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Old 09-30-2016, 12:41 PM
 
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Nell, at least Fidelity has a broad portfolio of low cost, decently performing funds. Correct me please if I'm wrong, but I was under the impression that their advisors are salaried employees. If I'm wrong, please let me know so I can talk to my brother, who uses Fidelity.
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Old 09-30-2016, 01:08 PM
 
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fidelity has all different types of employees . the team i use can sell products but only if you want them . even if they are not commissioned they have bonus systems .
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Old 09-30-2016, 09:02 PM
 
Location: Saint John, IN
11,043 posts, read 3,982,486 times
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Quote:
Originally Posted by slyfox2 View Post
Thanks for your help. Along with other information, we've decided that this is a BAD IDEA. What we really wanted was to change the Trustee of the beneficiary IRA to a local one. This would mean that we would have a face to connect to.

But I'm not sure that this is possible because of the investments that the IRA are in. Obviously we need to find a tax professional to talk to about this, since we don't even know how much we need to get out of it before December 31 to avoid penalties.

And the sales consultant that the bank gave us clearly didn't know, or didn't want to tell us about tax issues related to it.





Even if the bank rep had any idea about the taxes that will be related to the IRA, legally they can't give you tax advice. Best to consult with your tax professional as you planned. As far as the variable annuity, I would stay clear, but it seems you have already come to that conclusion. Have you looked into a fixed annuity? It will give you a fixed rate of return, usually higher than a CD.
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Old 09-30-2016, 09:13 PM
 
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What do you want the money to do for you? Are you looking for guaranteed income? Is Long Term Care an issue? What about grand kids education?

First consider what your expectations are and the plan or use the money accordingly.
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Old 09-30-2016, 09:43 PM
 
Location: Somewhere in deep in Maine
3,658 posts, read 2,808,340 times
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Quote:
Originally Posted by CGab View Post
Have you looked into a fixed annuity? It will give you a fixed rate of return, usually higher than a CD.
If I wanted bonds it would be easier and more cost effective to buy them myself, not pay someone else fees to do it, not be able to get the money out, and all the other bad scenes of a any kind of insurance annuity.
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Old 09-30-2016, 09:52 PM
 
Location: Somewhere in deep in Maine
3,658 posts, read 2,808,340 times
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Quote:
Originally Posted by Caltovegas View Post
What do you want the money to do for you? Are you looking for guaranteed income? Is Long Term Care an issue? What about grand kids education?

First consider what your expectations are and the plan or use the money accordingly.
Don't need the money to do anything for me. It can just sit there.

Don't need guaranteed income since I already have that.

Don't need long term health care since I have that already.

My grand children's education is the problem of my kids not me, unless I am dead by then, and then whatever assets I have can be decided by my them. By the time my grand kids need education, if I'm still alive I'll be almost 90.

What I need is for the money not to go away---such as lost through a falling market or eaten alive by fees, or unable to be made liquid by outrageous surrender fees.

I used to have an annuity in Swiss Francs back in the 90's. That one wasn't too bad. They offered me no less than 4% income by the end of the term, but there were no surrender fees, since I pulled it all within 6 years of opening it. I made out well because the dollar was falling compared to the Swiss Franc at the time. Every time I took more out for college educations, I had almost as much as I had before I took money out the previous semester. Fees were about 1%. Current USA annuity products are nothing like the La Swisse one I had back then. I had thought they were, until I explored the concept. Isn't the internet wonderful???
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Old 09-30-2016, 09:59 PM
 
Location: Somewhere in deep in Maine
3,658 posts, read 2,808,340 times
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Quote:
Originally Posted by CGab View Post
It will give you a fixed rate of return, usually higher than a CD.
They were offering a seatbelt feature that it would be locked in at the highest that the funds reached, and that if my principle would be protected by the insurance company. I suppose this could be true, but I suspect that the fees would be a lot higher, and that the requirements for these features might require a complicated set of circumstances, which might be difficult to understand in the find print.

Clearly the sales person was either unaware of the dangers to us or simply chose to try to bamboozle us. We told her directly that we would need to take distributions every year just like the beneficiary IRA, and she never batted an eye. Insurance annuities have surrender penalties of as much as 17% of the principle in the first 6-8 years. She never even mentioned that, which is kind of dishonest, don't you think? Kind of????
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Old 09-30-2016, 10:09 PM
 
Location: 5,400 feet
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Since it's an inherited IRA, you may be required to take a withdrawal this year. This is one article about that.
Inherited IRA Rules | Traditional and Roth IRA Withdrawal Rules

Not sure what you mean about the investments in the IRA, any investment can be sold and the original owner could have directed a sale to make a withdrawal.

