About Secondary Market Annuities And Taxes


Many customers inquire about Secondary Market Annuities and taxes.  The original underlying Structured Settlement is a tax free award to the original annuitant.  Because of this, annuity carriers do not issue 1099′s to the recipients or to subsequent assignees.

Now before you jump for joy, read on….

Federal law and IRS guidelines per IRS 5891 outline how, in a properly structured transaction, a buyer becomes the assignee of an existing payment stream by means of qualified order.  The Buyer of a Secondary Market Annuity in a properly structured transaction as we do here at Annuity Straight Talk holds the contractual right to the payments.

So while under current IRS regulations buyers will not received a 1099 for the income they receive, this does not mean it’s tax-free.

Secondary Market Annuities Taxation:

Even though the original payee does not receive a 1099, subsequent investors do have a cost basis in the payments and a gain, and therefore are responsible for income taxes.

The taxation of income from Secondary Market Annuities held in non-qualified  accounts is up to the taxpayer and their tax adviser to declare.  Generally annuities are considered ordinary income and the ratio of income to principal is calculated using an exclusion ratio to determine (exclude) from income that amount of each payment that is return of principal.  Refer to the following IRS rules for guidance and consult your tax adviser for specific questions.

How To Calculate The Exclusion Ratio:

Obviously, investors have a basis in an SMA investment, and a gain on that investment.  The typical way to calculate the gain is to utilize an exclusion ratio for determining the principal and interest component of each payment.

Let’s look at an example of an exclusion ratio.  Assume the investor paid $100,000 and will receive $200,000 over 100 payments of $2000 each.  The exclusion ratio is 50%- Exactly 50% of each payment would be income, and 50% is return of principal.  Consult your adviser, but generally, this income is “ordinary income” for IRS purposes.

Alternative Methods:

There are other ways to reflect a payment stream where you use an amortization schedule, and one will be provided with your purchase on any Secondary Market Annuity.

This method however treats the SMA like a loan (and you are the lender) and recognizes interest income predominately in early years, and principal in latter years.   This may not be beneficial for you.

At this time, it’s our understanding you can use either the amortization method, or the  exclusion ratio method, to calculate your taxes. But be sure to consult your own tax adviser.

Secondary Market Annuities and Amortization Schedules:

The software we use in the SMA industry is called T-Val  and is used for calculating present value and discounted notes, as well as amortization tables for loans. With each SMA purchase, you will receive an amortization schedule produced by TVal that shows the principal and interest portion of each payment under the amortization method.

You can also refer our site for a discounted cash flow calculator.

The exclusion ratio is more intuitive than the amortization table.  Feel free to view this article for more information on the exclusion ratio, in plain English and not tax-speak!

Other Tax Considerations:

In the case of factored lottery cases, taxes are withheld by the state lottery commission for state and federal taxes, and you will file for an applicable state and federal refund for the taxes withheld on that portion of your payment which is return of capital (basis).

Secondary Market Annuities & Taxes Summary:

So even though investors do not receive a 1099 for the payments from the carriers based on current tax law, what happens in the future to tax law is anyone’s guess.  Some may use an amortization schedule to calculate gains, and others use the exclusion ratio.

We at Annuity Straight Talk LLC do not offer tax advice, and this page is for general information only, so please be sure to consult your own tax adviser for more info.

Good News- The USA Is A-OK


We spend so much time reading bad news- think  national debt, entitlement reform, inflation, deflation, de-leveraging, low rates, and foreign threats- that we forget that the US is an incredibly dynamic and resilient place.

Our nation has survived a lot of lumps, and while we sure have some tough sledding in the decades ahead to get our debts and promises back in line with our means, there is good reason to believe that not only is that achievable, but our means are also likely to increase.

So today’s article is a ray of sunshine from one of my favorite big thinkers, Rich Karlgaard, Publisher of Forbes.  The title of the Wall Street Journal article is “The Future Is More Than Facebook” and it appeared in this 5/17/12 edition of The Journal.

The article makes the point that with Facebook’s IPO, we’re at the end of an era in Silicon Valley, and poised for a new wave of innovation. Now, Silicon Valley cycles are a lot like dog years, so the next big thing will be old news in 18 months or so, but that’s another story.

The point today is that social networking is a dynamo that did not exist a decade ago- billions and billions of dollars of value were created out of nothing, in a decade.  And it was  a pretty bad decade for the rest of the stock markets.  New waves of innovation in the years ahead will create new billionaires and these new, massive upheavals will sustain our preeminence.

Some really well said points are below:

The debate about whether America will own the global economy in the 21st century or else become a dude ranch for rich Chinese and Brazilians hinges on whether innovation can break out of the box. Can it go mainstream and transform the really big things: transportation, energy, electricity, food production, water delivery, health care and education?

If it can’t do that—or if it is thwarted by high taxes and complex regulation—then welcome to the new normal of 2% annual growth. Our future will become sadly familiar. Just follow Spain, France and Great Britain down history’s sinkhole of lost status and influence.

Despite this alarming warning, Karlgaard takes the high ground and gives a compelling vision of what the wealth, innovation, and capital of our country can accomplish when applied to the big problems of our world.  He continues:

Manufacturing? America will own the mid-21st century. Geopolitical instability and rising oil prices will wreck the late 20th-century rationale for outsourcing. Chinese labor costs are rising 20% a year while robotic costs are dropping by 30% a year. Do the math.

“Made in the USA” is set to have a major comeback. The showstopper will be 3-D printing, which makes physical objects from a digital file. It will turn our artists into artisanal manufacturers and reward American-style creativity.

Energy? America’s natural-gas and shale oil boom will bridge us to 2030 or so when solar energy and algae-based fuels will be closer to market parity and begin to make a real contribution. One of the companies who are making the use of solar energy grow across the country is Sandbar Solar & Electric. As long as I’m on the topic of the natural-gas boom, what key technology made this happy surprise possible? High-tech horizontal drilling. Who knew? We were all too busy fiddling with our iPhone apps to see it coming.

Question: If America could have only one of the following—Facebook, Twitter or horizontal drilling—which would be the smarter choice?

Happily, we don’t have to make that choice. America remains the world’s innovator, a country without limits.

Wow– I sat up straight and saluted at this.  What a refreshing vision of what can be.  Thanks Rich!

What Do you think? Tell Us Your Thoughts Below…

Why Annuities Are The Answer- And Are A Tough Sell


Time Magazine presents a poignant article today that gets to the heart of why so many people are in dire straits with their retirement. I can safely say that if you’re a regular reader or client of Annuity Straight Talk, you’re taking action to ensure this sad fate does not strike you- The article underscores why we feel so strongly that we are on the right track assisting people securing guaranteed income.

The article highlights results from a recent Blackrock study that surveyed the confidence levels of both retirees, and employees approaching retirement. See the article here.

The decline of traditional pensions and steady erosion of Social Security benefits has begun to leave most retirees without a source of guaranteed lifetime income. Plugging that hole is emerging as the most important retirement issue of our day.

How do we solve this retirement income puzzle? Annuities are the answer.  But this statistic is perhaps the most telling. 

