's US rates page shows the 5-year Treasury paying 3.65% and the 10-year paying 3.44%.

MYGAs should pay more than the corresponding Treasury due to their lower liquidity and higher insurer credit risk. How much more, though? From the limited research that I've been able to do, it seems like 1.5% (150 basis points) is a pretty reasonable historical premium for a MYGA from an A- rated insurer. So if the 7-year Treasury is paying about 3.5%, you should expect about 5.0% for an A- rated 7-year MYGA.

That's the rule of thumb that I've been able to develop based on an unscientific look at historical data. Someone else may have a more comprehensive statistical analysis, but if so, I haven't seen it.

Also, like CDs, MYGA rates tend to lag rapid changes in Treasury rates. Treasury rates have gone up substantially in the past few weeks, so I would expect MYGA rates to follow. If it were me, I wouldn't buy now. I'd wait at least a few weeks, feeling pretty confident that MYGA rates will go up.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

4% 1 year treasury. myga companies should be over 5% at least on a 3 year if they want my money.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by GaryA505 »

bog007 wrote: Thu Sep 15, 2022 4:18 pm 4% 1 year treasury. myga companies should be over 5% at least on a 3 year if they want my money.
Just give it week or two. We could see that 5% or more.
Get most of it right and don't make any big mistakes. Other things being equal (or close enough), simpler is better.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by relativeratio »

I am in the process of purchasing a MYGA from Midland. It went from 4.4% to 4.55% the other day and I will get that rate on the seven year MYGA.

But, I am having second thoughts and might take advantage of the "free look" and cancel the policy. It just seems like rates will just keep going higher and being locked into 4.55% for 7 years with limited liquidity might not be worth it.

With a one year treasury paying 4%, I could just put the money in there and after one year take the interest out (or more) for living expenses and just invest in another one year treasury. When the Fed starts talking about not doing any more increases and possibly cutting rates in a few years, than I could lock into a MYGA. What do you think of this approach?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

relativeratio wrote: Fri Sep 16, 2022 4:43 am I am in the process of purchasing a MYGA from Midland. It went from 4.4% to 4.55% the other day and I will get that rate on the seven year MYGA.

But, I am having second thoughts and might take advantage of the "free look" and cancel the policy. It just seems like rates will just keep going higher and being locked into 4.55% for 7 years with limited liquidity might not be worth it.

With a one year treasury paying 4%, I could just put the money in there and after one year take the interest out (or more) for living expenses and just invest in another one year treasury. When the Fed starts talking about not doing any more increases and possibly cutting rates in a few years, than I could lock into a MYGA. What do you think of this approach?
On the one hand, adjusting your investments based on your assessment of market conditions is literally the act of "market timing". See the wiki explanation - https://www.bogleheads.org/wiki/Market_timing

On the other hand, current MYGA interest rates aren't offering as attractive a premium over Treasury rates as was the case in recent months and years. I also saw that the one year Treasury traded above 4% yesterday. Treasury rates definitely have gone up a lot more than MYGA rates over the past few months. Maybe the MYGA/Treasury spread will widen again in the near-to-intermediate future; maybe it won't.

All things considered, I'd be hard-pressed to criticize a decision to hold off on buying a 7-year MYGA at this time.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by prozario01 »

bog007 wrote: Thu Sep 15, 2022 4:18 pm 4% 1 year treasury. myga companies should be over 5% at least on a 3 year if they want my money.
Is it expected to be even higher next week - if Fed raises by .75% - or is it already priced in?

In ME Edge - i saw TBILL for 3.95% - never really hitting 4% yet, but close enough.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by prozario01 »

relativeratio wrote: Fri Sep 16, 2022 4:43 am I am in the process of purchasing a MYGA from Midland. It went from 4.4% to 4.55% the other day and I will get that rate on the seven year MYGA.

But, I am having second thoughts and might take advantage of the "free look" and cancel the policy. It just seems like rates will just keep going higher and being locked into 4.55% for 7 years with limited liquidity might not be worth it.

