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willwork

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  1. If the life expectancy distribution option is offered by the DC plan and the plan has a wide variety of investment choices at low cost I would recommend that the non-spouse beneficiary NOT rollover the assets but leave them with the DC plan. Joel Valic offers the life expectancy distribution option; however the variety of investments are limited and high cost. The finicial advisor for Valic said that I would be able to get out of the Fixed Income product my relative had the money invested and find something more productive (remember the Portfolio Director option). Thank you for mentioning the Penision Act for 2007. I will review it more thoroughly and hopefully I can roll this product to another carrier with better options and tax deffered.
  2. I inherited a non-spousal 403B beneficiary account from AIG/VALIC. My relative had the account in a fixed plan plus product. The company said I could 1) Empty the account over a five year period 2) keep the account and take yearly minimum distribution 3) Take a lump sum 4) Change to a different carrier plan. Due to taxes, I am not taking the lump sum. However, I have considered emptying the account over five years because I think there are better choices instead of a variable annuity. Either way, I am going to pay taxes and might as well pay them now while I am in a low tax bracket and have the money working in another IRA for a long period of time (30yrs before I retire). A family friend financial advisor suggested taking the minimum distribution (which changes yearly as I age);hence, the rationale was related to the taxes. The VALIC financial advisor agreed. Becauase I am in the aggressive growth stage of my life I can do better than the fixed income. In switching my allocation the financial advisor suggested placing me in the Portfolio Directory with an income lock. He wasn't direct in answering my questions regarding fees. He stated that he was trying to offer the best suggestion for the situation I was in since I did not have the spousal choice of moving it to another 401K. (I think they are working on this option for non-spousal). Inside the Portfolio Directory, the advisor would put me in the stock index fund with a return of 10%. After researching (the VALIC website is complicated) the so called fees of roughly 2%, my return would decrease to 8%. Then I would also have to subtract the required minimum distribution (2% and I think it increases as I age). The money would grow only 6% (subtracting the % of required distribution). Another last option was to change to a different carrier plan, in which the financial adivisor said it would be Nationwide and another company I am not familiar with (not TIAA-CREFF). What do you think? I am not a big fan of variable annuities but I am not trying to let my bias interefere in keeping my money with AIG/VALIC. I was also looking for a website that offers good calculators because I would like to see the numbers instead of being told how the account will look 30years from now. Thanks
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