Good luck figuring this one out. When it comes to the one sure-fire solution—immediate fixed annuities—retirees have a split personality. According to research out of Harvard, 77% of retirees wish they had locked in a guaranteed income stream when they retired and 86% say their employer should have helped them arrange one. Yet almost as many (69%) say they prefer to keep control of their retirement assets.

You can’t have it both ways. No company is going to guarantee income for life without taking control of the assets standing behind the guarantee. “We need a national conversation on this issue,” says David Laibson, a Harvard economics professor. “We need to learn more about what people want.” His comments came during a press conference for the latest BlackRock annual retirement survey, which found that retirees with a guaranteed income stream tend be most confident about their finances.

The article continues and gives some of the reasons why the logical answer is not utilized as often as it should be.

There are many reasons that retirees shun annuities. They can be confusing and some are laden with fees, and as noted people don’t like to give up control over their assets even if it means securing income for life. Another stumbling block is the low-interest rate environment, which makes annuities seem expensive. It takes $737,000 for a 70-year-old couple to buy joint lifetime monthly income of $4,000, according to

Yes, immediate annuities where you give up control and access to your money do have drawbacks, but no other investment pays mortality credits and pays as high a guaranteed rate.

The bulk of the BlackRock study discussed the change in confidence levels and security among retirees as the workforce shifts  from a defined benefit or pension driven retirements, to defined contribution and 401K driven retirements.  

With defined benefits, longevity risk is on the plan sponsor- the employer.  But the responsibility and risk is shifted to individuals in a defined contribution world.

No matter how you solve it, securing guaranteed retirement income is an essential challenge.  The best way to solve the problem is by shifting the risk.  An annuity is a private pension, and with it, you shift longevity risk back onto the carrier.  It’s that simple.

Don’t be among that 77% who wish they’re locked in more guaranteed income.  Take action today for that guaranteed income stream that instills the most confidence in your future.

Tax Talk- Did You Forget April 1st?


Most people consider April 15th to be the only tax deadline they need to worry about, or the 17th if we’re talking specifically about this year. Well if you are withdrawing money from a qualified retirement account then April 1st is not a day you should forget either.

April 1st of the year following when you turn 70 ½ is the day you are required to take a minimum distribution from your tax-deferred retirement account. This is imminently important for those who are currently in that age bracket but it definitely should not be overlooked by those who are several years away. There’s a great article here from Smart Money that covers the basics of what you need to know.

You see, whether you need to take those withdrawals this year or not, any planning you do for the future needs to be done with RMDs in mind. IRAs and such are great for tax deferred saving but when it comes time to convert those assets into retirement income of any kind there are plenty of special nuances that must be considered when planning an income strategy.

First of all, add up all qualified assets and get an idea of how big your RMDs will be. This can be done using some simple formulas mentioned in the article and we’re here to guide you through it if you need to boil it down to exact numbers. Then you need to consider how those numbers match your plan for distribution of assets throughout retirement. Once you figure out how much you’ll be required to take you can design an income strategy that is flexible enough to keep you within IRS rules.

Other than that there are a couple of things that are important to mention…

First, if you are planning on taking systematic withdrawals from a traditional management portfolio then you need to carefully consider how your assets will be affected by a market slump. It will happen and when it does you’ll still be required to take RMDs which will only depress your account further. Do remember when we talked about Reverse Dollar Cost Averaging? It may be well worth another read.

Second, deferred income annuity contracts can be adversely affected as well. If you plan on parking money in a deferred annuity with guaranteed income rider past age 70 ½ you may still be required to withdraw money from your account before you had originally planned. This will decrease the amount of guaranteed income you can expect to take in the future. Tread lightly and take all factors into account before you commit to a long-term strategy with qualified assets.

No matter how you are planning to distribute your assets for retirement income, careful and exact calculations are necessary. I don’t care if you are age 55, 65 or 75 this is something everyone needs to think about. All planning should be done with every known variable in mind. There are plenty of unknown variables to worry about so the last thing you want to do is be blindsided one day by something you should have taken care of long ago.

One thing’s for sure, the day of RMDs is coming so get your ducks in a row now.

Have a great week!

Bryan J. Anderson
[email protected]

New Index Annuity Calculator


Understanding  the benefits of an index annuity can be a daunting task for investors, but it’s totally worth the effort to become proficient and give these a serious look.

Index Annuities are very safe investments much like a fixed annuity, yet they have the possibility for gains linked to a market index.  And further, they can go up but not down due to the methods used to generate the market participation.

There are index annuities oriented towards appreciation, and there are index annuities geared towards the income rider.  Most people are familiar with index annuities in conjunction with income riders- these are often known as Hybrid Annuities.  But outside the guaranteed lifetime income rider component of Index Annuities lies the potential for a very safe appreciation vehicle.  

The nice calculator below is wonderful for illustrating the power of annual reset – this is an index annuity crediting method that builds account value annually (subject to participation and caps).  Use the start year to scroll through turbulent years and see how the annuity would perform.

Your comprehensive annuity investment guide: Annuities.

This calculator comes from another online resource so we can’t vouch for the complete accuracy of the historical data sets.  So please use this for a visual illustration and give us a call to select the best fixed index annuity with the highest crediting methods and most beneficial caps and participation.

How Safe is the Secondary Market for Annuities?


The question of safety of the Secondary Market is one  we receive frequently, especially after sending out a list of currently available offers that pique reader interest.

Quite simply, we like  structured settlement secondary annuities  because  they offer the highest yield and highest level of safety available to consumers for retirement income purposes.  They are not the simplest  transactions for buyer or agents to complete, and they are not appropriate for all situations.  For example, for older investors,  other types of annuities may have more benefits in flexibility or longevity protection.  However as planning tools with excellent  yield and safety, they simply can’t be beat.

Be sure to reference our post on the difference between Structured Settlement Annuities  and viatical (life insurance) transactions

 So now that you know why we like them in general, the question remains, is this market for real and how safe is it?

Secondary market annuities can more specifically be called structured settlements in technical terms. A structured settlement originates when an individual wins a settlement- this can be a car accident, medical malpractice, or any other sort of award.

The settlement essentially takes the same form as an annuity contract that is available to anyone who invests retirement assets with an insurance company- it’s a promise by a highly rated carrier to make a series of future payments to the individual.

In this case, rather than an individual buying those future promised with a premium (AKA an annuity), in a settlement, the losing party in the case settles their obligation by transferring a sum of money to satisfy those future payments. The sum is transferred to an insurance company who then shoulders the future market risk and court-ordered obligation to make specific payments. The winning party- usually an individual- enjoys this income stream tax-free per IRS regulations.

However, circumstances change for people, and sometimes they wish to sell their future payments for a lump sum. This is where our ”Secondary Market Annuities” originate.

Because of this slight difference in origination of funds in the settlement, there is one critical difference that separates primary market from secondary market annuities. In addition I’ll add two other reasons that will show clearly why the secondary market is a much SAFER investment.

Safety Factor #1

An insurance company becomes party to a structured settlement as part of a final court order in a lawsuit. In the unlikely event that this specific insurance company fails in the future, an existing court order compelling the company to make payments would place that liability among the company’s most senior debt obligations. And that means it gets paid out ahead of all other company liabilities. The insolvent insurance company would be held in contempt of court for failing to make payments according to the terms of a structure settlement. The stream of income provided to you via the secondary market annuity would not be affected nor have to wait for further bankruptcy or liquidation proceedings.

