UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Old Question/jesserivera67 Date: 12/7/2003 12:19 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hey, Fools!

I think that I have a better handle on some of this now. I believe that I better understand the mortality and expense charges, the management fees, and the surrender charges. Mortality expenses and fees are 1.0%, and my "subaccount" (500 index fund) runs .32%, which is the "management fee", correct? So, my fees and expenses are 1.32%, plus the $25.00 I pay a year. Make sense?

So, of course that is not too exciting.

What I am trying to understand is this. They talk about how when you begin withdrawals (from the variable annuity), that the money is "taxed as ordinary income tax", which means it is taxed based on my tax bracket. If my 403B was NOT an annuity, it would STILL BE TAXED in the same way, correct? Is it only the "gains" that are taxed?

So, outside of the fees described above, there is no other downside to the variable annuity vs. a regular 403B (yes, as stated, I am trying to gather up a list as to "why we should get the heck out of the annuity only option", for my employer).

In the reading material suggested, when looking at the downside of annuities vs. other investment income, they spoke about a "capital gains tax break". They say this is 15%. They are referring to "after tax" accounts, correct? I don't understand what "capital gains tax break", means per say, but perhaps it means that when income from other sources, such as, lets say, money in a 500 index account in Vanguard, is removed, I would get taxed at 15%? Is this on all the money in there, or just what I made? Or does this relate to something completely different (this I would really like to understand b/c the money I have in said account is my "house fund", so I would like to know the consequences of this).

Anyway, back to retirement, specifically. If I am understanding this whole thing correctly, perhaps my retirement investment strategy (if I am stuck with this annuity at work), should look something like this:

1) Invest up to employer matching in 403B (annuity)
2) Max out Roth yearly
3) Put rest of money in after tax account in Vanguard (or whoever)

Thanks in advance for your wisdom!

-MTBer
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement