Purchasing MYGAs (multi year guaranteed annuities) - mega thread

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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

poker27 wrote: Sat Jan 21, 2023 1:46 pm Never thought I would be talking annuities, but a question if I may…

what’s the thoughts on annuities while well under 59?

I’m considering taking some time off work in the future, and withdrawing just the interest could be very helpful, while keeping my principle. I did read that there may be a penalty for doing so, similar to a 401k?
If you withdraw from a taxable annuity before age 59.5, you’ll pay a 10% tax penalty on the interest, plus regular Federal and state tax.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

I have invested with six MYGA carriers so far and have done partial withdrawals from five of them. Based on my experience, I created a table comparing how each carrier did in terms of the withdrawal process and the time it took to get hold of the money.

https://docs.google.com/spreadsheets/d/ ... sp=sharing

My best experiences so far have been with Gainbridge and American Equity.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by poker27 »

Stinky wrote: Sat Jan 21, 2023 2:15 pm
poker27 wrote: Sat Jan 21, 2023 1:46 pm Never thought I would be talking annuities, but a question if I may…

what’s the thoughts on annuities while well under 59?

I’m considering taking some time off work in the future, and withdrawing just the interest could be very helpful, while keeping my principle. I did read that there may be a penalty for doing so, similar to a 401k?
If you withdraw from a taxable annuity before age 59.5, you’ll pay a 10% tax penalty on the interest, plus regular Federal and state tax.
Thanks, Stinky! Are you still penalized if you do not withdraw until maturity?

While a 10% penalty is no joke, it’s still somewhat interesting to consider at 5.5% rates
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

poker27 wrote: Sat Jan 21, 2023 5:53 pm
Stinky wrote: Sat Jan 21, 2023 2:15 pm
poker27 wrote: Sat Jan 21, 2023 1:46 pm Never thought I would be talking annuities, but a question if I may…

what’s the thoughts on annuities while well under 59?

I’m considering taking some time off work in the future, and withdrawing just the interest could be very helpful, while keeping my principle. I did read that there may be a penalty for doing so, similar to a 401k?
If you withdraw from a taxable annuity before age 59.5, you’ll pay a 10% tax penalty on the interest, plus regular Federal and state tax.
Thanks, Stinky! Are you still penalized if you do not withdraw until maturity?

While a 10% penalty is no joke, it’s still somewhat interesting to consider at 5.5% rates
Yes, the penalty applies for any distributions prior to age 59.5.

One way to think of the 10% penalty is that, if incurred, it reduces your 5.5% interest rate by 10%, or to 4.95%. Not as good as 5.5%, but still a reasonably attractive rate.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by poker27 »

Stinky wrote: Sat Jan 21, 2023 6:42 pm
poker27 wrote: Sat Jan 21, 2023 5:53 pm
Stinky wrote: Sat Jan 21, 2023 2:15 pm
poker27 wrote: Sat Jan 21, 2023 1:46 pm Never thought I would be talking annuities, but a question if I may…

what’s the thoughts on annuities while well under 59?

I’m considering taking some time off work in the future, and withdrawing just the interest could be very helpful, while keeping my principle. I did read that there may be a penalty for doing so, similar to a 401k?
If you withdraw from a taxable annuity before age 59.5, you’ll pay a 10% tax penalty on the interest, plus regular Federal and state tax.
Thanks, Stinky! Are you still penalized if you do not withdraw until maturity?

While a 10% penalty is no joke, it’s still somewhat interesting to consider at 5.5% rates
Yes, the penalty applies for any distributions prior to age 59.5.

One way to think of the 10% penalty is that, if incurred, it reduces your 5.5% interest rate by 10%, or to 4.95%. Not as good as 5.5%, but still a reasonably attractive rate.
That’s what I was thinking too. A 5% guaranteed rate while keeping your principle? It’s appealing!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by kd2008 »