Safety Factor #2

And now for the somewhat less critical but also quite relevant…

Each state has an insurance guaranty fund that covers the guarantees of insurance policies and annuities for insolvent insurance companies who can’t make payments. Let’s assume your state guaranty fund covers $100,000 for annuities but you need to invest quite a bit more money to cover your retirement income needs. Within the primary market, no matter what you decide to invest, you may only be covered to the maximum limit of $100,000.

By using the secondary market, you are subject to the guaranty limits of the state where the contract was initially issued, not necessarily your state of residence. Structuring an income portfolio in the secondary market typically requires multiple deals to complete. It is quite probable that each contract will have originated in a different state, which affords you the total protection of all states involved rather than simply the limits offered in your current state of residency.

Safety Factor #3:

The risks in an SMA are generally transactional in nature- meaning, it has a risk of not closing due to the seller changing their mind or the court not approving the transfer. In both of these cases, there is no financial consequence to you if the case fails, and your deposit is fully refunded.  This happens in about 1 in 10 cases where generally a court disallows the seller from selling due to the seller’s personal situation.

Other risks in an improperly handled SMA transaction are that a payment stream could be already committed or not transferable. Our process eliminates that risk as our outside counsel reviews and will not release purchase funds until a thorough checklist is complete.

Thus the three key items that ensure legal safety are:

  1. Benefits letter from the issuer to the payee, which establishes that the Payee has the payments to sell,
  2. Court order changing the payee to you,
  3. Acknowledgement letter or stipulation agreement after the court hearing from the Issuer naming you as the new payee of the specific payment stream you purchased.

Not surprisingly, these three key pieces are what must be in place before your funds are released to a factoring company and seller, and are what constitute our closing book after a transaction is complete.

Safety Factor #4:

And finally we’re going to talk about a safeguard that is inherent to any sound retirement income plan. Any advisor worth their salt will advise you to spread your assets between several different insurance companies. While this is a great recommendation, it rarely happens because most salesmen are lazy and benefits can vary greatly between carriers to the point where it puts you at a financial disadvantage.

Because a typical case involves multiple Secondary Market Annuities, purchasing contracts in the secondary market virtually assures that you will place assets in several companies with no sacrifice to average yield or overall performance.


A retirement income portfolio based on secondary market annuities thus offers unparalleled safety of 1) credit quality, 2) seniority status among the issuing company obligations, 3) rock solid legal review, and 4) diversity of carriers.

If you’d like to explore this profitable yet extremely safe opportunity for your retirement income plans, we’re ready for your call.

Annuity Straight Talk


What Happens if Your Insurance Company Fails? CBS News


The economic climate of the past few years has caused consumers to question the certainty of nearly every type of investment product. Doubt is frequently cast toward insurance companies because of their position in the financial framework of our economy in addition to the number of spectacular failures in the banking industry, as mentioned in a recent article on read the article here.

This article basically talks about how to take protective measures that go beyond simply choosing to invest with a safe company. I expected to see a little more information regarding how annuities are treated when an insurance company fails but let’s first go over a brief summary of what the article does state.

First of all, a thorough discussion is offered as to how state guaranty associations protect annuity purchasers, much like the FDIC protects bank deposits. It is important to understand the coverage limitations that exist with your home state association. For annuities this will range from $100,000 to $500,000 depending on your state of residence.

Second, the author points out some critical information regarding the difference between failures at insurance companies vs banks. In the author’s words…

It’s hard to start a “run on an insurance company” like a “run on a bank.” While you can always withdraw the money from your bank accounts, you would have to die for life insurance benefits to be paid, and with immediate annuities, you’d have to wait each month to receive your check.

Also of note is the fact that banks are more highly leveraged, thus more susceptible to failure. Generally speaking, an insurance company’s liabilities are not much greater than its assets whereas a bank typically will have liabilities many times the amount of assets on hand. Which seems like more prudent financial management to you?

Lastly, the author offers some simple suggestions as to how you can protect yourself. Research your state guaranty association and keep individual purchases below the limit even if you have to use multiple companies to do it. And, only invest money with highly rated companies who have an excellent track record of conservative management. I know it sounds simple but you can’t even imagine how many people overlook these easy steps.

In this article we found a simple approach that shows why insurance companies are safe and what consumer protections exist. Now let’s also talk about what happens to your annuity if the company does fail.

Most importantly, annuities are backed by a conservative mix of corporate bonds and government treasury notes. Financial hardship is likely unrelated to the general company account that holds annuity assets. In the case of AIG, failure resulted from the company’s exposure to the sub-prime mortgage market. AIG’s fixed assets stayed in tact and annuity payments were made as promised. No consumer lost money from an annuity contract as a result of AIG’s reckless financial management. And that was a big one!

Had the company been allowed to fail without government assistance, the profitable portion of the company assets would have easily been sold to healthy institutions who would have carried the guarantees to term. You see, the problem was never the insurance business but the fact that executives used profits to further leverage the company with extremely risky assets.

When Conseco failed in the mid-90s, profitable lines of business like annuities were sold off to healthy insurers. Visitors to Annuity Straight Talk have showed me two original Conseco contracts issued before the failure that are now owned by separate insurance companies. Those contracts were not negatively affected by Conseco’s troubles and went to term and beyond with all contractual guarantees intact.

Nobody wants to see their insurance company fail but it certainly doesn’t indicate the end of the road. I know how it works. I’ve seen it in action. Annuities are extremely safe, and that’s all there is to it.

Have a great week!

Bryan J. Anderson
[email protected]

Calculating Yields in the Secondary Market


Nearly every time we send out an email with new secondary market annuity offers, several inquiries come back with people asking how the return is calculated.

The first resource is one from the vault- a piece we wrote several years ago that is just as accurate today- Which 10% Do you Want?

For more, let’s see an example that everyone can relate to…

Assume a purchase price of $282,951 where monthly income payments of $1500 begin one month from today and continue for 360 months. The effective annual yield is 5% and aggregate cash flow comes to $540,000.

Everyone has seen this similar loan and repayment amortization schedule with a conventional mortgage. With a mortgage you would be the borrower but with a Secondary Market Annuity you are essentially the lender.

The payments outlined above can be a good example of a 30 year mortgage or it could be an excellent income stream from the secondary market. Either would be calculated exactly the same way.

With Secondary Market Annuities many people want to assume that the $282,951 is simply growing at 5% for 30 years, but this is not the case, just as it is not the case with the amortizing mortgage either. Why is this? When money is paid out, the compounding asset balance shrinks.

Every payment on an amortizing mortgage is part interest and part principal, and Secondary Market Annuities are no different- each payment includes an interest earned component, plus a return of principal component.  We won’t bore you with an extensive amortization table here outlining 360 payments- if you really want it, just ask and we’ll send it over!

Alternative  Way of Looking at Secondary Market Annuities Yields:

There is another simple way to look at it so let’s have another example. Assume you placed $282,951 in a savings account earning 5% effective annual interest (unlikely, I know). If you were to withdraw $1500 per month, after 360 months you would have collected $540,000 and the account would be empty. While you are in fact earning 5% interest, you are not earning interest once the money comes out of the account.

