023: How The Secure Retirement Act & DC Affects Annuities

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welcome to

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fun with annuities with your host me

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stan

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the annuity man america's annuity agent

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can annuities be fun

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can contractual guarantees be fun

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absolutely they can find out the brutal

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facts about annuities

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with no sales pitches or high pressure

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nonsense

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just the brutal and factual annuity

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truth which is all you need to hear

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let's have some fun with annuities and

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let's have that fun start

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right now

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hey this is stan the annuity man i'm

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america's annuity agent licensed in all

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50 states

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and i pretty much represent every single

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carrier out there

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pretty much all of them so i really

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don't have any skin in the game other

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than

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i want to see the highest contractual

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guaranteed quotes for your specific

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situation that's the goal

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that's how we do it i don't uh steer you

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toward a

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a company or a product we're gonna quote

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and try to find the best contractual

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guarantees because annuities are

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contracts

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they're transfer risk contracts and you

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buy them for the contractual guarantees

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only topic of the day

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is about what washington dc is doing

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with annuities and retirement and this

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new secure retirement act that

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everyone's talking about there's a lot

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of misinformation about that i'm going

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to strip it all down to where it's

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understandable you'll understand how it

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can benefit you and some of the

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limitations as well

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like anything dc gets their hands on the

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intentions are good

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initially and then once they get a hold

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of it they

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end up screwing up a lot of stuff but i

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think overall this is a good attempt

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to help people start planning for

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retirement in essence what what

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dc is doing is they're tapping you on

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the shoulder and saying

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oh by the way we'd really like for you

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the individual the individual american

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out there to start planning

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for retirement income to start

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putting that in place and we're going to

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try to give you vehicles to do that

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and we're going to try to help

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incentivize the companies to offer those

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things

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now why would dc do that think logically

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number one social security was never

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ever put

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on this planet to be the primary source

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of retirement income it just wasn't and

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for anybody out there that says

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it it should be that they're living in a

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socialist

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dream it's just not going to happen in

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fact

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i think what's going to happen in the

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future there will be means testing

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meaning that if you've really worked

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hard and saved and scrimped and put away

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money and done without

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you're going to get penalized for that

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discipline

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and they're going to say well you you

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have enough money you're going to be

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means tested out or you know people my

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age who knows if it's going to be there

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i'm in my 50s and certainly for my

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daughters in their 20s who knows where

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social security is going to be now i

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understand it's a political football

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and it is the best inflation annuity on

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the planet i do laugh all the time when

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people say i hate all annuities

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my comment is every single working

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american with a social security number

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owns an annuity it's called social

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security

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it's the best inflation annuity on the

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planet why do you say that stan the

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annuity man number one age in the

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country

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because the cost of living increase is a

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political football not an

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actuarial football so typically it's

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just you know

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congress voting to increase it to make

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the voters happy

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that's cool but that's not how annuity

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companies do it if you if you put a cost

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of living adjustment increase on an

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annuity

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lifetime income stream all the annuity

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companies going to do is ratchet down

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that payment to make up for that

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increase they don't give it away

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dc gives it away and figures out how to

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pay for it later

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so what dc is doing the politicians

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they're realizing that

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social security is a mess and from the

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standpoint of funding it it's

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it's a big mess now i understand there's

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you know depending on what cable channel

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you watch

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there's competing arguments with that

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some say it's okay some say it's not

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you know the bottom line is we're

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running huge debts and social security

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is

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is messy and you know i i think the

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government is subtly saying to every one

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of us is hey

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we really want you to start planning for

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lifetime income now

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this whole nudging toward lifetime

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income started in

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really in 2014 in 2014

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the treasury and the irs combined and

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worked together to create

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an annuity called a culak and q lakh

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stands for qualified

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longevity annuity contract culac

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and what a culak was supposed to do was

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it's supposed to be used inside

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401k type plans and traditional iras

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for future income the contracts were

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irrevocable meaning that there was no

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liquidity once you

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locked in the policy then you're going

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to get your money back

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for someone your family's going to get

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the money back if you die early

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but it's a lifetime income stream

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guarantee for the rest of your life

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regardless of how long you live

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so that was the intention in 2014 very

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good intentions

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okay and that's 2014 the problem with

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that and it was pretty much put in place

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for the 401k side but the people that

