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Life Health > Annuities

Newfangled Annuities (Financial Planning)

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In February, the IRS released proposed regulations about the establishment of qualified longevity annuity contracts. They would allow retirement account owners to purchase certain annuity contracts with a portion of their retirement assets that can then be excluded from their required minimum distribution calculations. Under the proposed regulations, required minimum distribution issues will no longer be a concern for certain annuity contracts. The amount of retirement assets an individual can invest in annuity contracts will be limited to the lesser of $100,000 or 25% of retirement account assets. One disadvantage is that these products cannot be variable annuities or equity-indexed annuities. Another drawback is that contracts will not be able to offer “any commutation benefit, cash surrender value or other similar feature.”