The calculations for these returns are slightly more complicated than a simple (money ‘times’ interest rate ‘times’ time) formula. If that were the case, $282,951 growing at 5% for 30 years would compound to $1,222,886 which isn’t the case here. Money at work in the account earns interest while money in your pocket does not.

Secondary Market Annuities Yield Summary

These examples indicate that not all income deals in the secondary market are appropriate unless the structure meets specific objectives for your retirement plan. Immediate income works for some people and deferred income or future lump sum payments work for others. Which one is best for you? You must answer that question.

There are several ways to capitalize on the secondary market. What we have are above average interest rates and extremely high levels of safety, and a variety of available cash flows. The rate and safety are a compelling proposition in any economy and especially true now. The only thing to determine is what you are seeking, and then match your goal with an available offer.

To maximize the strength of this market, use the right tool for the job- don’t buy an income stream if you have no need for the payments. Instead, let it defer and accrue a few years! Likewise, don’t buy a 10 year deferral annuity if you need money every month.

Please don’t hesitate to call us if there are any specific questions you have about how the secondary market for annuities works, and for assistance selecting the right offers for your specific situation.

You can always view our available Secondary Market Annuities here, or give us a call or make an appointment to help setting your goals and matching appropriate tools for the job-

Have a great week!

Bryan J. Anderson
[email protected]

Secondary Market Annuities Are Not Viaticals


At Annuity Straight Talk we encourage you to learn all you can about annuities so you can independently verify what we recommend, or what any advisor you chose to work with presents you for consideration. As many know, we often recommend Secondary Market Annuities as a very high credit quality alternative for investors seeking a yield above market for comparable safety.

Recently, a reader who inquired about Secondary Market Annuities did some research and wrote back,


We just wanted to let you know that we are not interested at this time to purchase any SMA’s, after reading several articles about insurance company’s being able to opt out of these contracts in app. 35 states.

Thank you so much for your time.

As it’s easy to get turned around in the World Wide Web, we thought it would be beneficial for all to read our response:

The article referenced is here. It may require a registration to that site, but the registration is free.  If you don’t wish to register and want the article, Contact us and we’ll email you a copy.

Our response to the reader is as follows:

The article you referenced points to the proliferation of a ‘secondary market for annuities’ which is actually unrelated to the contracts I promote on my website. It is confusing, however, due to the similar name both transactions share.

In fact, the contracts I promote are more properly labeled ‘resale of structured settlements’ and come in the form of a payment stream (an annuity) from an insurance company.

We call them “Secondary Market Annuities” because they are annuity payment streams being bought on the secondary market. Unfortunately, regular annuities being re-sold would share the same title, and therein lies the confusion.

Secondary market annuities as mentioned in the article have to do with investors buying an annuity in the name of someone else. Why would someone do this? Because certain annuity contracts have death benefits attached to them.

Take for instance a variable annuity with a death benefit. If the owner dies when the market is depressed, a death benefit of the original investment amount plus interest will be paid to the beneficiaries.

Now, the problem with this sort of transaction is that groups of wealthy investors and attorneys got together and solicited terminally ill people. The investors purchased annuities with a death benefit while naming themselves beneficiary and a terminally ill individual the owner. It offered a risk-free way to invest in the market by leaving the insurance company on the hook for a death benefit.

The problem is that it went contrary to the spirit of offering protection for people saving for retirement while trying to protect family members. It falls in the same category of transaction as ‘stranger oriented life insurance’ and other viatical transactions.

Many regulators felt that investors were taking advantage of terminally ill people and the result was a series of laws that allowed insurance companies to cancel certain benefits if contracts were transferred. I personally believe that was the right thing to do. Contractual guarantees are put in place for very good reason and I feel any effort to exploit that should be stopped.

But comparing those “stranger originated transactions” to the structured settlements we promote at Annuity Straight Talk is like comparing apples to oranges, as they say.

The transfer of the Secondary Market Annuities we sell- more properly labeled ‘resale of structured settlements’- is regulated by an act of Congress in 2001 that produced HR 2884 and is found in Internal Revenue Code 5891. As of 2008, all but a small handful of states enacted laws governing transfers to mirror the federal statute.

In summary, the legislation and tax guidance cited states that a structured settlement may be resold and that if it follows a proscribed process involving the Court in the state where the original settlement originated, that the transfer of payments would retain its tax treatment and not be subject to a penalty taxation.

As a result, each of the transactions we promote has a Court date wherein the transaction needs to be reviewed and approved. Court orders must be in place and all documents reviewed and approved prior to funding.

The transfers we promote receive a substantial amount of due diligence from our legal counsel for your benefit and ours. As such they offer the highest levels of safety and retirement income efficiency. Each case is treated with exhaustive care and the result is the greatest amount of benefit for our clients, all firmly within the confines of state and federal laws.

It’s critical to perform due diligence and this article (cited above) is important if you are considering the purchase of a stranger-oriented life insurance policy or an annuity contract on the secondary market with a death benefit attached to another party’s life. But it’s equally important to understand the differences between that marketplace and the structured settlement market.

We hope this discussion and links are useful to our readers. We welcome any additional thoughts or questions- simply email us or leave a comment below.

** You may also wish to reference this post with more detailed information on the safety of Secondary Market Annuities.

Great Short-Term SMAs Available Now!

From what I’ve heard, the information shared over the last few weeks regarding the secondary annuity market has helped several people gain a greater understanding of this product class. Stepping into a little-known niche of the financial markets is a major transition for anyone. Understanding all that goes into a serious financial commitment is essential to making a calculated decision.
Because the inventory changes so quickly at times it is my job to let you know where the value is with what is currently available. Most of you have unique objectives so I’d like to highlight one specific area where this market offers fantastic opportunity.
Right now, the short-term deals are hot! Without the commitment of long-term deferred income or lump sum payments, you can secure exceptional rates on three to nine year contracts. Today, those contracts are yielding 4.75%-5.75% in comparison to the rates on CDs and Money Market funds that run between 1% and 3%.
For instance, here are a few quality short-term deals…
·         $66,906 will grow to $75,000 in three years for an effective yield of 4.75%
·         $194,842 will grow to $240,000 in four years for an effective yield of 5%
·         $57,733 will grow to $83,000 in seven years for an effective yield of 5.5%
And that’s just a small sample of the available contracts…
This is an easy decision to make. With so many people unsure of how to allocate capital in a volatile market, many have decided to play it safe. Well, here’s your safety with a little yield to go with it. All of this in a shorter time frame that will give you plenty of flexibility for any changes that may come in the stock market or economy.
Check out the current inventory now and see for yourself. Call or email immediately to reserve a deal that suits your situation.
If this is the type of investment that works for you but you don’t see anything that fits just right, please let me know to keep an eye out for the perfect deal so it doesn't slip away.
Have a great week!
Bryan J. Anderson

[email protected]

Secondary Market Annuities In Corporate Finance

The secondary market for annuities is traditionally the secret domain of large corporations. With annual distribution of around $700 million it is one of the smaller financial offerings available. A recent press release offers a glimpse of how financial institutions use these secondary deals to profit using companies like for support. The other major benefit of a very bad loans with loans4u, is that the lender may report the borrower’s payment history to credit reporting agencies. This may help the borrower build a better credit rating when payments are made on time. Loan shoppers should confirm a lender reports to credit bureaus in order to ensure they enjoy this benefit.