Most banks should be able to set up an inherited IRA, and will contact the current trustee to transfer the funds. It's the trustee's responsibility to sell the investments, not yours. I wouldn't do it because the returns will be limited to their CD rates (which is all i would ever let a bank manage for me). I also agree that you should never seek investment advice from a bank.

We have IRAs with Fidelity and Vanguard. Fidelity has a local office, which we visit, at most, once a year. Vanguard is strictly a phone and web contact, which works just fine. That also allows you to control the investments and manage the withdrawals. There is, unfortunately, no more magic in face to face contact. Every time we go into our local bank, someone new is there and our status as long time customer means little.
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Old 10-01-2016, 07:30 AM
 
Location: RVA
2,164 posts, read 1,264,598 times
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I guess I don't understand what the reason for the original question is. Just treat it like any other IRA you own, but are required to take an RMD out of. You will be doing the exact same thing in 5 years with your own IRAs, so its good practice. No matter what you do with it, you will have to take an RMD or pay taxes on it if you convert it. IIRAs have their own tax rules and I sincerely doubt any bank will know the best action for you. I manage our IIRAs through Fidelity but just roll the RMDs in to DWs tIRA for a tax wash, by paying the taxes out of pocket. Ours are small, less than $3k in RMDs each year, so not a big issue, yet, but he amount rises each year. I have been able to grow them both quite well so they are significantly larger than they were when we inherited them, despite the RMDs. When I retire in a few years, they will be vacation income generators and sources. I just ignore the income from them for now as part of the income planning process, but eventually they will figure in to our total supplemental income from savings, and because of the higher rate of the RMD withdrawals, we will draw them down first while delaying SS, to reduce total RMDs at 70.

Last edited by Perryinva; 10-01-2016 at 07:39 AM..
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Old 10-01-2016, 07:48 AM
 
Location: Somewhere in deep in Maine
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Quote:
Originally Posted by Perryinva View Post
I guess I don't understand what the reason for the original question is. Just treat it like any other IRA you own, but are required to take an RMD out of. You will be doing the exact same thing in 5 years with your own IRAs, so its good practice. No matter what you do with it, you will have to take an RMD or pay taxes on it if you convert it. IIRAs have their own tax rules and I sincerely doubt any bank will know the best action for you. I manage our IIRAs through Fidelity but just roll the RMDs in to DWs tIRA for a tax wash, by paying the taxes out of pocket. Ours are small, less than $3k in RMDs each year, so not a big issue.
The original question has evolved. We have an inheritance that we wanted to move out of Vanguard mutual funds that was an IRA from the FIL and MIL. Vanguard changed it to a beneficiary IRA with them. But the Vanguard office is more than 700 miles away, and so talking to a real person that we know is impossible if we have questions.

We arranged to have a 5 year draw down of the IRA. But we went to our bank to have it transferred out of stocks and into CD's and have the custodian be the bank. This is simple, and the custodian part would be virtually non-existent, since it would just be CD's. And yes we need to make a withdrawal from the fund this year by December 31 or face a 50% exise tax for the FEds. And no, we don't care about the dismal interest rate since safety is the over-riding concern at our age. I was in the market when I was in my 40's; I don't have time in my life to weather a market downturn in my 70's.

So we went to our bank to do this, and the Customer Service Rep, who we know since she lives 2 doors away, sent us to their Financial Consultant (who is nothing more than a salesperson for fixed and variable annuities, and who isn't even an employee of the bank so she has no fiduciary responsibility to us). She immediately started the sales tactics to sell us a variable annuity with seatbelt of insurance that prevents us from losing any money. Of course, we told her that we would need to take funds out of it on a regular bases, and she smiled and said yes, and failed to tell us that annuities have huge surrender fees before the 7th or 8th year. and that closing down the fund is nigh to impossible, nor did she explain how the fees often obliterate any return, or any of the 15 or so other bad things about them).

So after listening to people here on city data, and reading on the internet, I discovered that annuity that she was selling was nothing like the one I had from La Swisse in Zurich in the 1990's: surrender fees, high fees, limited income, horribly complicated, etc.

And so before the end of the day, I went back and told her that it was not what we wanted. Since she was a one trick pony financial advisor, who operated on commission(and since the commission on my variable was looking like and incredibly easy $4000 to her), she got rather angry when I said that she didn't need to put this together for us for the following week. And the customer service rep got kind of upset because I suspect that her bonus for sending us was disappearing, and so we ended with a disagreeable feeling all around, and may eventually move to another bank that might not be pressuring us in this way. And most certainly, any other money from the inheritance will NOT go to our banking bank, but to the local Savings and Loan where we had our mortgage.

And there you now have the rest of the story.
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