How Many Guys Here Are Retired?

[Tony alony]

The reason I asked is: I have to make a decision on a split of my retirement annuity. The reason for doing so is to lessen the burden of taxation on the mandatory withdrawals. I'll soon be 69 years old In a couple of months. The mandatory withdrawals are based on a 4% withdrawal rate,which is subject to taxation at age 701/2. Are there any clever moves to make now which would enable a lesser tax payment on the mandatory withdrawals. I suppose I could research another forum where the info could be found, but learning a new set of individuals, and the associated learning curve, is daunting. Sometimes I wish I had set up a Roth, and paid taxes early on; but that's water under the bridge.
Any suggestions?
Thanks

[Mightyquinn]

Does your bank offer a free financial advisor? I think that might be the best way to go unless we have some CPA's on here.

I have USAA and I know they offer free financial advice but not sure of other banks or credit unions.


REEL MEN MOW

[Tony alony]

Thanks MQ . Since you are ex-military you have the services from financial advisors from USAA.
In my case I (we), in the union building trades have independent financial advisors that are similar.
My main gist is to understand if there is a way to keep a portion of my retirement nest egg from taxation at the 4% mandatory withdrawal rate at 70 1/2 years of age.. My advisor, suggested today, that I take a portion of my retirement fund and start a new vehicle with a portion of the fund, even though I would be taxed on the complete value of the retirement nest egg( annuity). The original annuity, is a rather complicated annuity, in regards to the guaranteed value based on the highest amount of a death benefit in terms of value, for that year. It would take a very long explaination to describe how, or why, I could change the current setup, and why it was originally set up in that way.
I was wondering if anyone has been down this road before, since I trust a lot of the posters here, I'd rather consider the opinions here, rather than someone or just anyone's ramblings on another forum.
Thanks for any other replies.

[turf_toes]

Maybe I don't understand what you're trying to do here.

But if you withdraw funds from an IRA or 401k, you have to pay the tax due (unless it's a Roth).

So you'd have to pay the tax to withdraw it from the tax deferred account to put it into the annuity.

The other thing I don't understand is why you'd want to do that. An IRA or 401k is essentially an annuity.

I can understand why a financial advisor might suggest doing that (it results in more fees for him/her).

But it doesn't make much sense for you, in my opinion. You're going to pay the tax either way. Now you'll also pay the fees to get into the annuity.

Maybe I'm missing something here?

Ask your financial advisor if he or she is a fiduciary. If not, my advice to you is to run as fast as you can.

There are basically two types of financial advisors. Fiduciaries are legally required to give advice that is in your best interest.

The other type are not held to that standard.

I suggest you do more than ask if he or she is a fiduciary. Ask for proof.

http://money.usnews.com/money/blogs/the ... -fiduciary

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[Tony alony]

Thanks turf_toes for your help. I saw this web page and the look on the person's face is pretty much how I feel. LOL. http://www.bankrate.com/finance/taxes/i ... rules.aspx

Anyway, I should know more about my advisor's plan by the weekend, when he sends the paperwork for me to accept or decline. From what I can tell, the only way to avoid paying taxes on mandatory withdrawals is to donate the withdrawal to charity. In hindsight, I wish I had set up a Roth IRA just before retirement and paid the taxes on the monies at that time. I assume this new investment plan will work out, and perhaps provide more growth than the current plan. I hope this will offset the withdrawal requirement and not make the mandatory tax burden a larger burden.

[HoosierLawnGnome]

Not retired.

Are you talking about taking the required withdrawal from the annuity then rolling it into a traditional IRA for a tax deduction?

Don't withdraw money and incur taxes or fees if you are not required to start doing so by law or don't need the money.

And I'd avoid an annuity. If you're going to reinvest put it into something like an index fund.

Most financial advisers are really salesmen. I've know several that went bankrupt and wouldn't trust to manage a lemonade stand. BUT they qualified for a lease on a Mercedes and bought a nice suite and spend a lot on a haircut. You want someone that knows how to make money with money. Lots of big hat no cattle types out there. If it's "complicated" don't buy it.

[ Post made via Android ]

[Tony alony]

Thanks HLG. Good advice, I appreciate it !

[Pennstater2005]

I'm a member of Bogleheads, a free, investing forum. You'll get good, unbiased advice there. HLG's advice of index funds and avoiding financial advisors is a good start.

[kevreh]

^^^ I second Pennstater. Great forum, lot of good advice, and some of the members are financial advisers themselves. Being a Boglehead forum, there's a lot of Vanguard leaning advice, which is fine in my book since their a low-fee fund company.