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are taking advantage of it

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are the people with traditional iras and

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why is that is because

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i read a story the other day that fewer

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than 10 percent

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of private sector companies have 401ks

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that offer annuity options

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well that's five years after the fact

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when culex were introduced and qlacks

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were introduced

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to make that 10 number go higher

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so what did dc do they went well qlex

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was a pretty good shot at it

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and you know q-lex can be used in

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traditional iras where people are

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are doing that and that's where the

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majority of q-lectures sold and i'm the

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you know i i wrote the first book on

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culex when i saw it come out

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i thought it was going to be the top

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product ever and i still think

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it's going to be the number one sold

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type of annuity

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in the future because most people with

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traditional iras need to look at that

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for future income to at least

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set up income stream for their spouse or

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to combat inflation in the future

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but because that didn't go over like

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they thought it was going to go over i'm

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just

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guessing what they did they came out

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with a secure retirement act which was

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signed into law

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december the 20th of 2019

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so let's let's talk about what that is

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and and the

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the key points now it's very very

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detailed typical washington whoever

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wrote it

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a bunch of lawyers got in a room ordered

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a lot of pizzas and just went legal

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speak

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crazy on us but i went through it and i

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pulled out what i think is important for

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you

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to understand number one for 401k people

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that you're gonna you're gonna

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have annuity options you're gonna have

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lifetime income stream options in most

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401k

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plans and the reason is part of that act

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holds those plan sponsors the board of

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direct or whoever is approving the plan

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it holds them harmless there's a

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fiduciary safe harbor for these people

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which i'm not sure i agree with and the

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reason i don't agree with it is it says

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in there

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they can choose the annuity companies

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that they want to put in their plan

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based upon their research blah blah blah

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well you and i both know

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that just reeks of

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problems you know soft money

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good old boy handshakes you know

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trips dinner i just i i don't like it

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annuities are commodity products

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they should be shocked with all carriers

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for the highest contractual guarantees

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but

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because there's this fiduciary safe

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harbor act that holds these plan

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sponsors harmless

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they could come in there and say well

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you know they literally could do well

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my brother-in-law works over here my

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cousin works over here and bring in

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those

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two or three annuity companies and have

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it covered the way that i read it

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i'm hoping that's not true because

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that's not

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acting as a fiduciary but i guess that's

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the reason they said fiduciary safe

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harbor which means that you

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are not acting as a fiduciary

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which is interesting but i guess

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whatever it takes to get lifetime income

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products inside

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of 401k type plans define contribution

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plans

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i guess that's good i'm going to look at

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it from a positive side

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a couple of other things that you need

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to be aware of

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up until this point when you're 70 and a

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half you couldn't contribute to your

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traditional ira now there's no age

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limitations

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so you can contribute if you want to

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which i'm not sure that's a big deal i

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think one of the things i found

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interesting

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that they moved the required minimum

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distribution age

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from 70 and a half to age 72

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which i never thought that was going to

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go through personally because all that

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means is the irs has to wait to get

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their money because

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what what a required minimum

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distribution is is the irs tapping you

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on the shoulder and saying oh by the way

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all that money you've been deferring for

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all these years we'd love for you to

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start paying taxes on it and not only do

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we love it we're going to require it

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that's that's requirement of

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distribution

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but that's moved from age 70 and a half

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to 72.

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obviously there's some little asterisks

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in there

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that rule applies for those born on or

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after july 1st of 1949.

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so effective january 1st 2020

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the secure act it raised the rmd age

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from 70 and a half to 72

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for those born on or after july 1st of

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1949.

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so also under this new law that people

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that turn 70 and a half in in

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2020 or later they will not need to

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begin

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taking those distributions until the

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calendar year they reach age

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72. all right

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but those who turn 70 and a half by the

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end of 2019 will still need to take

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the rmds as previously required

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i know you just got to rewind and listen

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to that because that's convoluted legal

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mumbo jumbo that's a great example of dc

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good intentions you know okay we're

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raising it and then they throw in

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all these asterisks that you have to be

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aware of and i i'm like the only one out

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here talking those details i think most

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people are just broad stroking this

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thing and i don't blame him because

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reading that thing is

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is like reading the tax code it's tough

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the other thing you need to be aware of

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is that the stretch ira strategy when

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you when you take a stretch ira and you

