Tax Sheltered Annuities.....

[Bigmack]

I know Mutual Funds are supposedly covered by FDIC now, but does it make sense to pull the money out of the TSA... pay the taxes and just get out?

Especially if the account is over $100K?

[jojo54]

1. At this point, I think your guess is just as good as anyone else's.

Don't you have an advisor to ask?

[Bigmack]

2. All my friends with "advisors" ....

have lost their asses... anywhere from 1/3 lost to broke even.

When Dumbya "won" in 2004, I was so pissed I moved my TSA out of money market into anything outside the country. I asked Fidelity if they had anything related to Canada. They said yes ... FICDX. I put the whole bundle in, at $32.48. I sold at $66.54.

I did "ask my advisor"... the Economy board at DU.

[A HERETIC I AM]

6. But you made that move INSIDE the TSA, right?

You said;

I was so pissed I moved my TSA out of money market into anything outside the country. I asked Fidelity if they had anything related to Canada. They said yes ... FICDX. I put the whole bundle in, at $32.48. I sold at $66.54.

The OP is asking if he should get it completely out of his TSA. You didn't do that, did you? You just moved the investments around, but did not surrender the account, right?

[Bigmack]

8. Right... just moved it. nt

[sinkingfeeling]

3. Here's what the FDIC says...

A stockbroker at your bank or savings institution can sell securities and mutual funds that are protected against certain losses, but not by the FDIC and not in the same way the FDIC insures deposits. The Securities Investor Protection Corporation (SIPC), a non-profit corporation (not a government agency) funded by brokerage firms, provides limited coverage if, for example, a member brokerage firm goes out of business. The SIPC doesn't insure you against financial losses caused by market declines. (To learn more, go to the SIPC Web site.)


Your bank or savings institution can sell annuities, which are investments with income guaranteed to start some time in the future. Annuities may appear to be "insured" because they guarantee a minimum payment for life, but these products are not FDIC-insured.

http://www.fdic.gov/CONSUMERS/consumer/news/cnspr01/cvrstry.html

[hertopos]

4. In general, the answer is no

Today's variabile annuity comes with various form of 'minimum withdrawal garentee' and etc. They offer garanteed increase in your 'virtual account' regardless of what your real mutual funds are doing. And it comes with some cost.

In general, you are not healthy and already in 50's, good variable annuity from strong insurance company is a very good deal.

If you are younger, my best recommendation is the combination of wholelife and ETF funds ( they are much better than mutual funds and you can diversify wider even beyond securities. If you create a ETF based portfolio, you can includes global ETF and commodity ETF.
They are gaining popularity in Japan since mutual funds company does not have that much cover in Japan.

I am a financial adviser, FR of Guardian Mutual life and RR of Park Avenue security. For us, ( Guardian is one of very few remaining 100% mutual company, meaning zero market capitalization.)current finacial situation is almost good time since all investment banks disappeared and people are looking for different retirement planning model. All my clients redirect some of their money from 401k contribution to whole life premium. They are very happy with their decision right now.

Here is an interesting article by Businessweek website.
http://www.businessweek.com/investor/content/jan2008/pi20080131_281929.htm?chan=search

Just my input.

hertopos

[A HERETIC I AM]

5. Mutual Funds are NOT covered by the Federal Deposit Insurance Corporation.

That part of your post is a misconception. Certain Money Market Mutual Funds and other Money Market funds have recently been shored up but nothing I've read suggests they are FDIC insured and there is NO FDIC insurance on the average Mutual Fund.


If you have a TSA - otherwise known as a 403(B) plan, it is a safe bet that you are employed as either an Educator, a Hospital worker or in some capacity for a non-profit agency or organization. (403(B) definition)

If you do a "Surrender" - meaning you give up the investments, take the cash and pocket it, and if you do this while you are still employed by the organization with which the 403(B) agreement is made, you stand to lose a shitload.

Ten percent (10%) right off the top. If your current balance is $100,000 and you surrender, you will at the very most, get a check for $90,000. The ENTIRE $100,000 is then added to your adjusted Gross Income (AGI) for the year via a 1099 form that you will recieve and the IRS will be copied on. You will owe taxes on that entire hundred grand at your marginal rate.

What would your tax rate be if you got a $100,000 raise for this year and only this year?

Cashing it out is a horribly bad idea. If what you have is a common 403(B) then you should have investment options that you can change. Get some sound advice from someone you trust or from someone known by someone you trust. You should be able to make changes that will preserve capital. But you have to be careful and not shoot yourself in the foot. Do NOT take advice from a public message board before you either talk to a professional or are COMPLETELY familiar with the consequences of such a move.

Do you really want your $100,000 to become perhaps $65,000 just because of taxes and penalties? You won't get those back. With enough time, it is very likely you will get market losses back.

This is not investment advice. This is factual information that you and anyone else considering a similar move will realize, should you surrender a tax qualified account contrary to the IRS rules.

Edited for sentence structure.

[A HERETIC I AM]

7. And I should add, because I can't edit anymore, the above information can be verified here;

www.irs.gov