One more question for the long timers on this thread: Fed Reserve has indicated a couple more rate hikes for this year. But the 10 yr rate has fallen from it's recent high on lower reading of recent inflation. How do the rates move for MYGAs? Do they follow Fed funds rate or the 10 yr Treasury? Just looking at some of the quotes it seemed many companies were getting ready to lower their rate offering.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

kd2008 wrote: Sun Jan 22, 2023 10:21 am One more question for the long timers on this thread: Fed Reserve has indicated a couple more rate hikes for this year. But the 10 yr rate has fallen from it's recent high on lower reading of recent inflation. How do the rates move for MYGAs? Do they follow Fed funds rate or the 10 yr Treasury? Just looking at some of the quotes it seemed many companies were getting ready to lower their rate offering.
The Fed Reserve only sets the overnight rate, think of it as the 1-day interest rate. The 10-yr treasury and MYGAs obviously have vastly different durations (in years). The overnight rate is a factor but certainly not the only factor that affects the 10-yr treasury and MYGA rates.
Last edited by indexfundfan on Sun Jan 22, 2023 10:39 am, edited 1 time in total.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by CletusCaddy »

kd2008 wrote: Sun Jan 22, 2023 10:21 am One more question for the long timers on this thread: Fed Reserve has indicated a couple more rate hikes for this year. But the 10 yr rate has fallen from it's recent high on lower reading of recent inflation. How do the rates move for MYGAs? Do they follow Fed funds rate or the 10 yr Treasury? Just looking at some of the quotes it seemed many companies were getting ready to lower their rate offering.
If a 10 year MYGA tracked anything other than the 10 year Treasury, I’d be concerned for the insurance company’s solvency
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by OkanePlease »

New question (sorry if missed in the previous pages of this thread): Is it true that if I do an early withdrawal (that includes interest) before age 59-1/2 and designate that as a 1035 transfer to a new MYGA, I won't incur a penalty?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

OkanePlease wrote: Sun Jan 22, 2023 6:44 pm New question (sorry if missed in the previous pages of this thread): Is it true that if I do an early withdrawal (that includes interest) before age 59-1/2 and designate that as a 1035 transfer to a new MYGA, I won't incur a penalty?
That is correct.

You only have a tax penalty if you actually receive funds.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

OkanePlease wrote: Sun Jan 22, 2023 6:44 pm New question (sorry if missed in the previous pages of this thread): Is it true that if I do an early withdrawal (that includes interest) before age 59-1/2 and designate that as a 1035 transfer to a new MYGA, I won't incur a penalty?
In theory there is no penalty, but is it easy to find two carriers that will co-operate nicely with performing a 1035 partial withdrawal and funding? The assets generally have to move directly from the old carrier to the new carrier; you cannot gain control of the assets.

And unlike an IRA where you can do an indirect rollover (limited to one every 12 months) to control the process if you want to, I don't believe this is allowed for 1035 exchanges.

Blueprint has this to say about partial 1035 exchanges

Partial 1035: IRS rules allow for a partial 1035, but you’ll need to make sure that the insurance company with whom you currently have your policy will allow it. Some do not.

https://www.blueprintincome.com/resourc ... 5-exchange

I know that if I have to do a 1035 exchange, I will be on my toes the whole period until it is completed. :annoyed
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

indexfundfan wrote: Sun Jan 22, 2023 7:37 pm
OkanePlease wrote: Sun Jan 22, 2023 6:44 pm New question (sorry if missed in the previous pages of this thread): Is it true that if I do an early withdrawal (that includes interest) before age 59-1/2 and designate that as a 1035 transfer to a new MYGA, I won't incur a penalty?
In theory there is no penalty, but is it easy to find two carriers that will co-operate nicely with performing a 1035 partial withdrawal and funding? The assets generally have to move directly from the old carrier to the new carrier; you cannot gain control of the assets.

And unlike an IRA where you can do an indirect rollover (limited to one every 12 months) to control the process if you want to, I don't believe this is allowed for 1035 exchanges.

Blueprint has this to say about partial 1035 exchanges

Partial 1035: IRS rules allow for a partial 1035, but you’ll need to make sure that the insurance company with whom you currently have your policy will allow it. Some do not.

https://www.blueprintincome.com/resourc ... 5-exchange

I know that if I have to do a 1035 exchange, I will be on my toes the whole period until it is completed. :annoyed
What indexfundfan says is true.

I should have been more expansive in my answer.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

Cl life is 5.75% for a 5 year
CL Life

B++

5.75%

5yrs
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

bog007 wrote: Sun Jan 29, 2023 6:47 pm Cl life is 5.75% for a 5 year
CL Life

B++

5.75%

5yrs
Unfortunately, products from CL Life are currently available in only 8 states.