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can stretch it

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through you know spouses and kids the

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non-spouse

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part of that has gone away so spouses

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yes

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non-spouses no but it doesn't affect

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non-qualified stretches how about that

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so stretching your ira but i get it

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because most people's

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the majority of their money is in

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traditional ira asset

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that's where the assets are but instead

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of being able to stretch it

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over the wife and then the kids it's

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just the spouse

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now the non-spouses have been

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eliminated from that party dc cracks me

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up a lot i remember when the roth ira

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came through and you know roth iras as

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you pay taxes up front and then

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that account whatever money comes out of

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that account after that is tax free

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which sounds fantastic

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and it is for a lot of people but

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there's if you look at the country

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is a very very very small percentage of

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people that have roth iras

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and i look at everything as voting

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blocks right and trust me dc does as

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well

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and i will tell you this because i'm

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involved a lot with dc

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i'm in dc a good bit under the radar

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talking to politicians and talking to

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two people that that put together policy

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and giving my insight as stand the

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nudity man america's annuity agent on

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all of this

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not as much as i should be but they do

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call occasionally and i do weigh

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in i remember when the roth ira came in

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and they it went through law and

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and it was great and people loved it and

12:12
they started converting and paying taxes

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i swear to you day two i heard rumblings

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of how do we tax that

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the the the the politicians didn't even

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didn't even take a breath they're

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already trying to figure out

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how do we tax roth iras and my

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prediction is

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i wouldn't be surprised if they came

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back and said well

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it's tax-free but only if you stand on

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one leg and you've lost one arm

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or something crazy or something legal

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that that i mean they're just with too

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many holes and hoops to jump through

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but you know the other thing that i

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heard up there which is

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they're always trying to get at the ira

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assets they're always trying to

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because that's where all the money is

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that's where the trillions and trillions

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and trillions of dollars are

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so i heard rum leads up there and i

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don't think this will ever go through

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but another one a dc nugget i'll give

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you is i heard rumblings that

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they wanted to require how about that

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word

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require everyone to purchase united

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states treasuries

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inside of their ira and pay a yield on

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it

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so you say well that that's what's wrong

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with that standing annuity man

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i don't know sounds like confiscation to

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me

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and that's probably the reason it never

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went through and that's probably the

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reason you never heard of it because it

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never

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saw the light of day but i actually

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heard those rumors and anyone out there

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that says bs to that to me

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you don't know okay people were

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literally talking about that in dc as

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is requiring all ira holders to

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to purchase treasuries which where does

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that go straight to dc money straight to

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dc

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and they'll pay an interest rate and of

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course the comment when i heard that i'm

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like that's crap

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i'm like no no no it would only be a

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certain percentage we'd never go above

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that percentage

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and my comment was really you're never

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going to go higher than whatever

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percentage you put

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no we'll never do that okay i believe

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that not

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so i say that because i see

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everything coming out of dc and i look

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at it coming through a different lens

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and you should too and you probably do

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because we're all

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you know we're all non-trusting of those

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people that need to be term limited

14:19
but the one that really the secure

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retirement act

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is not a bad deal because i think that

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people in 401ks need to start planning

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for income they need to start thinking

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about income and they had to incentivize

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companies to offer these lifetime income

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products inside

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these defined contribution plan 401k

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type plans

14:38
and the only way they were going to do

14:40
that is to is to create that fiduciary

14:41
safe harbor to

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hold these people harmless so they

14:44
wouldn't be sued into the ground

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the only problem with that is i think

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that the consumer loses

14:50
on that because there's not going to be

14:52
the choices needed to find the highest

14:54
contractual guarantees now

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are the rich going to get richer with

14:58
this meaning the bigger company is going

14:59
to get richer

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on the annuity side yes because all of

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these people are going to

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you know gravitate toward the monster

15:08
annuity companies

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the good old boy handshakes to get them

15:10
in their plan i get all that

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but you know i'm waiting for the the

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call and it will come in

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that they'll say well stan the annuity

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man america's number one

15:20
agent america's annuity agent i got this

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quote

15:24
from the three carriers that are

15:25
approved in my 401k plan

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can you run the quote with all the other

15:30
carriers out there offering this similar

15:32
product

15:32
and tell me which has the highest

15:33
contractual guarantee

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what happens when when the numbers that

