4 Expert Annuity Tips for Income Seekers

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Mark La Spisa unfortunately is perpetuating myths without doing any homework.
Myth#1- Index annuities are "expensive". "Expensive" is relative. But every Equity Indexed Annuity that I offer has zero fees, upfront, continuing, or back end. How is that "expensive"?
Myth #2- Annuity payments are taxed as ordinary income. That's technically true. But practically, since most folks' retirement money is in 401(k)s or IRAs, their payments are taxed as ordinary income whether or not they come out of an annuity. But what I'm recommending are strategic rollouts into Roth IRAs within an indexed annuity. Risk to principal is eliminated without forfeiting market returns, income riders guarantee predictable income, and there are zero future taxes to the owner or the heirs.
Myth $3- annuities have "high surrender fees for long time periods" Again, "high" and "long" are relative terms. For example, exactly two years ago a client transferred his $214,000 mutual fund based IRA into a bonus equity indexed annuity. If he had stayed put and "surrendered" his account- that is, cashed in his IRA -today, he would only get $136,638, an effective "surrender charge" of 36%. If he cashed in his EIA, he would net $214,941 after a 7% surrender charge. Hey, that's more than he deposited! How many investors today would be delighted to have as much as they did two years ago? Anyway, the best EIA I have only has a 6 yr. surrender period. That's far from "long".
We all owe it to our clients to abandon preconceive notions, biases, myths and conventional "wisdom". All they care about is what works in their best interests.

Gary Duell of OR 8:48PM September 02, 2009

Mark La Spisa unfortunately is perpetuating myths without doing any homework.
Myth#1- Index annuities are "expensive". "Expensive" is relative. But every Equity Indexed Annuity that I offer has zero fees, upfront, continuing, or back end. How is that "expensive"?
Myth #2- Annuity payments are taxed as ordinary income. That's technically true. But practically, since most folks' retirement money is in 401(k)s or IRAs, their payments are taxed as ordinary income whether or not they come out of an annuity. But what I'm recommending are strategic rollouts into Roth IRAs within an indexed annuity. Risk to principal is eliminated without forfeiting market returns, income riders guarantee predictable income, and there are zero future taxes to the owner or the heirs.
Myth $3- annuities have "high surrender fees for long time periods" Again, "high" and "long" are relative terms. For example, exactly two years ago a client transferred his $214,000 mutual fund based IRA into a bonus equity indexed annuity. If he had stayed put and "surrendered" his account- that is, cashed in his IRA -today, he would only get $136,638, an effective "surrender charge" of 36%. If he cashed in his EIA, he would net $214,941 after a 7% surrender charge. Hey, that's more than he deposited! How many investors today would be delighted to have as much as they did two years ago? Anyway, the best EIA I have only has a 6 yr. surrender period. That's far from "long".
We all owe it to our clients to abandon preconceive notions, biases, myths and conventional "wisdom". All they care about is what works in their best interests.

Gary Duell of OR 8:48PM September 02, 2009