Variable-Annuity Charges Decline

There was an interesting article in today’s Wall Street Journal about how the financial services industry is working to lower fees on variable-annuities. This is a step in the right direction. My big problem with annuities is that the brokers get paid more to sell annuities than they do to sell traditional mutual funds. Therefore, there is a motivation to try to convince (often using scare tactics) customers to buy annuities. Of course, clients are unaware of their salesperson’s motivation.

While we are on the topic of variable annuities, Kim Snider at Kimmunications has some pretty good articles on variable annuities.

Stretch That IRA – An Example

Here’s an example of what a stretch IRA looks like.

Last week, I talked about how to calculate the Required Minimum Distribution on an inherited IRA. This week I want to show you even a small IRA can mean millions of dollars in additional income to a beneficiary.

For this example, I used the following inputs: Continue reading “Stretch That IRA – An Example”

IRA Question From Reader

A reader of my post on stretching IRAs asked the following question:

I have two kids, I am 30, and my parents are in their 50’s. Can they make me the beneficiary of their IRA’s, and then I turn around and make my kid’s beneficiaries of their g-parents IRA?

Here’s the way beneficiaries work:
Continue reading “IRA Question From Reader”

Stretch That IRA

This is from a post I did earlier this year so most of my readers probably never saw it.

This information was taken from Ed Slott’s books, The Retirement Savings Time Bomb and How to Defuse it and Parlay Your IRA Into a Family Fortune.

In the second book, Slott talks about stretching an IRA. I gotta tell you, this is HUGE! Stretching an IRA means that a person can name a beneficiary to their IRA. When the owner of the IRA dies, the beneficiary becomes the new owner of the IRA. Mandatory distributions must begin, but they are based on the beneficiary’s age (see table below).
Continue reading “Stretch That IRA”