The company’s products are “pending” in about 20-25 more states, so availability will improve in the next few months as more states approve the product.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

bog007 wrote: Sun Jan 29, 2023 6:47 pm Cl life is 5.75% for a 5 year
CL Life

B++

5.75%

5yrs
Blueprint income shows A-rated companies offering 5.4% for 5 years. Is 0.35% more worth the risk of investing in a B++ rated company over an A-rated company for 5 years? Only you can answer that question. As Dirty Harry said, "Do you feel lucky"? :happy

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Post by bog007 »

And cd rates are fdic insured up to 250k. tradeoffs for more %. myga annuity regulations and protections are at the state level. I bought gainbridge 3 year 5.5.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by kd2008 »

Gainbridge dropped to 5.25% 😢
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Post by CletusCaddy »

kd2008 wrote: Wed Feb 01, 2023 9:31 pm Gainbridge dropped to 5.25% 😢
Well on the plus side this mean I can stop my daily checking to see whether I should exercise my 30 day cancellation option with them!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by PFM »

PFM wrote: Tue Jan 17, 2023 11:03 am My experience in dealing with Nationwide directly has not been good.

It has been more than a month since the documents were completed for myself and my wife and it still has not been completed. And I'm talking large dollar amounts.

Terrible communication. Long hold times. No response to emails.

Do yourself a favor and avoid Nationwide. The aggravation is not worth an extra few basis points.
I wanted to provide an update for those interested in our Nationwide MYGA experience that I posted about above.

The process ended up taking about six weeks, which included the holiday break, so maybe not as bad as some others have experienced. I understand they have been swamped with new MYGA customers, so it's going to take a while, but I've never seen a time when I was too busy to respond to an email, even if it's just to say you don't know anything yet. Of course that problem may be more attributable to the individual on the other end and not so much the institution.

On a good note, setting up the online accounts was easy and I like the ease of use and functionality of their website in general.

At this point I'm very happy to have these MYGA's with Nationwide at the 5.45% rate.

Thanks again to Stinky and those providing all the good info in this thread!
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Post by Stinky »

PFM wrote: Wed Feb 08, 2023 12:22 pm
PFM wrote: Tue Jan 17, 2023 11:03 am My experience in dealing with Nationwide directly has not been good.

It has been more than a month since the documents were completed for myself and my wife and it still has not been completed. And I'm talking large dollar amounts.

Terrible communication. Long hold times. No response to emails.

Do yourself a favor and avoid Nationwide. The aggravation is not worth an extra few basis points.
I wanted to provide an update for those interested in our Nationwide MYGA experience that I posted about above.

The process ended up taking about six weeks, which included the holiday break, so maybe not as bad as some others have experienced. I understand they have been swamped with new MYGA customers, so it's going to take a while, but I've never seen a time when I was too busy to respond to an email, even if it's just to say you don't know anything yet. Of course that problem may be more attributable to the individual on the other end and not so much the institution.

On a good note, setting up the online accounts was easy and I like the ease of use and functionality of their website in general.

At this point I'm very happy to have these MYGA's with Nationwide at the 5.45% rate.

Thanks again to Stinky and those providing all the good info in this thread!
I’m glad that your experience turned out well and that you’re satisfied now.

I’m just curious - would you mind sharing both (a) what date your funds left the account from which you funded the MYGA and (b) the issue date of the policy? The difference between those dates should be roughly the amount of time that your money was “out of the market”.

Congratulations.
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Post by webtrojan »

I purchased two 5.45% 7-year annuities directly thru Nationwide. I found them to be very efficient in setting up my accounts. Sorry it took PFM so long. The first one I wired the money on 12/13 and the annuity was funded 12/14. The other I wired on Friday 12/16 and it was funded on Monday 12/19.
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Post by retireIn2020 »

webtrojan wrote: Wed Feb 08, 2023 7:33 pm I purchased two 5.45% 7-year annuities directly thru Nationwide. I found them to be very efficient in setting up my accounts. Sorry it took PFM so long. The first one I wired the money on 12/13 and the annuity was funded 12/14. The other I wired on Friday 12/16 and it was funded on Monday 12/19.
I had a similar experience, 1st one was wired from Fidelity to Nationwide on a Friday and funded on Monday, second one was a check sent from Fidelity to Nationwide and was funded in less than a week. It did take a while to get the contracts but these started earning interest the day they were funded.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

I had a positive experience “upgrading” a MYGA from Canvas/Puritan.

