The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: NextTime on February 05, 2019, 09:27:29 PM
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Can someone give me a quick explanation to me about what a Qualified Variable Annuity is?
I've still in the process of helping my mother consolidate her retirement accounts at Vanguard and what I thought was just an old 401k from Security Benefit is actually called a "Variflex Qualified Variable Annuity."
It shows a Death Benefit, but it's exactly the same as the value of the underlying securities she owns in the account. She's never received an annuity coupon/payment, only required minimum distributions. She turned 71 last year, so she's had 2 years of RMDs.
So I'm confused now. Is this the same as a 401k/403B and is just worth the stocks/funds she owns through it? Or if I roll it over to Vanguard is it actually worth a lot less than the "Death Benefit"?
Thank for your time.
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You may find Variable annuity - Bogleheads (https://www.bogleheads.org/wiki/Variable_annuity) helpful.
In general, any annuity other than a Single Premium Immediate (or Deferred) Annuity (SPIA or SPDA) is a great deal for the person who sells one, and not so good for the person who buys.
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To be certain, thee may be "surrender fees" in the account, to discourage you from moving away from it. Particularly if your mother has not had it for a while. But these costs do not change the fact that yes, you should move away.