Very aggressive PDA from NY Life

[scagnt83]

I wonder if it is invested entirely different statutorily, etc. Some carrier would be doing it to 1 up another (like is done in IUL with multipliers or crediting to in force) as away to lure away. If all are doing it, it tells me there is more to what they can do with bank like product or insurance product, especially big carrier doesn't have a banking entity. Kind of like the carriers don't pay agents on death claim retained asset checking accounts serviced by banks but assets held by carrier

Good points. Seems like they could pay more in Life comp if the PDA is used at minimum. An extra 10% first year and 2% while PDA is active.

 

[Allen Trent]

MYGA would not be ideal unless free withdrawal is on the basis. There used to be some out there that allowed that. There are a few different FIAs that allow it. The fixed period SPIA market has shrunk a good bit too. So the options are not like they used to be, but they still are out there. And as long as they exist, carriers are going to lose PDA deposits to them.

But do the limited few that you say do still exist with those liquidity features credit 3% MYGA interest or are they lower interest because of too much liquidity risk to carrier or lower rated carrier. MYGA I see with best rates tend to have little to no liquidity, sometimes not even 10% annual

 

[Allen Trent]

True. If using a deferred annuity, the method only works on age 50+ (since you can 72t a 50 year old for 10 years to fund a 10pay life policy).

You might want to double check that. Last I knew, 72t required Substantially equal periodic payments based on life expectancy table & according to super low IRS current interest rates, meaning no more than a few % access each year until they hit 59 1/2.

 

[Allen Trent]

Good points. Seems like they could pay more in Life comp if the PDA is used at minimum. An extra 10% first year and 2% while PDA is active.

I bet their actuaries will say they can, but then will want to increase the load fee on PUAR or something...... LOL

 

[scagnt83]

But do the limited few that you say do still exist with those liquidity features credit 3% MYGA interest or are they lower interest because of too much liquidity risk to carrier or lower rated carrier. MYGA I see with best rates tend to have little to no liquidity, sometimes not even 10% annual

It would be best done with a FIA in today's market. 10 years ago there would have been a decent amount of options. Not many anymore. I havent sold a MYGA in over a year, so that tells you how in tune I am with that market right now.

 

[scagnt83]

You might want to double check that. Last I knew, 72t required Substantially equal periodic payments based on life expectancy table & according to super low IRS current interest rates, meaning no more than a few % access each year until they hit 59 1/2.

SEPP is to age 59 1/2, or 5 years, whichever is longer.

I think it can also be based on entire life expectancy as well if you just want a lifetime spia.

Understanding 72(t) and SEPP | Fidelity Institutional

The returns arent going to be an issue for most people since you are taking distributions. The calculations look at account balance, not interest earned. (if I remember right)

 

[scagnt83]

I bet their actuaries will say they can, but then will want to increase the load fee on PUAR or something...... LOL

Probably. But why!?? LOL. They act like they arent profiting from those funds.

 

[Allen Trent]

SEPP is to age 59 1/2, or 5 years, whichever is longer.

I think it can also be based on entire life expectancy as well if you just want a lifetime spia.

Understanding 72(t) and SEPP | Fidelity Institutional

The returns arent going to be an issue for most people since you are taking distributions. The calculations look at account balance, not interest earned. (if I remember right)

Correct, but the annual amount is just the tiny amount allowed based on full life expectancy & low int rate, so a 50 year old might get 30 year spread at a couple % IRS interest in formula for a check of maybe 4% annually. At age 59 1/2, he could end the SEPP distributiosns without owing the retroactive back 10% penalty. But, he would have only taken 40-50% out of the original amount because of basically the RMD on life expectancy.

Pretty certain The level checks can't be a fixed number of equal years as I believe all methods use life expectancy in the calculated allowed amount

Same is true with a SPIA prior to age 59 1/2. Only way to avoid 10% IRS penalty on taxable gain is for the SPIA payments to be based on IRS approved life expectancy, not a fixed period of years SPIA

If you find something that contradicts what I am saying, please share

I think you can see where a misunderstanding of some of the details could completely unravel a case that up front was ok by Best interest standards & come crashing down several years later when CPA has to file amended returns or an audit happens

 

[Lloyds of Lubbock]

Glad you guys are having such a good time with this!

 

[scagnt83]

Glad you guys are having such a good time with this!

No way you dont have an opinion on the subject of comp and PDA accounts! .... lol