I apologize for my ignorance regarding annuities I am not licensed yet but my dad is and he is trying to figure out a way to help my grandmother but he doesn't deal with annuities on a regular basis.
She is 90, has a $171k Allianz annuity that she bought almost 5 years ago, the beneficiary of the annuities can only receive yearly payment for a minimum of 5 years once she dies. If she cashed it out early she would receive about 12k less than what she bought it for. I am not sure if she didn't realize when she bought it but she or nobody else is very fond of the 5 year deal. Is there anything she can do?
She also has 80k in a money market, we are trying to reduce the tax burden. Is there anything she can do at all? Is it at all possible for a 90 year old women to purchase a single premium annuity? I don't think there is anyway but figured I would ask.
What product did she purchase from Allianz? I assume you are referring to the Masterdex 10.
I would also be reluctant to have her cash this in as there have been some nice gains in her contract; and with the aforementioned product, her gains are greatly reduced for an early surrender.
I would need some other information like:
Current income
Total net worth
Total liquid net worth
Overall objection
A break down of her current holdings
Before I could give you a good opinion. I hope this helps.......
IMO the 5 year payout to the beneficiary is advantageous to the benficiary, The IRS allows a 5 year payout of the annuity porceeds to the beneficiary to spread the tax burden over that period instead of being with a one-time taxable event. The proceeds of an annuity are not income tax free as is the case with a life insurance policy.
I think insuranceexec will concur with the above statement.
In reality, she may be stuck with the Allianz product until maturity. The 5x5 payout is reflective of some of their older products.
In some cases, we have helped people with internal transfers to newer products that allow for a lump sum withdrawal that is surrender free.
An yes, there are annuity companies offering accounts to those that are age 90 and above. Feel free to contact me and I can tell you more. inquiries@ohioinsureplan.com
IMO the 5 year payout to the beneficiary is advantageous to the benficiary, The IRS allows a 5 year payout of the annuity porceeds to the beneficiary to spread the tax burden over that period instead of being with a one-time taxable event. The proceeds of an annuity are not income tax free as is the case with a life insurance policy.
I think insuranceexec will concur with the above statement.
Arnie I do agree. Most people look at the DB payouts as a drawback; where as I, and yourself, see them as an advantage.
The problem with this method is that Allianz does not pay any interest on the money that is kept during the payout; but when you factor in the tax savings, in most cases it is a wash. Very good point!
As insureguy has stated there are a number of companies and products including Beneficial Financial that will write a 90 year old; but it comes back to suitability. Good question!
I guess i should ask another question then, if she passes on the 80k in a CD or money market the whole thing would be taxable, correct? What if she was to pass it on as an annuity, wouldn't only the interest be taxable?
I guess i should ask another question then, if she passes on the 80k in a CD or money market the whole thing would be taxable, correct? What if she was to pass it on as an annuity, wouldn't only the interest be taxable?
If it is non-qualified, then none of the principal is taxable. The interest the CD made would be taxed as income in the year that it is made, while the annuity account could grow tax deferred until passing.
Annuities are not tax free however. Any accumulated tax deferred income would be due at passing if the account is taken lump sum. Or, as mentioned before, your could take it over five years.
The only asset that is really income tax free is life insurance. Can't really find that for a 90 year old though.
It was from the sale of securities so I am guessing non-qualified.
Securities can hold qualified money. Since I am not getting the question answered I will try to help the best I can.
Qualified money is tax deductible and is often used with traditional IRAs and retirement plans. You benefit because you are able to defer taxes on your contributed amount until it is time to start taking withdrawals from your qualified account.
Beginning at age 70½, annuities purchased as qualified contracts must begin to take distributions determined by the IRS, called Required Minimum Distributions (RMDs). For qualified money, the entire distribution is taxed (at your current income-tax rate) at the time of the withdrawal. Some annuities have flexible income options to help you achieve your required minimum distributions while spreading out your taxable distributions
Nonqualified money includes any funds that have been previously taxed. If you buy your annuity with nonqualified funds, you still accrue tax-deferred interest throughout your lifetime. The benefit to purchasing an annuity with nonqualified, or previously taxed money, is that you are never required to take distributions at a certain age, as you are with a qualified account.
When you decide to make a withdrawal, only your earnings are taxed and, like with a qualified account, it is taxed at your current income tax rate. I hope this helps.
We are not really concerned with the CDs, it is 80k in the money market she is concerned with.
EDM... you seem to be insinuating that when the 80K of MMA funds transfer to the heirs that there will be a (huge) tax liability. Assuming that this is from the sale of securities that were held in a non-qualified account, and the 90 yr old gal doesn't have lots of other assets other than the annuity and the MMA, then there will be neglible to NO tax liability on these funds at death. NO fed'l estate tax and depending upon which state she lives in, either none to a small amount of state estate taxation.
You need to get some solid advice for yourself here, before advising others. Do some reading into the Estate Taxation laws...
Securities can hold qualified money. Since I am not getting the question answered I will try to help the best I can.
Qualified money is tax deductible and is often used with traditional IRAs and retirement plans. You benefit because you are able to defer taxes on your contributed amount until it is time to start taking withdrawals from your qualified account.
Beginning at age 70½, annuities purchased as qualified contracts must begin to take distributions determined by the IRS, called Required Minimum Distributions (RMDs). For qualified money, the entire distribution is taxed (at your current income-tax rate) at the time of the withdrawal. Some annuities have flexible income options to help you achieve your required minimum distributions while spreading out your taxable distributions
Nonqualified money includes any funds that have been previously taxed. If you buy your annuity with nonqualified funds, you still accrue tax-deferred interest throughout your lifetime. The benefit to purchasing an annuity with nonqualified, or previously taxed money, is that you are never required to take distributions at a certain age, as you are with a qualified account.
When you decide to make a withdrawal, only your earnings are taxed and, like with a qualified account, it is taxed at your current income tax rate. I hope this helps.
With 2 posts to the forum, you sound like someone who's simply here to make money off the rest of us. If that's not the case, then why be so mysterious?
In reality, she may be stuck with the Allianz product until maturity. The 5x5 payout is reflective of some of their older products.
In some cases, we have helped people with internal transfers to newer products that allow for a lump sum withdrawal that is surrender free.
An yes, there are annuity companies offering accounts to those that are age 90 and above. Feel free to contact me and I can tell you more. inquiries@ohioinsureplan.com
I agree. This sounds like she probably purchased a older two tiered Allianz policy. FYI. There have been lawsuits (Mn.) where Allianz gave credits or payouts to policyholders to comply with a ruling.
I also agree our company offers 4 different cos. available for a 90 yr old. In addition there are guaranteed issue life plans for a lady that age through $50,000 (taxable NQ to possible tax free payout) within a trust for possible tax savings as well as probate.
Inquire at info@rsgagents.org
90 Year Old Women
Estate Tax for Dummies 
Linear Mode