If you have very bad credit loan, then the bank can run after the guarantor. Of course, you can’t find someone to do this unless you are very close with that person. It can also wreck your relationship if you are unable to fulfill your obligations.

This press release talks about how J.G. Wentworth, one of the biggest players in the industry, just completed a securitization of $265 Million of structured settlements. Wentworth buys various financial instruments like settlements, annuities, and financial obligations through aggressive direct-to-consumer advertising, offering cash now for future payments. You may have heard their catchy radio and TV advertising. 
Secondary Market Annuity... Image Via Wikipedia
J.G. Wentworth buys these contracts, packages them into a fixed income portfolio, and resells them to institutional investors. Of course, they pocket the the spread and make a good business out of doing it. Read the release here.
The key to this is that factoring companies like J.G. Wentworth create high-quality fixed income portfolios that are in high demand from banks, corporations… and insurance companies. An insurance company can conceivably buy a securitized portfolio which may in part be comprised of its own obligations! 
In this we can see the essence of Share Prices – they are such ultra safe and secure financial instruments that they are in demand by the most stable and risk averse institutions. Secondary market annuities thus may indirectly contribute to the safety and yield of primary market annuities.

Ultra Safe, Guaranteed Cash Flows:

Wentworth does on an institutional scale exactly as we recommend to our clients: they assemble many Secondary Market Annuities to create a desired stream of cash flow, but one that is of higher yield than what is available on the open market. Bundled together, these financial instruments become smooth payment streams.   Wentworth’s buyers have the same goals as you: they want ultra-safe, guaranteed returns to add stability to their investment portfolio.

Stefano Sola, J.G. Wentworth Chief Investment Officer phrases it like this:

“The driver behind this decision was the underlying investor appetite and demand for long term access to strong, consistent and predictable cash flows”

Does this sound familiar? Frequent readers of this site will realize that’s exactly the benefit I’ve emphasized all along. A strong, consistent, and predictable cash flow is precisely what individual investors should seek for guaranteed retirement income. Do you believe me yet? 
Consider this: Would you like to get a 3.5% fixed annuity from a company like MetLife whose assets may include this securitized portfolio from J.G. Wentworth, or would you rather get the SAME QUALITY UNDERLYING ASSET yielding 6.5% from me? Seems like an easy decision.

This Market Is Open To You…For A Limited Time:

As you may be aware, I have access to excellent Secondary Market Annuities for individuals.  Though they are available to individual consumers currently, this has not traditionally been the case, nor may this market stay open to individuals for long. While this limited opportunity is available I suggest you take a closer look before the demand from banks comes back, and J.G. Wentworth and others absorb all available inventory and shut off the valve for good.
All the details of these transactions are available for your due diligence before entering the market. Once you reserve a specific contract you can investigate all the underlying facts and make your own independent verification. Take advantage of this excellent opportunity while you can.
This is an exceptional opportunity to increase the yield substantially on the safe portion of your portfolio. Take the opportunity now to get on the institutional side of a financial transaction for a change!
Have a great week!
Bryan J. Anderson

Is the Secondary Market Too Good To Be True?

A fair number of people who have requested more information about the secondary annuity market have cast it aside as ‘to good to be true.’ Many other advisors might mention they have never heard of this market. I was personally in the same place six months ago. In order for me to become comfortable enough to recommend these products I had to go through the same process of discovery that you’ll want to go through before buying.
Every objection can be explained so I’d like to share the answers to the two most common skeptical questions in order to clear the air.
Why hasn’t my advisor heard of SMAs?
Secondary market annuities are better known as ‘factored structured settlements’ within institutional circles. You see, prior to 2009 these contracts were absorbed entirely by major corporations. After the credit crisis in 2008, many banks stopped buying these so the companies who sell them started actively searching for additional funding sources. Several partnerships were started with brokers who could offer them to individual investors as the yields offered exceptional value.
When financial institutions purchase these contracts, in many case they will be securitized and offered as a part of a bond or mutual fund, with a watered down yield of course. It’s not all too far-fetched to assume you may actually hold ownership in these as part of some of your other investments.
It’s important to understand the overall market is very small in relation to other financial products. The average annual market for these contracts is less than $800 Million. Of that, less than 20% is available to consumers. That may sound like a lot but it pales in comparison to the $200 Billion annual market for primary market annuities, including all fixed, variable, index and immediate annuities. If banks begin actively buying these contracts again it will no longer be available to you.
How do I know the insurance company will actually pay me?
I consider this a very reasonable concern since you need ultimate assurance when you part ways with a major chunk of savings. There are three key factors that offer certainty as to the outcome. 
First, we have attorneys that review each deal to make sure all issues that prevent the sale are remedied. These attorneys specialize in this type of transaction whether an individual or bank is the buyer. Since they are working on for your benefit they are willing to take time on the phone to explain their experience with this process. By the way, this legal consulting comes at no additional cost to you.
Second, all transfers are court approved and the issuing company is given a court order to redirect the payments to you. It’s easy to verify this through court filings and you are given a copy of this court order at closing of the sale to you.
Third, each issuing company will issue a form acknowledging the court ordered transfer. This document is issued from the home office of each company from a specific division that deals with structured settlements. This document is also including in your closing book and a representative within the company will confirm that your name is now listed as the person who will receive payments.
As I mentioned before, this is all due diligence I performed when deciding whether to offer these deals to my clients. When it’s all said and done, you’ll receive as much or more confirmation of the transaction than you’d get with any primary market annuity.
Since this market is only accessible to a very small number of advisors nationwide, it’s no surprise that few people know about it. Don’t let that stop you. Do your research and find the value. This could be a very limited opportunity so you don’t want to miss it because you didn’t take the time to investigate.
Please let me know how I can help.  You can click here to start learning about Secondary Market Annuities.
Bryan J. Anderson

[email protected]

Is Someone Telling You to Surrender Your Annuity… and Buy a Different One?

This article made me realize I need to make consumers aware of a potential financial hazard. Last week a press release came out describing how two Registered Investment Advisors in Illinois were penalized for recommending the replacement of existing annuity contracts. The transactions made these advisors a substantial amount of commission and were later found to be completely unsuitable for the consumers involved. Read the release here.
In the past couple of years, I’ve taken dozens of calls from people asking if they should replace a current contract based on the advice of another salesman. In every case, the answer has been NO! Aside from generating a fat paycheck for the new agent, there is usually little to no net benefit to anyone involved. Termination of an existing contract not only costs money in surrender penalties but also results in a loss of benefits from the former contract.
There is a lot of information out on the internet and a lot of people trying to earn your business. I know that many of you get informational emails from some of these sources just like I do. I want to know what you hear and what other advisors have to say. Some of the information is troubling to say the least. A few people out there actually advertise for annuity replacement. Be extremely cautious when contact with an advisor is made this way! In fact, if that’s how someone needs to attract clients, do the guy a favor and take your business elsewhere. He needs to find another line of work.
Many of the products sold today have a long list of benefits. Each available product has a specific strength that is meant to be used for a specific purpose. Some offer excellent guaranteed income, growth or death benefit guarantees but rarely, if ever, does one product do it all. Surrendering a contract for a greater benefit in one area will cause you to give up benefits in other areas. Besides, guarantees from product to product are usually close enough that it’s not worth the hassle.
If you are the victim of unethical sales practice you may have recourse but no one enters into a contract looking for that kind of hassle. The purchase of an annuity is supposed to relieve stress, not create it. Do your homework before you buy any financial product and look for a competitive analysis of any strategy. The more you know about your contract the better you’ll be able to tell the difference between a true advisor and a snake-oil salesman.
If you want some hard-hitting questions to ask any advisor who may or may not be acting in your best interests send me an email. I’d be happy to offer up a list of questions that can only be answered by the real experts out there.
You and your money deserve the most ethical approach.
Have a great week!
Bryan J. Anderson

[email protected]

CD vs Annuity Idea


Okay, we all know there are a lot of people with money sitting in CD and money market accounts that are currently yielding very little interest. With the uncertainty in the global economy, I can certainly understand why many are choosing to play it safe for the time being. Are you one of those people?

