Glad you joined me. We're talking today on the ongoing series that we're doing about retirement withdrawal strategies using, in this case, Deferred Income Annuities, DIAs. This should be interesting. DIAs are relatively new. They're the sister, cousin, brother of the Single Premium Immediate Annuity. Because once you defer past 13 months, an Immediate Annuity turns into a Deferred Income Annuity. I know what you're saying; you’re like, what? Same structure, no moving parts, no annual fees, very easy to understand. I always say, if you can't explain your annuity purchase to a nine-year-old, don't purchase it. No offense to nine-year-olds. These are simplistic products. They're pension products. Deferred Income Annuities can be used in IRAs, non-IRAs, Roth IRAs. We're going to get to all of that in a second.
Deferred Income Annuities. You can defer that income as far as 40 years with some companies, but most people defer the income from a year, maybe to five years, but it's customizable. We have a calculator where you can just punch in your information, confidential, private, and non-shared. Remember that. Punch in your information and get the top contractual guarantees for your specific situation. You can run a Deferred Income Annuity, single life, or joint life. You can defer and then run at periods certain for a specific period. Once again, it's customizable.
If you're digging into the Deferred Income Annuity space, I encourage you to contact me by either calling or e-mail. You could schedule a call and say, here's what I'm trying to achieve, here's what I'm looking to do, then I will personally put together a customized quote for you, and then we can start that conversation on how Deferred Income Annuities work.
Many people call and say, "Hey, I'm looking at a different income annuity; what’s the best one? Just cut to the chase, Stan The Annuity Man, and give me the best carrier for Deferred Income Annuities." Well, I represent pretty much everyone. There is no best carrier, but there is a best contractual guarantee for your specific situation. We don't know that until you run the quotes yourself or have me run the quotes for you. But I would encourage you to run the quotes. Put in your information confidentially, and then get the best contractual guarantees for life only or joint-life only or life with a cash refund or joint life with a cash refund.
We can dig in further from those two quotes and figure out which one works the best for you and which customized quote works the best for you. Because I'm going to ask questions about when you want the income to start? Tell me about your family, tell me about your legacy plans. Tell me about your spouse or partner. Tell me what you want to do so I can put together the best quotes. You got to remember, quotes change like a gallon of milk every 7-10 days. That's not a sales pitch. Maybe we're going through the process; it’s taking us a month to complete the education process. A quote that I might give you today might not be the quote that you decide upon a month from now because carriers change their quotes. You have to understand; you’re not going to fall in love with a name; you’re falling in love with the numbers.
When you use Deferred Income Annuities, you can use them in a Roth IRA. That income stream is going to be tax-free. You can use them in a traditional IRA up to age 72. We will cover this in another part of the retirement withdrawals series about QLACs; then, we will use a QLAC also a Deferred Income Annuity. But up until age 72, you can use IRA assets to purchase a Deferred Income Annuity. You just have to start that income before that time period. It doesn't have to be right at 72; you could buy it within your IRA and start it at 59 or 60 or whatever annuitize, etc., within your IRA.
Let's talk about non-IRA assets. If you're using non-IRA non-qualified, just like checking account type assets, the income stream will be a combination of return of principal plus interest. In the business, we call the exclusion ratio. Your income stream will be a combination return of principal plus interest; only the interest portion is taxable. On our quotes, if you put in the quote that you're using non-IRA assets, it'll show that portion that's taxable of the income stream. Just keep that in the back of your mind.
I got a call the other day; the guy said, "I'm looking at a Deferred Income Annuity. I'm 61 years old. I want to turn on the income stream at 67/ 68 using IRA assets. Tell me how RMDs work with different income annuities in this situation." When you use IRA assets with Deferred Income Annuities, that income is coming out of your IRA. It’s taxed at ordinary income levels. But the amount of money you put into that Deferred Income Annuity, that income stream that's coming from that, fully covers and satisfies the requirement of the distributions for that Deferred Income Annuity asset. If you put $200,000 in Deferred Income Annuity and kick off this income stream, that income stream satisfies the requirement of distributions for that Deferred Income Annuity at DIA.
You can't use overage. RMD is $6,000, and you're getting an $8,000 income stream. You can't use that overage on non-annuity assets. The RMD is turnkey, but it's only for the money you put in the Deferred Income Annuity with your IRA assets. Remember what I said that Deferred Income Annuity quotes are customizable retirement withdrawal strategies that come down to your goal.
I got a call the other day, and the guy said, "Here's what I want to do. I want to use non-IRA a want to buy Deferred Income Annuity. I want to defer it for seven years." He was a planner. He was a box checker. You might be that person too. He wanted to defer it for seven years, and then he said, "I only want 15 years of payments. I don't want a lifetime income stream. I just want 15 years of payments." Because after that 15th year, he had something else kicking in that would cover that income floor. That guaranteed amount will hit your bank account every single month. That's a way to quote it as well. They deferred it for seven years and said, "Hey, I want a period certain at those seven years." Meaning that he wanted 15 years of payments. I think we ran both ten years of payments, 15 years of payments, and 20, and he decided by the 15. But what that means is, it's only going to pay for that specific period of time, that period certain. It's not a lifetime income stream. You can structure a Deferred Income Annuity to differ as short as 13 months, as long as 40 years, then you can turn on the income stream either for life, but in this case, period certain. Again, customizable.
I love when you use the calculators on my site, but call me when you want to dig in and hit me with the hard questions. Hey, Stan, here's what I want to do. I have a specific situation, gap, and income trunk I want to fill. I want it to start here. I'll quote every carrier for the highest contractual guarantee for that specific quote and customized structure. Put that in the back of your head. They're not one size fits all. Not one company is better than the other, period. We can contractually put that together for you, whatever you need to achieve.
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.