I purchased a 7 year MYGA from Canvas in early 2021 at 3.50%, which was a market leading rate at the time. The Puritan policies have a surrender charge, but no market value adjustment upon full surrender.

I did the calculation to show that I would be money-ahead by doing a full surrender and applying the proceeds to buy a new 5 year MYGA from Puritan at 5.60%. Doing it this way kept the duration of my credit exposure to Puritan Life unchanged (that is, the new policy will also mature in early 2028), and I will have a several thousand dollar higher value in 2028 than under the original policy.

Puritan processed this relatively efficiently. It was complex because they had to do two separate surrender transactions (a 10% free partial withdrawal and then a full surrender), I had to write them a letter explaining the rationale for the transaction (to earn more money by changing policies and incurring a surrender charge), and they had to issue the new policy. The whole process took about two weeks.

Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

Thanks for sharing your experience. I think you also improved the minimum guaranteed rate from 1.0% to 3.0%.
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Post by HueyLD »

Well done, Mr. Stinky. Your strategy looks good.

I had to call Canvas in Scottsdale and Puritan in Lincoln a few times and was always impressed with their customer service.
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Post by webtrojan »

Stinky wrote: Mon Feb 13, 2023 3:40 pm I had a positive experience “upgrading” a MYGA from Canvas/Puritan.

I purchased a 7 year MYGA from Canvas in early 2021 at 3.50%, which was a market leading rate at the time. The Puritan policies have a surrender charge, but no market value adjustment upon full surrender.

I did the calculation to show that I would be money-ahead by doing a full surrender and applying the proceeds to buy a new 5 year MYGA from Puritan at 5.60%. Doing it this way kept the duration of my credit exposure to Puritan Life unchanged (that is, the new policy will also mature in early 2028), and I will have a several thousand dollar higher value in 2028 than under the original policy.

Puritan processed this relatively efficiently. It was complex because they had to do two separate surrender transactions (a 10% free partial withdrawal and then a full surrender), I had to write them a letter explaining the rationale for the transaction (to earn more money by changing policies and incurring a surrender charge), and they had to issue the new policy. The whole process took about two weeks.

Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Stinky , so will you record the interest earned to date and deduct the surrender charges on your 2023 tax return (resulting in a loss for the original contract)? Puritan doesn’t do any kind of “exchange” transaction, right?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

webtrojan wrote: Mon Feb 13, 2023 8:51 pm
Stinky wrote: Mon Feb 13, 2023 3:40 pm I had a positive experience “upgrading” a MYGA from Canvas/Puritan.

I purchased a 7 year MYGA from Canvas in early 2021 at 3.50%, which was a market leading rate at the time. The Puritan policies have a surrender charge, but no market value adjustment upon full surrender.

I did the calculation to show that I would be money-ahead by doing a full surrender and applying the proceeds to buy a new 5 year MYGA from Puritan at 5.60%. Doing it this way kept the duration of my credit exposure to Puritan Life unchanged (that is, the new policy will also mature in early 2028), and I will have a several thousand dollar higher value in 2028 than under the original policy.

Puritan processed this relatively efficiently. It was complex because they had to do two separate surrender transactions (a 10% free partial withdrawal and then a full surrender), I had to write them a letter explaining the rationale for the transaction (to earn more money by changing policies and incurring a surrender charge), and they had to issue the new policy. The whole process took about two weeks.

Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Stinky , so will you record the interest earned to date and deduct the surrender charges on your 2023 tax return (resulting in a loss for the original contract)? Puritan doesn’t do any kind of “exchange” transaction, right?
This was an IRA to IRA exchange, so there is no current tax reporting.

I’m guessing that if the Puritan MYGA had been in a taxable account, I could have gone either way. I could have done a straight surrender and repurchase, which would have generated some current taxable income since the net surrender value was greater than the initial premium. Or I could have done an exchange, which would have deferred taxable income recognition. But, as I said in the first sentence of this paragraph, I’m just guessing that Puritan could have gone either way.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

webtrojan wrote: Mon Feb 13, 2023 8:51 pm so will you record the interest earned to date and deduct the surrender charges on your 2023 tax return (resulting in a loss for the original contract)? Puritan doesn’t do any kind of “exchange” transaction, right?
The IRS Pub 575 provides answer to your question.

