Newfangled Annuities (Financial Planning)

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.”