With a one year treasury paying 4%, I could just put the money in there and after one year take the interest out (or more) for living expenses and just invest in another one year treasury. When the Fed starts talking about not doing any more increases and possibly cutting rates in a few years, than I could lock into a MYGA. What do you think of this approach?
You would think that within the next 2-3 years either we might hit a recession - in that case, Fed will stop hiking rates, or inflation is down & economy is not doing so great - so Fed cut rates. So t could go other way as well. It would be tough to "time" the peak interest rate period. One approach could be splitting up the money and doing some type of laddering.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Zosima »

I have been building a fixed income bridge between my semi-retirement and beginning to collect SS at Age 70. Two years ago, MYGAs were far better than other alternatives such as nominal Treasuries, TIPS, CDs and defined maturity bond ETFs. Today, MYGAs are simply not competitive given their illiquidity, higher administrative costs (e.g. cannot immediately buy online through a broker) and nominal credit risk. Recently, my fixed income purchases have been a combination of defined maturity bond ETFs (4.9% adjusted YTM at 6-7 years, with likely a 20-30bp future haircut for credit downgrades) and TIPS at 1%. I am hopeful that MYGA rates will increase in the near future but 5 and 7 year rates need to be above 5% for me to consider them in the current environment.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

prozario01 wrote: Fri Sep 16, 2022 7:57 am You would think that within the next 2-3 years either we might hit a recession - in that case, Fed will stop hiking rates, or inflation is down & economy is not doing so great - so Fed cut rates. So t could go other way as well. It would be tough to "time" the peak interest rate period. One approach could be splitting up the money and doing some type of laddering.
Agree. The yield curve is normally rising (higher interest rates for longer durations, compensating for duration risk). An inverted yield curve like we have now indicates investors expect that rates will drop over time. So sure, you can get 4% for the next year, but then you face reinvestment risk: In a year, will you be able reinvest those funds at the 4.5% MYGA rate that's available now, or will that rate be lower?

A strategy to invest in short-duration bonds now is a bet that you know better about where interest rates are headed than the collective wisdom built into asset prices. You might be right or you may be wrong, but it's all guesswork.

One trend that's more reliable is for MYGA rate changes to lag Treasury rate changes, and for MYGA rates to offer a premium over Treasuries. So waiting a few weeks for MYGA rates to rise commensurate with the recent rise in Treasury rates is sensible. But waiting a year with the expectation that MYGA rates will be higher is just guesswork.

Laddering is a good way to diversify across durations and match assets to liabilities.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by vineviz »

prozario01 wrote: Fri Sep 16, 2022 7:52 am
bog007 wrote: Thu Sep 15, 2022 4:18 pm 4% 1 year treasury. myga companies should be over 5% at least on a 3 year if they want my money.
Is it expected to be even higher next week - if Fed raises by .75% - or is it already priced in?
I would not expect a big move in 7-year yields if the Fed raises the overnight rate by 0.75%.

The market is assigning a 78% probability that this will happen.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

Zosima wrote: Fri Sep 16, 2022 8:11 am I am hopeful that MYGA rates will increase in the near future but 5 and 7 year rates need to be above 5% for me to consider them in the current environment.
I bought a couple of MYGAs at 4.5% to 4.6% in the past few months when corresponding Treasury rates were 2.8% to 2.9%.

Agree that with the 5-year Treasury now at 3.7% I'd need more than 5% to invest in a new MYGA. Or if Treasury rates dropped back to 3%, 4.5% would look pretty good.

Rates are extremely volatile right now. I agree MYGAs aren't a good deal today, but they very well could be a deal again a week from now.

The free-look period is a great benefit of MYGAs (vs. other fixed-income investments) in a volatile environment. The 10% annual withdrawal allowance available on some MYGAs also provides some insurance against rising rates in the future.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by vineviz »

discman017 wrote: Fri Sep 16, 2022 8:18 am
prozario01 wrote: Fri Sep 16, 2022 7:57 am You would think that within the next 2-3 years either we might hit a recession - in that case, Fed will stop hiking rates, or inflation is down & economy is not doing so great - so Fed cut rates. So t could go other way as well. It would be tough to "time" the peak interest rate period. One approach could be splitting up the money and doing some type of laddering.
Agree. The yield curve is normally rising (higher interest rates for longer durations, compensating for duration risk). An inverted yield curve like we have now indicates investors expect that rates will drop over time. So sure, you can get 4% for the next year, but then you face reinvestment risk: In a year, will you be able reinvest those funds at the 4.5% MYGA rate that's available now, or will that rate be lower?
Agreed.