Would you like an alternative with more potential? For the most part I stay away from general product recommendations without knowing your specific situation, but sometimes it helps to demonstrate how annuities can be used in the proper context. This one is very simple and we’ll consider a five year time frame with a particular fixed index annuity that is currently available in the market.

CD Vs Annuity: Comparison-

This product will pay a minimum guaranteed rate of 1.5% and also allows for up to 5% interest credit if the market performs well. Let’s assume you have a CD or money market fund paying a similar minimum interest rate, which could be more or less depending on your specifics.
With an initial premium of $100,000, this annuity will return $107,728 in the absolute worst-case scenario. If the stock market returns positive in at least one year, the total yield will be even higher. And who knows, maybe you’ll win more often than that.
Now your CD or money market may have the same guaranteed base, but I’ll bet it doesn’t allow for higher yields with positive stock market performance. Not to mention the fact that the annuity allows for tax deferred growth as compared to the annual taxation of the alternatives.
The best part is that the annuity is terminated after five years so you aren’t locked in to a lengthy contract. You should know by now that I’m a big proponent of flexibility and this product provides that with enough growth potential to make it worth a closer look.
If you are interested in this product issued by an A+ rated insurance company please call or email for more information so we can see if this is a match for you.
Take care and feel free to contact me at your convenience.
Bryan J. Anderson

Annuities and the Puzzle of Income- New York Times



Here is still more information that documents the difference between a person with a pension and one without. This time, Richard H. Thaler from the University of Chicago writes of the difference in the New York Times this past weekend. In the article found here, Thaler considers two individuals, Dave and Ron, with identical ages and retirement portfolio balances to illustrate the point perfectly. Dave has a pension and Ron does not.
The lesson is clear; Dave has a substantial amount of guaranteed income for life whereas Ron has some difficult choices to make. Here it is straight from the article…
Dave can count on a traditional pension, paying $4,000 a month for the rest of his life. Ron, on the other hand, will receive his benefits in a lump sum that he must manage himself. Ron has a lot of choices, but all have consequences. For example, he could put the money into a conservative bond portfolio and by spending the interest and drawing down the principal he could also spend $4,000 a month. If Ron does that, though, he can expect to run out of money sometime around the age of 85, which the actuarial tables tell him he has a 30 percent chance of reaching. Or he could draw down only $3,000 a month. He wouldn’t have as much to live on each month, but his money should last until he reached 100.
Which option would you choose? It seems taking the pension route carries several additional benefits, all of which we’ve covered recently. And while many people malign the fact that defined benefit pensions are going extinct, the same kind of secure benefits can be found with an annuity. While that may be true, this article considers that relatively few people choose to purchase an annuity to fill the pension void.
In the author’s words…
Although people like Dave who have them tend to love them, old-fashioned “defined benefit” pensions are a vanishing breed. On the other hand, people like Ron — with defined-contribution plans like 401(k)s — can transform their uncertainty into a guaranteed monthly income stream that mirrors the payouts of a traditional pension plan. They can do so by buying an annuity — but when offered the chance, nearly everyone declines.
As we know, there is no shortage of economic evidence to verify the superiority of pension income.
Economists call this the “annuity puzzle.” Using standard assumptions, economists have shown that buyers of annuities are assured more annual income for the rest of their lives, compared with people who self-manage their portfolios…
If it’s this obvious, why don’t more people purchase annuities? Maybe you should tell me. I know first-hand that many consumers decline the annuity option, but rarely am I told exactly why. For starters, let’s take a look at the reasons mentioned in the article.
Stiffing Heirs– Many people feel that purchasing an annuity will decrease the likelihood of leaving a future inheritance. With the basic structure of most products, this is actually the case, although annuities can be designed to meet individual wishes.
Complicated Set of Choices– With the extreme amount of available annuities on the market, choosing one that fits perfectly is a daunting task. That’s exactly why this site was created. Here you can learn to grade specific contracts to find the most efficient way to produce long-term income without sacrificing other individual desires.
Payoff Is a Gamble– If profiting with an annuity contract requires that you live longer than average; many people would be justified to balk at the risk. The key to a suitable purchase is to not over-commit. By using an annuity to meet only your basic expenses you will keep additional assets available for the other financial goals you have.
If the economists are correct in saying that people with pensions and annuities are able to guarantee a higher level of cash expenditure over retirement, I think it’s worth raising all objections so you can give the option to purchase an annuity a chance. With a reasonable advisor, you should be able to take an academic approach to the question to verify a valid strategy.
I happen to think I’m a reasonable guy… and my clients would probably agree, it’s definitely worth closer inspection. What are your concerns with using an annuity for retirement income? An open discussion is the best way to answer every question. You’ll do yourself a disservice with any other approach.
I invite all your comments and look forward to helping you answer some very important questions.
Thanks for your time and have a great week!
Bryan J. Anderson

Secondary Market Annuity Brochure Available


Many of you are interested in the secondary market for annuity products but are taking the prudent approach by doing a little research first.  I think that’s a great idea!  And now I have a little more to offer with a shiny new brochure that does a great job explaining these contracts.  The information here is similar to what is available on this site but will go into a little more detail so please let me know if you are interested and I’ll email you right away.

Read the Secondary Market Annuity brochure in order to answer these questions…

  1. What is a secondary market annuity?
  2. What are the risks involved?
  3. How do I buy one?

The secondary market for annuity products presents the opportunity for exceptional fixed interest rates that are likely to enhance the profitability of most, if not all, retirement portfolios.  Is an SMA right for you?  Get the brochure and find out.  The easiest way to get it is to send me an email and I’ll attach and return promptly.  Follow the email link at the bottom to send me a message and put “SMA Brochure” in the subject line.

As for what’s currently available, check out the Secondary Market Annuity Availability list on this site to see if there’s anything that sparks your interest.  You are likely to find anything from short-term deals that handily beat current CD or fixed annuity rates to long-term income deals that offer extremely profitable cash flow over time.

Whether income starts immediately or at a later date, these offers yield far more than you’ll find in the current markets.  The best part is that it comes with the same safety and guarantees of any top rated annuity product.

Check it out the list now and call or email to reserve one of these exclusive annuities today!

