If you contribute to a Standard IRA or a Roth IRA by April 15th, you’ll be able to reduce your 2021 income taxes or earn tax-free growth with your Roth, provided you’re eligible. It’s also an excellent opportunity to think about how you’re investing all of your IRA assets to see if there are any better possibilities. If you’re overly invested in equities, review your current asset allocation and work on rebalancing. You may be able to create an investment plan that will give you superior growth without taking on intolerable risk by broadening your horizons. This article won’t discuss well-known techniques like foreign and domestic equities, CDs, bonds, and commodity exchange-traded funds (ETFs) – all of which can help you stay ahead of inflation if you have a well-diversified portfolio. We’ll only stick to annuities and why they might be a beneficial addition to any IRA plan and portfolio. Upsides of fixed-index Annuities Fixed annuities are the only financial products that guarantee your principal while allowing market-based development. Fixed-indexed annuities are a new type of investment that combines the best parts of both stocks and bonds. When the stock market rises, they pay a portion of the gain as yearly interest rate credit. You can only get a small share of the market’s annual gains, like the S&P 500 or the Dow Jones Industrial Average (DJIA), in exchange for a promise that you won’t lose money in the long run. You’ll usually get no interest if the market index produces a negative for the year. Also, you can buy riders for guaranteed lifetime income and withdrawal benefits for an additional fee. Indexed annuities have a lot of advantages, and their sales have increased dramatically. One drawback is the level of intricacy. Understanding indexed annuities require more time and effort to determine which one is best for you. They’re also designed to perform over time, not just for immediate needs, which is one of the primary reasons they work effectively in IRAs. Deferred Income Annuity (DIA) to Provide a Lifetime Income Guarantee A Deferred Income Annuity (DIA) postpones income distributions to a future date you choose. After a holding period of two to 40 years, it can give an assured lifetime income. The biggest downside of income annuities is that the cash value is no longer yours. You give the money up in exchange for a guarantee of future earnings. But you can choose annuities that pay within a shorter period. A DIA can be used as an IRA to comply with required minimum distribution (RMD) laws, but ensure your income payments start after you hit age 72. If you plan to defer income payments past that age, consider getting a Qualified Longevity Annuity Contract (QLAC). Qualified Longevity Annuity Contract (QLAC) To Defer RMDs The QLAC is an IRA-DIA that complies with IRS regulations. You don’t have to take RMD on assets in a QLAC. If you have money in a traditional IRA, this is the only way you can legally postpone your RMDs, which means you can keep more funds in your account for longer. You can put up to 25% of your IRA money ($135,000 maximum) into a QLAC. Instead of needing to take RMDs on a conventional IRA starting at 72, you can put off taking them on the QLAC until you’re 85. Immediate income annuity for RMDs An immediate annuity can assist you with paying your RMDs if you’re over 72. You can pick between a lifetime income guarantee or a limited-term, so it doesn’t exceed your life expectancy. Some retirees don’t like illiquidity. However, if you require immediate cash, it isn’t easy to secure the same level of guaranteed lifetime income in any other way. Fixed-rate annuities vs. bond funds and bank CDs A CD-type annuity is another name for a fixed-rate annuity. It promises a fixed rate for two to ten years, just like a bank certificate of deposit. Multi-Year Guaranteed Annuity (MYGA) typically pays far higher interest rates than CDs with similar terms. You can renew your MYGA for an extended guarantee period at the end of each term. You can also annuitize it to get guaranteed income. You’ll be fined if you make too many withdrawals before the term ends, just like with CDs.
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Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families. Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation. Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.
Disclosure:
Securities offered through GRF Capital Investors, Inc., 6506 South Lewis Avenue, Suite 160 Tulsa, OK 74136 Phone: 918-744-1333 Fax: 918-744-1564 Securities cleared through RBC Capital Markets, LLC. 60 South 6th St., Minneapolis, MN 55402Member FINRA www.finra.org / SIPC www.sipc.orgBroker Check http://brokercheck.finra.org/