The SEC yield on corporate bonds maturing in 2029 (which is essentially what a 7-year MYGA would be investing in) is just 4.8%.

e.g. iShares iBonds Dec 2029 Term Corp ETF (IBDU)

I'd say it's a tossup between a MYGA and a direct purchase of the bonds via an ETF. Neither is obviously superior or inferior.

But buying a shorter-term instrument is definitely incurring a lot of reinvestment risk, so I'd want a HIGHER rate on the shorter instrument as compensation for that .
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

prozario01 wrote: Fri Sep 16, 2022 7:52 am
bog007 wrote: Thu Sep 15, 2022 4:18 pm 4% 1 year treasury. myga companies should be over 5% at least on a 3 year if they want my money.
Is it expected to be even higher next week - if Fed raises by .75% - or is it already priced in?

In ME Edge - i saw TBILL for 3.95% - never really hitting 4% yet, but close enough.
I'm waiting a few weeks. Right now canvas has 4.6 on a 3 year myga. Fed may raise 2 or 3 more times
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Post by Stinky »

As a former life insurance company employee, I hate to see life insurers take advantage of customers. However, I've got an example in hand right now of just such an attempt.

As I've mentioned upthread, I have a MYGA that is maturing soon. I received my "renewal letter" from the current carrier yesterday, outlining my renewal options. They gave me the option of taking the money in cash, and offered me the rates that are currently available from that carrier (per Blueprint Income) for a couple of renewal periods if I leave the money with them.

However, the "default option", if I do nothing, is to put me into a renewal period that is not shown on the Blueprint Income site, at a rate that is about 50 basis points less than is "fair" based on that carrier's other posted rates. In other words, the consumer who is not paying attention and just lets the policy roll into a new guarantee period is being taken advantage of by the insurer, to the tune of 50 basis points per year.

My sample size is limited - I only have this one experience to date. I hope that other carriers don't do this, because I regard this practice as seedy and underhanded.

I know from experience that a certain number of customers can be expected to not act on such a renewal offer, due to inertia, lack of paying attention, or lack of sophistication. I hate to see an insurer taking advantage of anyone.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

Thanks for the heads-up.

So what you are saying is that this particular insurer will renew the policy at a rate that is 50 bps lower than their published rate if they do it automatically for you? This is not nice.

I think I have an idea who this insurer is. It must be the one that offered 2-yr MYGAs two year ago (there was only one at that time).

Are you planning to transfer the funds to another insurer?
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Post by Stinky »

indexfundfan wrote: Sat Sep 17, 2022 6:48 am Thanks for the heads-up.

So what you are saying is that this particular insurer will renew the policy at a rate that is 50 bps lower than their published rate if they do it automatically for you? This is not nice.

I think I have an idea who this insurer is. It must be the one that offered 2-yr MYGAs two year ago (there was only one at that time).

Are you planning to transfer the funds to another insurer?
Yes, my maturing MYGA is a 2 year duration.

That insurer currently offers a 2 year product and a 5 year product on Blueprint Income. The “automatic” renewal option is into a 3 year product, which is not offered on Blueprint. The rate for the 3 year automatic product is less than the 2 year rate, and much less than the 5 year rate. By inspection, it looks like the 3 year rate is about 0.50% less than the “fair” rate, by comparison to the 2 year and 5 year rates from that carrier.

I agree that this is not nice.

My funds will be moving to another carrier. I don’t expect to ever use the current carrier again.
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Post by BarbK »

Thank is sneaky. I've had it that when MYGAs mature, they just roll over into a 1 year guarantee period where you can withdraw penalty free at anytime. They still earned more than a CD.