Bryan J. Anderson
[email protected]

Federally Issued Inflation Adjusted Annuity


indexMy mind was filled with negative images before I even got the details of the plan covered in this New York Times Op-ed. The article rightfully acknowledges the high risk many people face of outliving retirement assets but the solution causes all sorts of problems.

Yes, the authors do in fact believe that a federally issued inflation adjusted annuity is the answer to the challenge of longevity risk. In my opinion this is an extremely reckless proposal for several reasons.

Here are my thoughts based on what’s mentioned in the article.

First, it is stated that there is no single financial product capable of dealing with longevity risk. That’s news to me since insurance companies, as I understand, have been properly managing assets for retirement income for several centuries now. The authors do note that private annuities go part of the way to address the problem. If they don’t go all the way it’s a funding issue and no fault of the annuity product itself.

Next, and I quote, “By doing good for individuals, the federal government could actually do well for itself.” The problem here is that the government always does well for itself. Congresses past have helped themselves to the social security trust fund and that is a critical reason why that fund is costing taxpayers so much money and is projected to go insolvent in less than 30 years. The fox is already guarding the henhouse. Why would we put more chickens in there?

Also, the article mentions the risk of potential insolvency of insurance company and states that the fed is well-equipped to carry the liability instead. Again, I’ll quote.

“…how can someone — particularly a young person — know for sure which insurance companies will be solvent half a century from now?”

How indeed? Well, I don’t know, except for the fact that the federal government is already over budget and deeply in debt. Insurance companies, on the other hand, are solvent, profitable and suitably hedged for future obligations. If I were looking for a good steward for my money, I’d rather have a hole in my head than trust more of my financial well being to those spend-happy egotists in D.C.

Lastly, when you look at how the proposal would be structured it’s no different than current annuity contracts. It’s like these guys just realized what annuities are designed to do and figured that the government should get in the business. Sorry guys, your idea is a couple hundred years behind its time. Any notion to the thought that the federal government could achieve better results than insurance companies cannot be grounded in actuarial analysis. Do the American public a favor and run some numbers to assert these claims.

At a time when social security is projected to account for nearly 40% of retirement income for the average individual, the last thing that should happen is to ensure more private money to that public institution. Does anyone remember Enron? So many employees got hurt because they were banking on Enron pensions, planning on cashing out Enron stock options and had 401(k)s heavily invested in Enron stock. That’s a direct example of how the lack of diversification put millionaires on food stamps. How is this proposed strategy an less risky?

Annuities work as designed and no meddling from bureaucrats will improve the situation. The reason I’m citing this article is to illustrate the fact that you can’t count on anyone but yourself for long-term financial security.

If you feel so inspired, I would love to have some comments or questions on this post. Please… tell me what you think!

Bryan J. Anderson
800.438.5121 [email protected]


Index Annuities And Variable Annuities In The News


This week’s focus remains on index annuities and variable annuities because of the rich mix of popularity and confusion regarding each of these products. I want you to have the most recent news and information on available products and strategies so you’re ready to make an informed decision when the time comes. In addition, you’ll find a reference to a very important article on federal spending that should remind you again as to why an annuity is likely to be the keystone financial vehicle in your retirement income plan. Let’s get started…

Are Variable Annuities Becoming More Efficient?

Leslie Scism writes in the Wall Street Journal about the move by investment managers to incorporate exchange traded funds (ETFs) into variable annuities. The main reason? ETFs are more cost effective and the result of this move would bring the overall cost of these products down, making them more attractive to potential investors. It doesn’t matter if the currently high fees are justified or not, but the fee structure of variable annuities has long been one of few valid complaints with the product. Lower fees and the resulting higher level of efficiency will make them better for consumers and also more popular with financial professionals. To read into the details of this transformation, click here for Leslie’s article.

What’s more, the article continues by showing further changes to variable annuities that is meant to not only make them more efficient but also more competitive with other products.

It seems to me that issuers of variable annuities are taking a page out of the fixed index handbook.

In the Annuity Report, the difference between these two products is clearly illustrated and it shows that index annuities provided better income guarantees because of a more stable underlying asset base.

With a variable annuity, the base account is exposed to the risks of the stock market. As such, companies have less control over future performance and must go light on the guarantees as a result. A stable asset base is the major advantage of index annuities to the benefit of the consumer and issuing company. How could variable annuities ever compete?

Well, this article describes a shift in investment strategies for the companies who manage variable annuity assets. In an attempt to protect the principle asset, management teams are working to implement indexing and hedging strategies that will limit downside losses in bear market while capitalizing on upswings during a bull market.

To me that sounds a lot like the value proposition of a fixed index annuity.

Why should you care about changes in the variable annuity landscape?

Variable annuities have achieved much greater reach in the retirement planning market. Index annuities are not as well understood but, by their nature, offer a better value proposition for the consumer. For clarification please refer to The Annuity Report for objective information on the difference between these two products.

My job is to present the information and give a clear interpretation of how these things will benefit you when it’s time to decide how you’ll choose to provide a source of guaranteed lifetime income in retirement.  When you are ready, I look forward to hearing from you.

Investment Firms Show Interest in Fixed Index Annuities

You know, maybe index annuities aren’t as bad as the financial press would have you believe. In fact, this article from Insurance News shows that Wall Street financial firms are working to offer their own line of fixed index annuities. Click here to read the article.

As the products have aged and proved value over the last decade or more, the changing popular opinion means investment firms will have to alter strategies in an attempt to retain assets under management. Yes, the demonizing will slow down as more and more firms embrace the use of these safe-asset products. It’s the classic “if you can’t beat ‘em, join ‘em” mentality.

This will likely result in the movement of many more investment and insurance companies into this market. How does that affect you? Over time there will be a better competitive environment that leads to more product offerings and better contractual benefits. The market will continue to grow along with available choices for consumers.

That’s the major advantage of Annuity Straight Talk. You have me to do all the heavy lifting in product selection and loads of quality information that allow you find the best product out there for your specific situation.

And there’s one more thing I’d like to share with you this week…

Senators Propose Rigid Spending Cap- Andrew Taylor (AP)

How will any necessary budget cuts affect your plans for retirement? Well, if you don’t live under a rock then you know we have a mounting fiscal crisis in this country.

This AP release talks about a major proposal to reign in federal spending via a serious of cuts that is meant to shave $8 Trillion out of the government budget over the next ten years. You might want to read that again. The primary targets of those cuts are Medicare and Social Security. I’m not making this up… read the AP release.

I don’t want to spend too much time talking about the looming insolvency of those programs, but maybe it’s time for a quick quiz:

When you retire, how much control should you have over your financial livelihood?

a.)    I want to cede all control to bankrupt government program whose administrators admit their own insolvency.


b.)    I want to take control and make my own decisions.

Hopefully the answer is clear. It’s time to take a step in the right direction and make an appointment now! I look forward to working with you.

Bryan J. Anderson

800.438.5121 [email protected]

Retirement and Annuity Calculators


I’d like to take just a second to notify all members of a new feature on designed to aid in your retirement income and planning projections.

We now have calculators!  It’s always nice to put some numbers behind the answers to your questions.  We specifically wanted to add this to make your research and use of the site more interactive.

View all our annuity calculators:

Fixed Annuity Calculator

Variable Annuity Calculator

Immediate Annuity Calculator

Fixed Index Annuity Calculator


Be advised that these retirement calculators offer general information and number crunching.

