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My SO had a fixed indexed annuity out of the penalty phase and wanted to earn a better interest rate than the 2.5% rate it had earned over the last 10 years. She did a 1035 exchange into a Multi Year Guaranteed Annuity ladder for 3-5 years at roughly 5.85%. This is a taxable (non deferred) account that will shelter the money from taxes for the length of the annuity. She will not need lifetime income as her current guaranteed income floor is more than sufficient to cover expenses. Reducing the taxes and possible IIRMA penalty is the goal at this time. I’m thinking a 10 year immediate annuity may be the best solution to spread out the tax hit on each annuity as it matures. Is there another way to handle this that I am missing? SO is 64 at this time and MYGA funds are about 25% of her net worth.
I am in a very similar situation – 64, just set up a 4 year MYGA ladder. Due to the size of the rungs and other sources of income, I’m not concerned about IIRMA. However will be watching this thread to see what others have to say about your question.
You may want to try your question over on Bogleheads forum. That’s where I first learned about MYGAs. Lots of discussions about them over there.
I also have MYGAs. I was able to take my interest from each annuity on a monthly basis so as to lessen the tax hit when the annuity matures and not need to roll the annuity in a 1035 exchange to avoid taxes on the interest. In my case, I will invest in muni bonds due to my age and tax status. Just a thought.