What I am pleasantly surprised at is how fast you can get the $ out even with having to snail mail the request. $ sent directly to bank.
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Post by Stinky »

I’ve received an email stating that Oceanview is increasing MYGA rates effective tomorrow (9/19/22).

The headline rate is on the 6 year contract, which is going to 4.80%.

Insurers don’t respond immediately to market interest rate increases. And not all insurers respond in the same amount. But those who want to maintain their market competitive position eventually do respond.
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Post by indexfundfan »

BarbK wrote: Sat Sep 17, 2022 7:41 am Thank is sneaky. I've had it that when MYGAs mature, they just roll over into a 1 year guarantee period where you can withdraw penalty free at anytime. They still earned more than a CD.

What I am pleasantly surprised at is how fast you can get the $ out even with having to snail mail the request. $ sent directly to bank.
This one is particularly sneaky considering that most people would expect a 2-yr MYGA to roll into a new 2-yr MYGA. Instead they want to roll into a 3-yr MYGA with a sub-standard rate.
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Post by jwfails »

I am 55 and considering buying MYGA with after tax money. Why would I have to fill out a 1035 to avoid early withdrawal penaly? Is it because its an annuity and considered a retirement vehicle unlike a CD? Thanks for any reply’s.
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Post by Stinky »

jwfails wrote: Mon Sep 19, 2022 12:57 pm I am 55 and considering buying MYGA with after tax money. Why would I have to fill out a 1035 to avoid early withdrawal penaly? Is it because its an annuity and considered a retirement vehicle unlike a CD? Thanks for any reply’s.
I’m not sure that I’m fully understanding your question, but I’ll give it a shot.

There is an additional tax penalty of 10% on withdrawals of interest from a taxable annuity prior to age 59.5.

Since you’re 55, you could buy a 5 year (or longer) MYGA and avoid any tax penalties if you didn’t make any withdrawals prior to age 59.5. So, if you leave the money and the accumulated earnings in the MYGA until you’re at least 59.5, there will be no penalty.

If you were to buy a shorter MYGA, it would mature prior to your age 59.5. In that case, you would likely want to do a “1035 exchange” into another annuity at the maturity date in order to avoid the tax penalty. Alternatively, you could just leave the money in the existing MYGA, and let it roll over into a new guarantee period, to avoid the penalty.

Does this help out? Post back with questions.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by jwfails »

Yes that helps clarify the tax implications of EWP.

What I was not sure of, is why is there a 10% EWP on the interest of after tax money invested. I realize I can roll it over to avoid the penalty, however, I can also invest that same money in a CD and pay taxes on it when it matures without a 10 % EWP.

My reasons for asking is that I recently sold my house and have the funds in a MM, trying to figure out my next move. I am married, retired, both have cola pensions, currently renting and thinking of moving to a differently area in the future. Just not sure if I want to buy a house in 1 year or 5 or ever. We plan to rent and travel for a while. I want to keep the money in something 2 years or less for now. I was trying to figure out if a MYGA would work better than a CD. Thanks
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

jwfails wrote: Mon Sep 19, 2022 1:55 pm Yes that helps clarify the tax implications of EWP.

What I was not sure of, is why is there a 10% EWP on the interest of after tax money invested. I realize I can roll it over to avoid the penalty, however, I can also invest that same money in a CD and pay taxes on it when it matures without a 10 % EWP.

My reasons for asking is that I recently sold my house and have the funds in a MM, trying to figure out my next move. I am married, retired, both have cola pensions, currently renting and thinking of moving to a differently area in the future. Just not sure if I want to buy a house in 1 year or 5 or ever. We plan to rent and travel for a while. I want to keep the money in something 2 years or less for now. I was trying to figure out if a MYGA would work better than a CD. Thanks
Sorry, but that’s just the federal tax rules for annuities. And a MYGA is an annuity.

The 10% tax penalty is not the end of the world. Let’s say you bought a 2 year MYGA today. In my state, Americo, an A rated company, is paying 3.55%. If you kept the MYGA for the full two years and then cashed it out, your effective interest rate would be 90% of 3.55%, or 3.195%. Not too shabby.

