Our financial planner wants us to put our 401k inot annuities (more commission) for him. Our employer suggests IRA account. Need help retiring June 15. Thanks

Our financial planner wants us to put our 401k inot annuities (more commission) for him. Our
employer suggests IRA account. Need help retiring June 15. Thanks

Your post does not indicate any need for an annuity. Stay with the IRA.

The annuity may have some benefit if you could not have tax deferred earnings in an IRA and you wanted a set payment (remember inflation) for the rest of your life.

Lacking additional info that would suggest to the contrary, I'd suggest you go with the 401k rollover into an IRA of your choosing! Good luck! PP

The choice between annuity and IRA at retirement requires careful assessment. You may need professional advice, but here are some thoughts.

As you point out, the annuity is more costly in terms of commissions (usually). If you are talking about the annuitized phase of the annuity, you will probably find that the guaranteed annual payout of the annuity is higher than would be obtained from say a bond portfolio, and the annuity payout is guaranteed by the insurance company that issued it. However, the price is that the annuity is not really your asset. At your death, the bond portfolio becomes an asset in your estate (if in an IRA, then an asset of your beneficiaries) while the annuity becomes property of the insurance company.

Setting up a bond portfolio for income requires more risk taking, but is a better option if you have the knowledge to manage it or trustworthy advisers. Besides, a bond portfolio can usually be converted to an annunity. The reverse is rarely practical.

The answers change if you plan to allow the assets to grow for a while before you start taking payments in retirement. Then both the IRA and annuity are protected from taxes during the accumulation phase. A self directed IRA should provide more options and more flexibility, and probably at lower cost. The main limitation is that the amount you can add to the account is strictly limited (except in the case of a rollover). Lack of restrictions on the amount that can be added is a major advantage of the annuity.

(This is complex subject. My answer makes many assumptions. I'll bet there are books on this subject.)

Pauleckler sez:

<<(This is complex subject. My answer makes many assumptions. I'll bet there are books on this subject.)>>

And if anyone was silly enough to take the opposite side of that bet, you'd win, too. :-)

Regards..Pixy

Annuities are just plain stupid investments for 99.99% of the population. Buy a no load index fund. Please!!!

-jeff

please, please, please do not put into annuities. your planner sounds like a prime candidate for one of those tv commercials for online trading. he(or she) wants to get rich off of suckers-don't be one

Your employer should allow you to keep you money in your 401k with his trustee for a time being. At least until you are sure what to do with it. My co. allows me to keep it with them til 65. I can use their trustee to maintain my account, I can convert or buy and sell the offered mutual funds, receive dividends etc. If you roll it over, you should do a direct rollover to an traditional IRA. A Roth is good but depends upon how long you intend to keep money there and if you can pay taxes up front etc.etc. Try, I said try, to resist the agent pressuring you into the annuity until you are absolutely sure, foolishly sure. Big commissions, right! By the way, what kind of car does he drive?? Definitely not all of your account should go to the annuity (my opinion). By the way, your 401k might even have its own payout features. Check with your plan administrator.

Annuities are good only for the agent/financial advisor. Stay away from this guy!

Perhaps a smaller number might be more appropriate...
PP

Sorry Vivien, annuities are beneficial for the consumer too! When used properly they provide a tax-deferred growth account & can guarantee an income for a fixed period, a lifetime, or both. While they're not great for everyone, they are good for some. PP

p.s. the commissions aren't that great anyway!

Why not go to a 2nd financial planner and see what he says? Also, seek out some who have recently retired from your company, see what choices they made and how they have fared with these choices.

An IRA is the only way to go, gives you more flexability, in all likelyhood the fees are less , you have the use of the principal if you need it and your kids may even inherit some money if you expire before you use all the money. Two bits says your financial planner also wants to sell you the annuity. Go to a planner that only sells his plans, no products!