Would like opinions on variable annuity for IRA account?

Money Magazine has a 4 page article out this month on the horrors of annuities.

Please go to your bookstore or library to read the article.

Your library will also have many good books on annuities - read at least one.

Note: Your IRA is already tax advantaged - only buy annities with money that is tax account.

^^^ first sign of scam.

The article states that annuities are of extreme profit for the seller.

Some can charge 15% upfront - from the total.

Then, in a couple of years, they could try to get you to sell your annuity - another hit.

And try to get you to buy another (better) one - yet another hit.

They recommend laddering CD's.

You can find long term ones with Charles Schwab or Fidelity Investments.

Just bought one paying 4% - safe and sound money and they pay out monthly.

Call a discount brokerage.

Schwab offers a cd' ladder annity - one of the best around - extremely low cost.

Annuities - I hate them. They tend to scam those that need money the most.

What is the name of this investor? Jones???

A. Never buy investment products at a bank or insurance company.

Poor products

Poor advice.

A Variable Annuity in an IRA should be against the law. Why pay high hidden fees for tax defferal, inside a product (IRA) that's already tax deffered.

Your adviser is either;

A new representative

or

Only interested in the great commissions from this product

Pro's - good for investments outside of IRAs or 401k plans.

Con's - higher expenses & lower returns

They also pay the seller a nice commission. That's why he was pushing this.

I would NEVER buy one of these for an IRA. Annuity's allow for tax deferral. But you already have this in an IRA.

I would also not likely choose a bank, as my IRA custodian. I would choose one of the large mutual fund companies: Vanguard, Fidelity or TRowe Price. That's assuming you are going to put mutual funds in your IRA??

Variable annuities are 97.99% crap. Run, do not walk, away from anyone pushing them. It means they are not interested in giving you good advice.

As a general rule, banks are also horrible options for retirement advice. Overpriced garbage. Ditto insurance companies.

All you really need is an IRA at Vanguard.com. Roth or traditional.

Traditional = tax advantages for those with modest incomes.

Roth = no taxes on withdrawl in retirement.

At Vanguard, all you need is a little money ($10,000) for a totally free account...although there are a number of free and nearly free options with less money. They have a 1-800 number and will be happy to talk to you. The website also has a lot of good info (link below).

For nearly zero risk investing, there is the Prime Money Market fund.

For stock market investing, there is the Total Stock Market Index (VTSMX) fund and the Total International Stock Index (VGTSX) fund.

For Bond investing, there is the Total Bond Market Index (VBMFX) fund.

For one-stop, set it and forget investing, there is the Target Retirement Fund for your age.

Had to chime in here. First, the "duplicity" argument against VAs, that is, "you shouldn't invest your IRA in an annuity 'cause the IRA is already tax-deferred" is not only absurd, but laughable. The fees associated with VAs do not pay for the tax-deferred feature of the VA; it's part of our tax code. The fees can pay for guarantees, backed by the claims-paying ability of the insurance company, like an income stream you cannot outlive, and/or a guaranteed death benefit. That said, they are expensive to own.

In fact, with the tax favored treatment of qualified dividends (vs. ordinary income tax on VA gains). one could argue investing non-qualified money in a VA is absurd because the break even point is nearly 30 years! (beyond the scope of your question, sorry)

I should mention I've been helping retirees plan for the best, and final, third (1/3) of their lives (age 60-90), from managing their money to the efficient transfer of their assets at death, and less than 15% of my managed money are in annuities; fixed or VAs, so I'm not a huge advocate. However, when if fits, and/or for a portion of your assets, it might be prudent.

Personally, I have 20% of my SEP-IRA in a VA and know, in advance, what my minimum income from this product will be 10 years from now (I'm 53). And while the internal fees are near 3.5%, I purchased this product for a guaranteed income stream I cannot outlive.

One type of investment need not be an alternative to another. You can, and likely will, own many investment types.Feel free to send me an email if you have any questions.

Hope that helps.

PLEASE VOTE to avoid a TIE. On behalf of all of your responders, who take the time and effort to help questioners in this free Yahoo! community, THANK YOU in advance for taking the time to choose your "Best" Answer. We really appreciate it.

DISCLAIMER: While the information in this response was obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. The opinion voiced in this answer is for general information only and it shall not be construed as tax, legal, or investment advice for any individual, nor shall it be considered a solicitation for business. Questioners are urged to consult with their professional advisers before making any decisions regarding their finances.

Bradley Mann, CFP®, EA, BCE, CFS, AAMS

Certified Financial Planner™ Practitioner

Enrolled Agent | Admitted to Practice before the IRS

Board Certified in Estate Planning

It is not a product of a bank or savings and loan and is maybe just a product of an insurance company and that does not make me feel safe.

The word variable worries me because it can go down as well as up. Be careful that it will not take part of your principle on the way down.

Just my way of looking at it. Not for me personally.

The guy wants a commission and could care less about you. Don't walk run!

For my money I am going with the 2011 portfolio of no load mutual funds which can be purchased through Fidelity.

http://hubpages.com/hub/2011portfolio

Ask that "bank person" what kind of commission he collects for selling you an annuity. Lousy investments.

Too expensive a cost-structure behind the product, so don't get them. Better option is to ladder the CD's (i.e. buy Cd's with different maturity dates).