For help with using these calculators to illustrate specific products or strategies call now or visit the appointment page to schedule a meeting.

Have a great week…

Bryan J. Anderson

800.438.5121 [email protected]

Factual Analysis of Index Annuities


Fixed index annuities will eventually find their place in the retirement planning marketplace, although not without a lot of kicking and screaming from the financial press.

Let’s take a close look at some of the misleading information that explodes from seemingly reputable publications and a well-researched rebuttal from an insurance industry analyst.  If you read both with an open mind you should realize any annuity product can be of value to consumers if only placed in a well-designed retirement portfolio.

The negative article comes courtesy of Lisa Gibbs of Money Magazine and highlights a few cases of misappropriated index annuity contracts with the intention of casting a shadow over the entire industry.

It’s amazing to me that stocks and mutual funds weren’t similarly attacked when trillions of dollars in wealth vanished as a result of the market meltdown in 2008.  Of all the people I talk to every day, no one has mentioned they have to delay retirement because of an annuity underperforming.

Well, Sheryl Moore of came to the rescue in a thorough attempt to set the record straight.  Sheryl posted a 52 point counter argument to Lisa’s article that documents the many factual errors published by Money.

Which article do you think required more knowledge, information and insight?

There are two things you need to understand.  Annuities are good products that offer valuable benefits to consumers.  And, no specific product or strategy is right for every person.

Between the two viewpoints expressed in these articles, which level of diligence would you like an advisor to offer?

Every person approaching retirement deserves honest analysis rather than sensational opinions.

Please call or email for a fact-based second opinion of any annuity you are considering.

Bryan J. Anderson

800.438.5121 [email protected]

Annuity Competitors Step To the Line


Here we go ladies and gentelmen.  A Canadian bank has entered the race to provide lifetime income for retirees.  See this article in the Vancouver Sun.

Now, this is obviously meant to target our pre-retirement neighbors to the north but expect some similar offerings to come to market here as well.  Financial institutions know there is serious demand for lifetime income and all players will no doubt take a shot at the firms at the front of the pack:  insurance companie.

Lifetime income annuities have been around for ages and are perfectly designed to be the most efficient means for providing guaranteed retirement income.

This recent offering from BMO Financial Group mirrors guaranteed income annuities in features but the benefits fall short of those offered by insurance companies.  All that means is it takes more money to produce the desired level of retirement income.

What does all this mean for the consumer?  Well, you’ll likely have a steadily increasing list of options to choose from when it’s time to properly allocate retirement assets.

The free market will always give people the opportunity find the best deal but that doesn’t mean it won’t be a little harder to dodge all the sales pitches coming your way.

Look no further than Annuity Straight Talk as a premier source for annuity information and a fair analysis of all retirement income options.


IRA’s and Secondary Market Annuities


Self Directed IRAs and Secondary Market Annuities

Self directed IRA’s are needed when making investments in Secondary Market Annuities with qualified funds.

Secondary Market Annuities can easily be purchased with qualified retirement funds utilizing a Self Directed IRA account.

Qualified funds may be in a Roth, a 401K, 403b, a Simple IRA, or other qualified vehicle.  To buy an SMA using qualified funds we need to utilize a self directed IRA.  Many self directed IRA custodian options exist but we work with one almost exclusively who has experience in the asset class and offers great service at a low cost.

Rolling funds over from one custodian to a new one is a very simple process, but it can take a week or two.  For clients who are planning to use qualified funds, it often is best to open the self directed account first, even before you reserve a deal.

Using Self Directed IRA’s With Secondary Market Annuities

GSTC Full Logo smallWe have worked with several self directed IRA custodians in the past, including Provident Trust Company and IRA Services, however Gold Star Trust is head and shoulders above the other two in terms of speed, service, and low cost. They are doing a great job for us and we recommend all customers use them. Their paperwork will be shown in the video demo.

Download “SDIRA Questionnaire” Shown In This Video

Download “Gold Star Trust Traditional IRA Documents” Shown In This Video

Download “Gold Start Trust Roth IRA Documents” Shown In This Video

There are four steps in an SMA/IRA transaction:

  • Open the Gold Star IRA Account– pages 1-4 AND page 8 of the IRA Application kit
    • Gold star will open an account with $0 transferred in. There are nominal account establishment fees ($65 annual/$25 opening) that can be paid by credit card.
    • Typically there is no need to open the IRA until an SMA is court approved.
    • Page 8= wholesale rep form. This authorizes us to communicate with, but not direct, Gold Star regarding your SMA purchase.
  • Fund the Gold Star IRA- pages 5+6, IRA Transfer/ Rollover documentation
    • This moves money from the current custodian to Gold Star.
    • Depending on the current custodian and the investments held, this might take 2 days or 4 weeks. It might require additional documentation such as notarized or medallion stamped signatures, and it may require time for currently held investments to sell and for trades to settle out. Also, some custodians may not wire, and may only send a check.
    • All these factors determine when you need to initiate the rollover/ transfer. Ideally, you wait until your SMA is court approved, then initiate transfer of funds to Gold Star, however there may be situations depending on your current custodian where you need to start money moving earlier.
  • Buy the SMA- Direction of Investment form, page 7
    • There is a space on the form for the case ode (Example 2A010216A-1), and for the exact purchase price
    • The best practice for people who know they are buying an SMA but don’t know which SMA yet, is to send in a signed DOI form right at account opening, leaving the case code and $$ blank- Gold Star will fill this in once you identify an SMA
    • Alternatively, if you know which SMA you are buying and it’s been court approved, fill in the code but leave the price blank, as that is not known until right before closing, and Gold Star can fill that in.
  • Closing book
    • In SMA transactions with IRA funding, we supply you with the closing book for your review prior to funding
    • Once you review and approve, by email or call to us or to Gold Star, Gold Star signs the Absolute Assignment and the Servicing Agreement on your behalf as custodian, and wires money from your account to purchase the SMA
    • Closed/Funded/Complete

About Self Directed IRA’s

Self directed IRA’s are simply IRA’s held by a custodian that permits you to direct your own investments- you can chose to buy SMA’s, real estate, or any other sort of investment.  A self directed IRA custodian will not offer you investment advice- they just ensure the account is in compliance with the IRS.

By contrast, many IRA’s held by brokerages like Schwab or Fidelity let you pick from only a few Fidelity or Schwab mutual funds- they are restricted and captive, and may  offer traditional stock picking advice.  Read about self directed IRA’s here.

Best Cases For Qualified Funds

IRA’s are designed to offer tax deferral for investors saving for retirement…. and they are designed to be SPENT in retirement as well.  Most investors can’t touch the money in their IRA’s for a long time, and too often, people shoot for income contracts in an IRA and produce income (and return of principal) that they can’t take out.  Instead, take advantage of these deferred interest rates and consider deferred lump sum cases.

RMD Details

Holding SMA’s in a qualified vehicle requires the custodian to calculate the Required Minimum Distribution (RMD) each year.  Be aware that long term deferred SMA contracts in qualified vehicles for investors over 70.5 years of age may be subject to RMD’s yet not produce cash flow.  Advisors should be sure there is sufficient money for RMD’s when using deferred contracts in IRA’s