Of course, you could also buy a 2 year Treasury note. I’m seeing a rate of 3.94% right now. And there is no surrender charge or EWP on a Treasury note. So arguably, that’s more attractive for you than a 2 year MYGA.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by PatrickA5 »

I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by tj »

PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
why not blueprintincome?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Zosima »

EDIT to fix comment about not obtaining online quotes.
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs.

https://www.fidelity.com/annuities/imme ... es/compare
Last edited by Zosima on Wed Sep 21, 2022 4:08 pm, edited 1 time in total.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

Zosima wrote: Wed Sep 21, 2022 3:48 pm
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs but you need to work through an agent and are not able to obtain online quotes.

https://www.fidelity.com/annuities/imme ... es/compare
On the linked page, you can obtain online quotes by clicking on “Guaranteed Income Estimator.”
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Zosima »

HueyLD wrote: Wed Sep 21, 2022 4:03 pm
Zosima wrote: Wed Sep 21, 2022 3:48 pm
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs but you need to work through an agent and are not able to obtain online quotes.

https://www.fidelity.com/annuities/imme ... es/compare
On the linked page, you can obtain online quotes by clicking on “Guaranteed Income Estimator.”
Thanks! I missed that.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by PatrickA5 »

Zosima wrote: Wed Sep 21, 2022 3:48 pm EDIT to fix comment about not obtaining online quotes.
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs.

https://www.fidelity.com/annuities/imme ... es/compare
Thanks. Funny, this page doesn't seem to show up under Annuities on my Fidelity home screen.

Looks like they have a group of 5 or 6 large, highly rated companies they use. I'll have to compare quotes with Immediate Annuities and Stan and see if they are the same payouts as Fidelity.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by PatrickA5 »

HueyLD wrote: Wed Sep 21, 2022 4:03 pm
Zosima wrote: Wed Sep 21, 2022 3:48 pm
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs but you need to work through an agent and are not able to obtain online quotes.

Thanks.

https://www.fidelity.com/annuities/imme ... es/compare
On the linked page, you can obtain online quotes by clicking on “Guaranteed Income Estimator.”
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by PatrickA5 »

tj wrote: Wed Sep 21, 2022 3:11 pm
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
why not blueprintincome?

I went through Fidelity for my Mass Mutual MYGAs and it was super easy. All of my retirement money is at Fidelity.
I'll consider all of them when I get closer - maybe when my MYGAs mature next May.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by GaryA505 »

Fidelity seems to list some lifetime income continuation options that I haven't seen before. 50% or 66 2/3 % to joint owner. Interesting.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

Wonder when the myga rates are going to go up. You can a 1 year treasury or cd over 4 percent
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by vineviz »

bog007 wrote: Sat Sep 24, 2022 12:17 pm Wonder when the myga rates are going to go up.
What makes you think they will go up? That's a bet I'd be reluctant to make.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

trust me they will go up if you know anything about myga
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by vineviz »

bog007 wrote: Sat Sep 24, 2022 12:57 pm trust me they will go up if you know anything about myga
I think that no one who understands how financial markets work would be that confident.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

bog007 wrote: Sat Sep 24, 2022 12:17 pm Wonder when the myga rates are going to go up. You can a 1 year treasury or cd over 4 percent
I got an email yesterday from My Annuity Store, announcing the first MYGA in recent times with a rate higher than 5%.

Ibexis Life, a brand new entrant into the MYGA space rated A- by AM Best, announced a rate of 5.10% on 5 year and 7 year MYGAs, and 4.60% on 3 year MYGAs. The product is available as a straight MYGA. It also has an option to include an equity-indexed "kicker" on up to one-half of the account value, where a rate of 7-7.5% will be credited if the S&P 500 is higher on a policy anniversary than on the prior anniversary (and credit zero if the index is lower).