“ Losses

You may be able to claim a loss on your return if you receive a lump-sum distribution that is less than the plan participant's cost. You must receive the distribution entirely in cash or worthless securities. The amount you can claim is the difference between the participant's cost and the amount of the cash distribution, if any.

However, for tax years 2018 through 2025, miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit are suspended and therefore not deductible on Schedule A (Form 1040).”

In other words, the loss is not tax deductible until year 2026 provided that Congress does not change the law as is.

If you do a partial nonperiodic withdrawal, you cannot deduct the surrender charges and you pay tax on earnings calculated without regard to the surrender charges. Again, from IRS Pub 575:

“ Distribution Before Annuity Starting Date From a Nonqualified Plan

If you receive a nonperiodic distribution before the annuity starting date from a plan other than a qualified retirement plan (nonqualified plan), it is allocated first to earnings (the taxable part) and then to the cost of the contract (the tax-free part). This allocation rule applies, for example, to a commercial annuity contract you bought directly from the issuer. You include in your gross income the smaller of:

The nonperiodic distribution, or

The amount by which the cash value of the contract (figured without considering any surrender charge) immediately before you receive the distribution exceeds your investment in the contract at that time.

Example. You bought an annuity from an insurance company. Before the annuity starting date under your annuity contract, you received a $7,000 distribution. At the time of the distribution, the annuity had a cash value of $16,000 and your investment in the contract was $10,000. The distribution is allocated first to earnings, so you must include $6,000 ($16,000 − $10,000) in your gross income. The remaining $1,000 ($7,000 − $6,000) is a tax-free return of part of your investment.”

Again, you could be paying taxes if the value before partial withdrawal exceeds your cost basis even if surrender charges reduce the net value to below the cost.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Stinky wrote: Mon Feb 13, 2023 3:40 pm I had a positive experience “upgrading” a MYGA from Canvas/Puritan.

I purchased a 7 year MYGA from Canvas in early 2021 at 3.50%, which was a market leading rate at the time. The Puritan policies have a surrender charge, but no market value adjustment upon full surrender.

I did the calculation to show that I would be money-ahead by doing a full surrender and applying the proceeds to buy a new 5 year MYGA from Puritan at 5.60%. Doing it this way kept the duration of my credit exposure to Puritan Life unchanged (that is, the new policy will also mature in early 2028), and I will have a several thousand dollar higher value in 2028 than under the original policy.

Puritan processed this relatively efficiently. It was complex because they had to do two separate surrender transactions (a 10% free partial withdrawal and then a full surrender), I had to write them a letter explaining the rationale for the transaction (to earn more money by changing policies and incurring a surrender charge), and they had to issue the new policy. The whole process took about two weeks.

Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
A follow-up to the message above -

Canvas Annuity / Puritan Life announced today that interest rates on new policies have been increased. The new rates are 5.75% for 3 years, 6.20% for 5 years, and 6.25% for 7 years.

My newly-issued policy is still within the free look period, so I called Puritan to see what I could do to get the new rate. The response could not have been more pleasant. The new rate is being offered to all policyholders who call in. I might lose a few days' interest (the days between my policy issue date and when the "amendment letter" is issued in a day or two), but I will more than make up for it in higher interest rate over the next five years.

The representative I spoke to today said that they had been deluged with calls from folks who bought a policy in the last few weeks and wanted the higher rate.

For a policy of $100,000, the increase in the 5 year rate from 5.60% to 6.20% increases the value in 5 years from $131,300 to $135,100, or $3,800. (My policy isn't $100,000, but you get the idea.)

Overall, I've been very impressed with Canvas / Puritan customer service over the past few weeks.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by pchalt »

Hello. First, just wanted to say this is my first post here, I am immensely grateful to everyone who posts here, I have learned so much.

To Stinky: regarding the new high rates at Canvas, would you happen to know if Canvas has ever been known to waive the surrender charge if a customer wishes to execute a 1035 exchange to a new "like" policy still within Canvas? For context, I have a 3 year Future Fund policy that was issued in June 2022 at 4.6%, and I would like to execute a 1035 exchange for a new Canvas Future Fund policy, but this one for 5 years at the new 6.2% rate.
I was researching the scenario, and one particular article stated that "However, if you’re performing a transfer between products within the same company, they may waive the fees as you’re not “leaving” the group." https://www.lifeant.com/1035-exchange-explained/.

