Roth 401K versus variable annuity


R

rick++

I was noticing the similiarities of a Roth 401K to a VA.
Are these items accurate:

Both are funded with post-tax dollars; earnings are deferred.
Both have have 10% tax penalty if withdrawals before five years.
A Roth has no mandatory age withdrawal. A VA matures at some
future contract date which can be age 90 (or later?).
Roth contributions have an AGI limitation and ceiling amount.
A VA has no AGI limitation or ceiling amount.
A VA has an insurance wrapper overhead of at least 0.25%.
It may have early withdrawal penalties beyond the federal one,
but some dont.
A Roth can be inherited wihout paying immediate taxes.
The gains in a VA are taxes when inherited.
The insurance part of a VA can be structured for additional
benefits such guaranteeing principal, death benefit etc,
but that may increase the insurance amount.
 
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J

joetaxpayer

rick++ said:
I was noticing the similiarities of a Roth 401K to a VA.
Are these items accurate:

Both are funded with post-tax dollars; earnings are deferred.
Both have have 10% tax penalty if withdrawals before five years.
A Roth has no mandatory age withdrawal. A VA matures at some
future contract date which can be age 90 (or later?).
Roth contributions have an AGI limitation and ceiling amount.
A VA has no AGI limitation or ceiling amount.
A VA has an insurance wrapper overhead of at least 0.25%.
It may have early withdrawal penalties beyond the federal one,
but some dont.
A Roth can be inherited wihout paying immediate taxes.
The gains in a VA are taxes when inherited.
The insurance part of a VA can be structured for additional
benefits such guaranteeing principal, death benefit etc,
but that may increase the insurance amount.
The best part of the VA you missed is that all gains are then taxed at
ordinary rates upon withdrawal. So even after the years of "only" .25%
overhead, you get to support uncle sam on the back end.
JOE
 

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