401k rollover to variable annuity


H

Harsha

Hello-

I was recently laid off and have a choice of leaving my 401k savings
in the current plan at Schwab or roll it over. One advice I received
is to move it to a variable annuity. I have about $100k. Is this is a
good thing to do? Any other suggestions?

Thanks in advance.

Harsha
 
Ad

Advertisements

G

Gene E. Utterback, EA

Harsha said:
Hello-

I was recently laid off and have a choice of leaving my 401k savings
in the current plan at Schwab or roll it over. One advice I received
is to move it to a variable annuity. I have about $100k. Is this is a
good thing to do? Any other suggestions?

Thanks in advance.

Harsha
That depends! On a LOT of information that we aren't privy to. These
things include your age, risk tolerance, job prospects, etc. You also have
to consider the specifics of the annuity you are considering.

I am a BIG fan of annuities; they offer a lot of options and benefits that
you cannot get in any type of investment. These are called RIDERS. You can
get riders that guarantee a death benefit to your beneficiary of at least
what you invested in the contract regardless of the value of the contract
when you die. Other riders guarantee a minimum rate of return providing you
stay in the contract for a number of years, with the caveat that if your
contract value is less than the guaranteed amount when you want take some
money that you only take your contract value unless you annuitize the
contract (annuitizing is converting a dollar amount into a guaranteed stream
of income for a specified period of time).

My general recommendation is that if you aren't interested in the RIDERS,
don't buy an annuity. However, if you are interested in the guarantees that
the riders provide then by all means get enough information about the
annuity you are interested in so you can make sure it's right for you.

Gene E. Utterback, EA
 
D

Durban

Harsha said:
Hello-

I was recently laid off and have a choice of leaving my 401k savings
in the current plan at Schwab or roll it over. One advice I received
is to move it to a variable annuity. I have about $100k. Is this is a
good thing to do? Any other suggestions?

Thanks in advance.

Harsha
No to the variable annuity! Roll it over to an IRA mutual fund account
at Vanguard, Fidelity, or Schwab (or some other good solid mutual fund
company).
 
D

Drew

A variable annuity could be a good choice if u know which company and
the product features. One is ING GoldenSelect Variable annutiy with
the income benefit rider. It has a 7% roll-up base which grows ur 100k
at 7% annualy so in 10 years that money would have doubled to 200K if
ur contract value is valued lower than 100k after 10 yrs and you
decided to annutize. It will continue to grow at 7% until it reaches
three times your intial premium or until you reach age 80. It also
adds a quarterly ratchet base whick locks in the highest contract
value on any given quarter till age 90. So the benefit base when you
annutize is the greater of the 7% rollup base and the quarterly
ratchet base. so if your contract value was ever worth more than 200k
you would recieve that contract value when you annutize. The thing is
you have to annutize on the 10th or later year. I can explain to more
benefits of the product if you would like more information
 
F

FranksPlace2

I agree with Durban. To me annuities are like asking someone to hold
your money and pay it back to you less a fee. They do have insurance
features that reduce risk but at price. Hold your own money!

Frank
 
G

Gene E. Utterback, EA

Durban said:
No to the variable annuity! Roll it over to an IRA mutual fund account at
Vanguard, Fidelity, or Schwab (or some other good solid mutual fund
company).
There is nothing wrong with a VA, providing it is the right VA and you
understand what you are getting into.

Gene E. Utterback, EA
 
Ad

Advertisements

B

BMS

How old are you and where does this fit in your portfolio?

If you are going back to work, a roll over IRA might make more sense. I you
have other retirement money, the right VA could make sense.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top