We are heading into the heat of the summer here in Denver, and I wanted to talk about everyone’s favorite subject—variable annuities (kidding …).
Annuities are generally sold, not bought. In many cases, they are a solution looking for a problem.
We speak to a lot of clients / prospects, and no one ever seems happy with the annuities they have purchased over time. High costs, hidden commissions, surrender charges, and confusing language make it hard for most to know what they have purchased. The main issue is the lack of transparency.
That is not to say that the right kind of variable annuity wouldn’t have a place in a financial plan. It does. The main reason is to defer taxes, especially for someone who has come into a large one-time sum of money—inheritance, sale of a business, divorce, lottery, etc. The compounding power of tax deferral allows clients’ retirement dollars to grow at a much faster rate over time.
So, what is the “right” kind of variable annuity?
Well, glad you asked. We have one!
It is called Gain Keeper—an Investment Only Variable Annuity that is available to clients of advisors like All Season. It is a variable annuity wrapper offered by Nationwide, where we manage the investments in our Blended Asset strategy. Here is a quick refresher on Gain Keeper from our website (https://allseasonfunds.com/our-services/investment-categories):
Gain Keeper solves the issues of cost and transparency when it comes to annuities—no high fees, no commissions, no B.S.
Specifically, there are:
- No hidden fees. All Season clients are only charged $20 per month and our flat investment management fee to have us manage this product.
- No limits on contributions. 401k’s and other retirement plans limit the amount annual pre-tax contributions. Since you will be using post-tax dollars to fund Gain Keeper, there are no limits on what you can put into them. As we mentioned, this is a perfect solution to help defer taxes after receiving an inheritance, selling your business, and/or going through a divorce.
- No required minimum distributions until age 100. Unlike IRA’s you aren’t required to take money out every starting in the year you turn 70 ½ years old.
- Higher age limits to add money. Unlike standard defined contribution plans, you can add money to Gain Keeper until age 95.
- No hard-to-understand investments. All Season manages the assets directly inside the annuity wrapper. We offer clients a diversified portfolio with a focus on managing risk and controlling draw-downs. You will be able to see what is in your portfolio on any given day.
- No surrender charges. There are no hidden fees to close the annuity. You can shut it down at any time with no penalty.
- Tax advantages. Investment gains are withdrawn first and taxed at your marginal rate. Once you get back to your original principal, withdrawals will no longer be taxed.
- Advantages for estate planning. You can name beneficiaries with this annuity product so that your heirs can continue to maintain the tax-deferred gains.
We love lowering or deferring tax bills for clients. Gain Keeper offers a great solution for high income earners, who want to put more money away, or for those who have received a large one-time sum of money.
If either circumstance applies to you, please feel to reach out for more information.
Stay cool!
Sean