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i produce

15:40
from the the remaining you know all of

15:42
the other carriers that aren't in that

15:44
plan

15:45
and they just destroy that number what

15:47
happens then

15:48
well obviously you can't sue the board

15:50
or the or the uh

15:51
the plan sponsors or people like that

15:53
because there's a fiduciary safe harbor

15:55
act but the point is

15:57
that's not how you buy annuities you buy

15:59
annuities

16:01
shopping all carriers looking for the

16:03
highest contractual guarantee

16:05
not thinking about the carrier's name

16:06
not being steered

16:08
toward the preferred carrier of choice

16:12
or

16:12
a carrier that a board or director has

16:14
chosen based upon what they think is

16:16
best for you

16:18
anytime someone's making a choice of

16:19
what they think is best for you whether

16:21
it's an annuity agent or the government

16:23
that's garbage okay it is

16:27
you make that choice you shop all

16:29
carriers now we can provide that at the

16:31
annuityman.com because that's my

16:32
business model

16:33
my business model is to shop everybody

16:36
send you the quotes

16:37
give you enough information send you my

16:39
books you listen to the podcast you

16:40
watch my videos

16:42
and then you make a decision on your

16:43
terms and your time frame that's not

16:45
what's going to happen in the 401ks

16:46
offering annuity options

16:48
okay now the good news is is i think dc

16:51
is going to get what they want which is

16:53
people trying to

16:54
plan for future income which will i

16:57
guess lessen the dependency i guess

16:59
on social security or that they can

17:02
means test it easier i don't know

17:05
anytime they do that i always envision

17:06
people with those tiki torches like

17:09
millions of people with tiki torches

17:11
like marching on the square in

17:12
washington dc saying don't touch my ira

17:14
or

17:15
you're screwing with us you know with

17:17
our retirement type thing

17:19
i hope we never reached that tipping

17:20
point but you never know

17:22
right so that's that's kind of what's

17:24
happening with the uh the secure

17:26
retirement act

17:27
that just got enacted and dc in general

17:30
they're they're looking at your iras

17:31
they're trying to figure out how to

17:32
taxes

17:33
tax your iras the states you know states

17:36
like california are already

17:38
doing an annuitization type tax on

17:40
annuities

17:41
and trust me that is going to spread

17:44
because

17:45
you know we're spending too much money

17:47
and they need more money

17:49
they meaning the politicians they mean

17:50
in the states they meaning the fed

17:52
they need more money and guess who's got

17:55
it you got it

17:56
and i got it because we planned and we

17:59
scrimped and we saved and we worked hard

18:01
and we put money away

18:02
and we did without and we did what we're

18:05
supposed to do but

18:06
unfortunately in this world you know

18:08
there's more there's more takers than

18:10
there are givers or

18:11
is that right they call it the haves and

18:13
have-nots

18:15
i'm not sure about that i think it's

18:17
it's people that the dudes the newspayer

18:19
and the non-news payer

18:21
unless you're inheritance baby or a

18:23
trust fund baby and there's there's some

18:24
out there

18:25
and they're a joke they'll run through

18:27
that money but most of us

18:28
you included listening to me right now

18:30
nod your head

18:32
have worked hard for what we have

18:35
we've worked hard and

18:39
we don't want to give it away right i

18:41
mean we're charitable we love people but

18:42
we don't want to give it away

18:44
to people that haven't worked hard do we

18:47
i don't think so i digress a little bit

18:49
politically and i don't

18:50
like either party just for the record

18:52
because they both

18:53
seem eerily similar in a lot of cases

18:57
but remember this and with annuities

19:00
period their commodity products their

19:02
contracts their transfer risk

19:05
strategies and you own them for the

19:07
contractual guarantees only

19:08
owner for what they will do not what

19:09
they might do you never ever

19:11
ever buy an annuity for the hypothetical

19:14
theoretical

19:15
back tested hopeful agent return

19:18
scenarios

19:18
buy it for the contractual guarantees

19:20
because you own that contract

19:22
now i would encourage you to go to my i

19:25
got a new youtube channel

19:26
and i put out a video every monday

19:28
through friday a new one

19:30
five a week i know you're saying that's

19:31
crazy of course

19:33
that's who i am i mean i'm trying to i'm

19:35
trying to educate out here i'm i'm

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