First time setting up an annuity

mmsfct

All of my existing investments are set up as separate accounts. I am guessing that I will follow the same process with (a brand new) annuity? I was hoping that if there are any tips on what to do with this new creature - or not do , during the setup that you kind people would help me out. I want to get it correct - as it is an investment that I will have until I die. Thanks so much

bmciance

To answer the question as to the account, yes, I would put it in a separate investment account. I have several annuities and they are all in separate accounts.

As for the annuity itself, you will have to set that up manually as I don't think that there are any annuities that will download. Beyond that, updating the value depends more on the type of annuity than anything else from my experience. For example, I have a fixed annuity where I just update the balance regularly by changing the "price". I it set up as 1 share and the value is the price.

Then I have fixed index annuities which always have the price as 100 and I make entries to record any changes like interest, fees etc.

mmsfct

Thank you, I am not sure how this will go, but after a get my first statement I think it will become clearer if I did it well.

markus1957

One method, there are others.

A fixed annuity will provide an annual payment of interest and a return of capital over your calculated life expectancy; Thereafter all payments are interest.

I created a new Other type security for the annuity itself. Use a share amount that allows the price per share to provide the exact amount of the annuity cost; i.e., 1000 shares at $150/share for a $150K purchase.

When you get your payment, create 2 transactions, one for interest and one for the return of capital. Then reduce the price per share to account for the return of capital received. If you're lucky and outlive the calculated life expectancy, payments received after your initial purchase price not including interest paid, will just be one interest payment transaction.

If you use the tax planner and/or cash flow tools, create an Income Reminder consisting of an Interest payment and a non-taxable rebate payment. As of now, Return of Capital cannot be scheduled so you need that placeholder rebate to get the projected amounts to report properly.

mmsfct

Thank you so much for taking the time to provide that level of detail.