VA Performance

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Aug 8, 2008 6:02 pm

[quote=Primo]

Mistake in post, non-qual money. 

[/quote]   Can someone explain the double-taxation for VAs?
Aug 8, 2008 10:45 pm

[quote=JimYoung][quote=Primo]

Mistake in post, non-qual money. 

[/quote]   Can someone explain the double-taxation for VAs?[/quote]

It can't be explained because it doesn't occur. Primo is poorly informed, as he gets most of his information from his own imagination.
Aug 8, 2008 10:45 pm

JIm, NQ VA's don't get a step up in basis.   This means that they get hit with estate taxes and income taxes.

Ex. Joe bought $100,000 worth of XYZ stock.  The stock is now worth $10,000,000.  At death, this stock will add $10,000,000 to his estate.  However, at death, the inheritor will get a step-up in basis to $10,000,000.  Therefore, if he sells the stock, he'll get $10,000,000 tax free.   If this was a VA instead, the VA would add $10,000,000 to his estate, but at death the beneficiary would keep the original cost basis of $100,000.  If he sells the VA, he'll pay income tax on the $9,900,000 gain.
Aug 8, 2008 11:09 pm

Only one problem with your post anon, the VA wouldn’t get to $10mm, so the tax gain would be less, double taxed still, but less.  I guess current tax law= poorly informed.

Sep 18, 2008 1:24 pm

I just crunched some numbers on the annuity that I’ve been using for almost 6 years.

Annuity +72%
Dow      +47%
S&P       + 54%

The annuity number is NET of ALL fees. Not bad, eh?

  Show me exact funds and exact years. The only way that would be possible is if we started off in an extreme bull market and ended in one in which your VA picked out good funds. Otherwise the rider fees would completely eat up the account value in a bear market because the fees increase as your account value gets lower.