Poster “CletusCaddy” makes a good case for low cost variable annuities for high earners in high tax states who have maxed out other tax-saving alternatives, and who plan to withdraw from the VA during years when other income is low or zero.
I know the general consensus is that Variable Annuities are bad, but given the lower cost of this one I wanted to seek feedback.
If you fit into this category (and it sounds like you may), this product may be good for you.
As you consider this product, just be aware of all of the potential expenses compared to holding assets in a taxable account -
—- The $20 per month fee, which is trivial for a VA account value of any size
—- Fund fees. I briefly scanned the list of available funds, and noted that there were many funds in the 1% per year expense range. But I also saw the Vanguard Total Stock Market index available at 0.13% inside the VA, a nominal increase compared to the expense ratio of 0.04% outside the VA
—- The marginal increase in fees charged by your advisor, if any, by owning the VA through him instead of holding the assets in an outside taxable account
I can imagine a situation where these VA fees are justified by the overall tax savings, even though VA gains are taxed as ordinary income. So a stripped down VA like this might make sense for you.
(And CletusCaddy, I’m glad that you rejoined us on the Forum. Your perspective is welcome and very much needed)
Statistics: Posted by Stinky — Mon Apr 01, 2024 4:32 am