No. of Recommendations: 1
To summarize, your most important question is that you are considering a non-qualified deferred annuity so that you can better qualify for financial aid for your children?

(There is no reason to really do a comparison of your SS and RMD situation without adding in the pensions so until you have those numbers, I would wait on any conversion decision. Those "moderate" pensions will have a significant impact on your decision.)

Now regarding the taxable money, the alternative is to leave this money in cash or what? You state that retirement funds do not count toward EFC, have you confirmed that a non-qualified annuity would be consider retirement funds under that scenario?

One would have to measure the opportunity cost. What investment opportunity are you giving up for putting that money into an annuity. What benefit (i.e. how much financial aid) are you likely to gain from such a move?

Which is greater when you factor in whatever return you expect on the money in the annuity? Note, with the annuity, you need not necessarily take income from it in the future. You could simply cash it in at maturity and pay taxes on whatever gains you experience.

If your analysis warrants further research, I would consider looking into a 3-5 yr fixed annuity - assuming you are only doing this to game the EFC and are not looking to make much money in the process.

Last I checked, I NYLife and The Principal offered a 3 and a 5 yr.

If you are trying to replace a taxable stock investment something that might get comparable returns, I would look for an A share VA (they charge an upfront fee instead of a back-end charge and cost you less every year) There are also a handful of low-fee VAs out there that you might find at places like Fidelity and Vanguard.
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