I don't know how many states have approved this Ibexis product. I also don't know whether the company's products will be carried on other annuity platforms like Blueprint Income and Stan the Annuity Man.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

we'll see soon enuff :annoyed some should use common sense

that was fast lol :sharebeer ty stinky. hope it's good in my state
Last edited by bog007 on Sat Sep 24, 2022 2:52 pm, edited 1 time in total.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by GaryA505 »

Stinky wrote: Sat Sep 24, 2022 1:30 pm
bog007 wrote: Sat Sep 24, 2022 12:17 pm Wonder when the myga rates are going to go up. You can a 1 year treasury or cd over 4 percent
I got an email yesterday from My Annuity Store, announcing the first MYGA in recent times with a rate higher than 5%.

Ibexis Life, a brand new entrant into the MYGA space rated A- by AM Best, announced a rate of 5.10% on 5 year and 7 year MYGAs, and 4.60% on 3 year MYGAs. The product is available as a straight MYGA. It also has an option to include an equity-indexed "kicker" on up to one-half of the account value, where a rate of 7-7.5% will be credited if the S&P 500 is higher on a policy anniversary than on the prior anniversary (and credit zero if the index is lower).

I don't know how many states have approved this Ibexis product. I also don't know whether the company's products will be carried on other annuity platforms like Blueprint Income and Stan the Annuity Man.
What is the fee on the option?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

GaryA505 wrote: Sat Sep 24, 2022 1:52 pm
Stinky wrote: Sat Sep 24, 2022 1:30 pm
bog007 wrote: Sat Sep 24, 2022 12:17 pm Wonder when the myga rates are going to go up. You can a 1 year treasury or cd over 4 percent
I got an email yesterday from My Annuity Store, announcing the first MYGA in recent times with a rate higher than 5%.

Ibexis Life, a brand new entrant into the MYGA space rated A- by AM Best, announced a rate of 5.10% on 5 year and 7 year MYGAs, and 4.60% on 3 year MYGAs. The product is available as a straight MYGA. It also has an option to include an equity-indexed "kicker" on up to one-half of the account value, where a rate of 7-7.5% will be credited if the S&P 500 is higher on a policy anniversary than on the prior anniversary (and credit zero if the index is lower).

I don't know how many states have approved this Ibexis product. I also don't know whether the company's products will be carried on other annuity platforms like Blueprint Income and Stan the Annuity Man.
What is the fee on the option?
There’s no explicit fee. It’s just a “kicker” of 2% or so on top of the 5+% available from the MYGA if the S&P goes up, which is paid for by the policyholder accepting a zero return if the S&P goes down.

Note that this kicker is not required to be purchased, and is available only up to 50% of the initial premium.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by GaryA505 »

Stinky wrote: Sat Sep 24, 2022 1:57 pm
GaryA505 wrote: Sat Sep 24, 2022 1:52 pm
Stinky wrote: Sat Sep 24, 2022 1:30 pm
bog007 wrote: Sat Sep 24, 2022 12:17 pm Wonder when the myga rates are going to go up. You can a 1 year treasury or cd over 4 percent
I got an email yesterday from My Annuity Store, announcing the first MYGA in recent times with a rate higher than 5%.

Ibexis Life, a brand new entrant into the MYGA space rated A- by AM Best, announced a rate of 5.10% on 5 year and 7 year MYGAs, and 4.60% on 3 year MYGAs. The product is available as a straight MYGA. It also has an option to include an equity-indexed "kicker" on up to one-half of the account value, where a rate of 7-7.5% will be credited if the S&P 500 is higher on a policy anniversary than on the prior anniversary (and credit zero if the index is lower).

I don't know how many states have approved this Ibexis product. I also don't know whether the company's products will be carried on other annuity platforms like Blueprint Income and Stan the Annuity Man.
What is the fee on the option?
There’s no explicit fee. It’s just a “kicker” of 2% or so on top of the 5+% available from the MYGA if the S&P goes up, which is paid for by the policyholder accepting a zero return if the S&P goes down.

Note that this kicker is not required to be purchased, and is available only up to 50% of the initial premium.
I just read their info and it looks like you select an allocation for each option. For the part that is allocated to the index-linked option, if the index is up you get the 7% but if it's down you get 0.
Get most of it right and don't make any big mistakes. Other things being equal (or close enough), simpler is better.
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