I plan to call Canvas tomorrow and speak with Devon or Nicole, but if possilbe, it would be good to know ahead of time what Canvas has done historically with 1035 exchanges.

Thanks again to everyone for providing this amazing resource!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

Sadly, Canvas/Puritan does not write policies in my state. Is there any possibility of getting a policy using an address in a different state? My son lives in a state where they are offered. Could I use his address? How hard is it for them to add another state (NOT New York)? If I asked, would they? I suspect none of these are viable, but for 6.2% rate, I have to ask!

Wrench
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

pchalt wrote: Thu Feb 16, 2023 5:18 pm Hello. First, just wanted to say this is my first post here, I am immensely grateful to everyone who posts here, I have learned so much.

To Stinky: regarding the new high rates at Canvas, would you happen to know if Canvas has ever been known to waive the surrender charge if a customer wishes to execute a 1035 exchange to a new "like" policy still within Canvas? For context, I have a 3 year Future Fund policy that was issued in June 2022 at 4.6%, and I would like to execute a 1035 exchange for a new Canvas Future Fund policy, but this one for 5 years at the new 6.2% rate.
I was researching the scenario, and one particular article stated that "However, if you’re performing a transfer between products within the same company, they may waive the fees as you’re not “leaving” the group." https://www.lifeant.com/1035-exchange-explained/.

I plan to call Canvas tomorrow and speak with Devon or Nicole, but if possilbe, it would be good to know ahead of time what Canvas has done historically with 1035 exchanges.

Thanks again to everyone for providing this amazing resource!
Welcome to the Forum!

As I posted upthread, they didn’t waive my surrender charge when I went from the 7 year product at 3.50% to the 5 year product at 5.60%. But I came out ahead after 5 years, even after paying the charge.

I kind of doubt they’d waive your surrender charge. You’d need to run the numbers and see if it makes sense for you, assuming you incur a surrender charge.

Let us know if you’re successful. Best to you.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by tj »

Wrench wrote: Thu Feb 16, 2023 5:56 pm Sadly, Canvas/Puritan does not write policies in my state. Is there any possibility of getting a policy using an address in a different state? My son lives in a state where they are offered. Could I use his address? How hard is it for them to add another state (NOT New York)? If I asked, would they? I suspect none of these are viable, but for 6.2% rate, I have to ask!

Wrench
I don't believe you could lie about your address without defrauding the insurance company into selling the product to a resident of a state in which they are not licensed. I highly doubt that a request would cause movement in where they are licensed, but at least making a request would not be illegal.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by CletusCaddy »

6.25%!

Huge regret as my free look period on my 5.5% Gainbridge MYGA literally just expired yesterday.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Wrench wrote: Thu Feb 16, 2023 5:56 pm Sadly, Canvas/Puritan does not write policies in my state. Is there any possibility of getting a policy using an address in a different state? My son lives in a state where they are offered. Could I use his address? How hard is it for them to add another state (NOT New York)? If I asked, would they? I suspect none of these are viable, but for 6.2% rate, I have to ask!

Wrench
Canvas asks for a copy of your drivers license, front and back. So I agree with Chardo that you really can’t use your sons address to get a policy.

You might just want to call or email Canvas, to see if they have plans to offer annuities in your state. Many companies try for 49 state coverage (all but New York). It can’t hurt to ask.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

Stinky wrote: Thu Feb 16, 2023 6:23 pm
Wrench wrote: Thu Feb 16, 2023 5:56 pm Sadly, Canvas/Puritan does not write policies in my state. Is there any possibility of getting a policy using an address in a different state? My son lives in a state where they are offered. Could I use his address? How hard is it for them to add another state (NOT New York)? If I asked, would they? I suspect none of these are viable, but for 6.2% rate, I have to ask!

Wrench
Canvas asks for a copy of your drivers license, front and back. So I agree with Chardo that you really can’t use your sons address to get a policy.

