Commissions are paid to the agent by the issuing carrier…..and is built into the product. In other words, you don’t see it. Commission levels depend on the product type. The simpler the product, the lower the built in commission.
MYGAs and SPIAs can be 0.50% to 2%. Indexed and variable annuities can have commissions ranging from 5% to over 10%. Once again, it depends on the product and carrier.
If you have a specific product in mind, I can tell you the commission range.
If you die after the income stream has started……it would continue uninterrupted and unchanged if you had set it up “Joint Life” at the time of application. You will receive an annual statement with a QLAC type of annuity.
This is an easy one question to answer. A person that is 94 years old has NO BUSINESS BUYING ANY TYPE OF ANNUITY. Anyone that tells you otherwise is a crook.
The answer to your question depends on what type of annuity you purchase within your IRA. If it’s a SPIA, then income will be coming out of your IRA immediately….and will be taxable. If it’s a QLAC, then you can defer to as far out as age 85.
How does the application process work in terms of how an insurance company qualifies your application for ability to pay the premium? Do you need to show proof of funds? How does it work specifically? Once you determine the amount you care to purchase, say $100,000, can they provide all the specifics of the contract before receiving payment or guarantee of payment?
The application process is very simple with all of the Annuities.direct sites: www.SPIA.direct, www.DIAS.direct, www.QLAC.direct, andwww.MYGA.direct). 95% of the process is done online, with online forms…with the final 5% handled by a licensed administrative person (non-agent). The application process involves suitability questions. The vast majority of annuities are single premium. You can either write a check, or wire the funds directly to the carriers. Regarding do you need to show proof of funds? No. You fill out the application by answering the suitability questions. Regarding how does it work specifically? Not sure if you are talking about the application process, or carrier suitability. Please call me so I can clarify. Regarding, once you determine the amount you care to purchase, say $100,000, can they provide all the specifics of the contract before receiving payment or guarantee of payment? Yes.
That information is provided by the annuity carrier to the IRS…but your CPA should know about the QLAC purchase.
To answer your question, there are no fees to you with a QLAC contract. The annuity carrier takes on all of the risk. For additional information please feel free to read the pdf. in QLAC.direct.
Yes, your spouse can also contribute 25% or $130,000 (whichever is less) into a QLAC contract. That’s potentially as high as $250,000 per household that can be allocated to QLAC strategies.
Also, you can add your spouse as a joint annuitant to your contract. That means the lifetime income guarantee is for both lives, regardless of how long either of you live. The contractually guaranteed payment will be lower because the carrier will be covering two lives, but it may be worth it to you.
Yes, the biggest negative to the QLAC ruling is the limitation of how much money you can place in the strategy. $130,000 or 25% of your IRA isn’t enough for a lot of people, but rules are rules. If you max out your QLAC then switch gears and focus on the same future income strategy in your non-IRA accounts. Look at a Deferred Income Annuity (DIA) to contractually guarantee a future income at a specified date.
Is there a minimum purchase amount for a QLAC? As my IRA appreciates (hopefully), will I be allowed to add to the QLAC? Since I turn 70½ in April 2017, to reduce my RMD will I need to purchase the QLAC prior to 31 December 2016. Does the QLAC become effective immediately, or is there a wait period? Who decides which fund (or funds) to contribute to the QLAC? Will this transaction be similar to a rollover, and therefore non-taxable?
1) The minimum amount from most companies is $25,000 for a QLAC contract.
2) You can establish a second contract, but you would not be able to add to the existing contract as they are calculated using the current data and the date the income begins to determine the income amount. Regarding age, the RMD will be reduced in the whatever year you contribute to the a QLAC as the calculation is determined by the 12/31 balance of the IRA account.
3) The QLAC is effective immediately, i.e. the contract date – the income is determined by the start date.
4) You decide which funds to contribute.
5) Yes, it will be a transfer and avoid taxes.
There is no annuity that perfectly solves for inflation. With QLACs you have the ability to attach a COLA (Cost of Living Adjustment) annual increase at the time of application, and choose the percentage increase for the life of the policy. The reality of a COLA is that adding one will lower your initial payment when compared to the same QLAC without a COLA. The good news with QLAC is that the $125,000 funding limit will be indexed to inflation and adjusted in $10,000 increments.
- If I don’t need this money until later in life I can defer the taxes until I need the income.
- My Required Minimum Distribution on the remainder of my IRA will be lower at age 70 1/2.
- If I die before the income stream begins 100% of the original premium will go to my beneficiaries.
- If I die after the income stream begins the remainder of my premium will go to my beneficiaries.
- This is in reference to the guaranteed contractual income payment. Life with a Balance Refunded is when I die my beneficiary(s) will receive the balance of my initial premium payment in either a lump sum or remaining installments.