You might just want to call or email Canvas, to see if they have plans to offer annuities in your state. Many companies try for 49 state coverage (all but New York). It can’t hurt to ask.
Thank you Stinky. I will reach out to them. Just to clarify - I did not mean to imply I would lie about my state of residence, but rather indicate that I wished to receive the policy in my son's state at my son's address as a non-resident of that state because the policy was not offered in my state of residence. Just wondered if that was a "loophole". A long shot I know, but I will ask.

Wrench
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

what if I give up my myga before free look is over . do I still get the interest earned for 20 days
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

bog007 wrote: Thu Feb 16, 2023 8:48 pm what if I give up my myga before free look is over . do I still get the interest earned for 20 days
I don’t believe so. I expect that you’ll get your premium back, and that’s all.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

ok ty. canvas looking good. need to scrap up some money
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by kd2008 »

Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Calhoon »

Inspired by this thread, I am in the process of purchasing a 150k nationwide myga at 5 percent for 5 years. The sign up process has been going on for over a month now. The agent at nationwide had screwed up on the first contract and so we did it again and most recently they fed exed paperwork required by the company that currently holds the annuity that is getting transferred over to nationwide.

In the interim, there's been discussion here about a canvas annuity at 6.2 percent for 5 years, which I'm now thinking about. I see that canvas has a lower rating (B++ versus A+) and I'm trying to wrap my head around the cost/benefit of whether the 1.2 percent difference is worth it.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Calhoon wrote: Sat Feb 18, 2023 9:05 am Inspired by this thread, I am in the process of purchasing a 150k nationwide myga at 5 percent for 5 years. The sign up process has been going on for over a month now. The agent at nationwide had screwed up on the first contract and so we did it again and most recently they fed exed paperwork required by the company that currently holds the annuity that is getting transferred over to nationwide.

In the interim, there's been discussion here about a canvas annuity at 6.2 percent for 5 years, which I'm now thinking about. I see that canvas has a lower rating (B++ versus A+) and I'm trying to wrap my head around the cost/benefit of whether the 1.2 percent difference is worth it.
You might look at this thread for thoughts about ratings. viewtopic.php?t=383905

It’s definitely a personal decision.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Calhoon »

Thanks Stinky!

After checking out that thread, I called the Wisconsin Insurance Security Fund and spoke to them. 300,000 aggregate per person, but there were caveats ontop of caveats and then a few more caveats.

With that in mind, I'm leaning more toward nationwide.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Calhoon wrote: Mon Feb 20, 2023 9:11 am Thanks Stinky!

After checking out that thread, I called the Wisconsin Insurance Security Fund and spoke to them. 300,000 aggregate per person, but there were caveats ontop of caveats and then a few more caveats.

With that in mind, I'm leaning more toward nationwide.
You could also check out the website for your state guaranty fund to get more details. Especially look at the “frequently asked questions” tab. https://www.wilifega.org/
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wannaretireearly »

kd2008 wrote: Thu Feb 16, 2023 9:21 pm Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Ok, I’m officially interested now too.
I’d really appreciate an ‘idiots guide’ on next steps? Any pitfalls to be aware of? Thanks y’all 🙏
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wannaretireearly »

Wannaretireearly wrote: Mon Feb 20, 2023 10:03 am
kd2008 wrote: Thu Feb 16, 2023 9:21 pm Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Ok, I’m officially interested now too.
I’d really appreciate an ‘idiots guide’ on next steps? Any pitfalls to be aware of? Thanks y’all 🙏
Grrr. This is not available in CA :(
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Wannaretireearly wrote: Mon Feb 20, 2023 10:03 am
kd2008 wrote: Thu Feb 16, 2023 9:21 pm Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Ok, I’m officially interested now too.
I’d really appreciate an ‘idiots guide’ on next steps? Any pitfalls to be aware of? Thanks y’all 🙏
A few things to know -
—- Be highly confident that you can hold the annuity for the full 7 years. If you need to withdraw in excess of the annual free partial withdrawal (10% of account value on this contract), you’ll incur a punishing surrender charge.
—- Be aware of additional market value adjustments upon early surrender on the products of most companies. Canvas happens to not have such adjustments.
—- If buying in a taxable account, be aware that any interest withdrawn before your age 59.5 is subject to an additional 10% Federal penalty tax, in addition to regular state and federal income tax.
—- Be aware of the guaranty fund coverage limits for your state. Look up your states fund at this link. Pay close attention to the “frequently asked questions” tab, if there is one. https://www.nolhga.com/policyholderinfo ... ocation/ga
—- Be aware that Puritan Life, the issuing insurer behind Canvas, has a B++ rating from AM Best. That is lower than many companies that issue MYGAs.
—- Be aware that issuing an annuity isn’t as simple as buying a Treasury or a CD. More time is involved. In my experience, Canvas is one of the quicker responding companies.

Post back with questions.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Wannaretireearly wrote: Mon Feb 20, 2023 10:10 am
Wannaretireearly wrote: Mon Feb 20, 2023 10:03 am
kd2008 wrote: Thu Feb 16, 2023 9:21 pm Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Ok, I’m officially interested now too.
I’d really appreciate an ‘idiots guide’ on next steps? Any pitfalls to be aware of? Thanks y’all 🙏
Grrr. This is not available in CA :(
Go to another site, like Blueprint Income, Stan the Annuity Man, etc to see acallable products.

Also be aware that California, unique (to my knowledge) among states, has a guaranty fund that covers only 80% of policy surrender values up to the maximum coverage limit.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wannaretireearly »

Stinky wrote: Mon Feb 20, 2023 10:16 am
Wannaretireearly wrote: Mon Feb 20, 2023 10:03 am
kd2008 wrote: Thu Feb 16, 2023 9:21 pm Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Ok, I’m officially interested now too.
I’d really appreciate an ‘idiots guide’ on next steps? Any pitfalls to be aware of? Thanks y’all 🙏
A few things to know -
—- Be highly confident that you can hold the annuity for the full 7 years. If you need to withdraw in excess of the annual free partial withdrawal (10% of account value on this contract), you’ll incur a punishing surrender charge.
—- Be aware of additional market value adjustments upon early surrender on the products of most companies. Canvas happens to not have such adjustments.
—- If buying in a taxable account, be aware that any interest withdrawn before your age 59.5 is subject to an additional 10% Federal penalty tax, in addition to regular state and federal income tax.
—- Be aware of the guaranty fund coverage limits for your state. Look up your states fund at this link. Pay close attention to the “frequently asked questions” tab, if there is one. https://www.nolhga.com/policyholderinfo ... ocation/ga
—- Be aware that Puritan Life, the issuing insurer behind Canvas, has a B++ rating from AM Best. That is lower than many companies that issue MYGAs.
—- Be aware that issuing an annuity isn’t as simple as buying a Treasury or a CD. More time is involved. In my experience, Canvas is one of the quicker responding companies.

Post back with questions.
Thank you very much Stinky! I’m going to keep a close eye on this.
I’m thinking a 5% CD may be easier for this calendar year. I’m worried about the taxes in CA, as this would be in a taxable account. Also, I’ve got to think thru ‘what’s the point’ if I’m not able to access interest before 59.5, without the tax implications…

Edit: one question: can I not buy something like this thru Vanguard (brokerage) or Fidelity (401k) ? :) I’m really trying to reduce/maintain the number of accounts I have!
Last edited by Wannaretireearly on Mon Feb 20, 2023 10:47 am, edited 1 time in total.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wannaretireearly »

Stinky wrote: Mon Feb 20, 2023 10:18 am
Wannaretireearly wrote: Mon Feb 20, 2023 10:10 am
Wannaretireearly wrote: Mon Feb 20, 2023 10:03 am
kd2008 wrote: Thu Feb 16, 2023 9:21 pm Stinky thank you for sharing

6.25% for 7 year myga at https://canvasannuity.com/product

AM Best financial rating B++

From your earlier post: Surrendering a MYGA to get a higher rate probably only works if you’re not incurring a market value adjustment at surrender. I’m aware of only two companies (Puritan (canvas) and Pacific Guardian) that issue MYGAs without a market value adjustment clause.
Ok, I’m officially interested now too.
I’d really appreciate an ‘idiots guide’ on next steps? Any pitfalls to be aware of? Thanks y’all 🙏
Grrr. This is not available in CA :(
Go to another site, like Blueprint Income, Stan the Annuity Man, etc to see acallable products.

Also be aware that California, unique (to my knowledge) among states, has a guaranty fund that covers only 80% of policy surrender values up to the maximum coverage limit.
Thank you! Will check out both suggestions above.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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