An annuity can
contain qualified money (funds that comply with federal tax code requirements for retirement plans) or non-qualified money (funds from an after tax source).
You will still be able to roll or
transfer qualified money from other individual or employer sponsored retirement accounts into the TSP.
Although, in Section 412 (i) plans, which are defined benefit plans that often use an annuity or life insurance to fund the retirement benefit, the amount
of qualified money that can be used to pay life insurance premiums may be higher than for other defined benefit plans.
By extension, it was dictating what kind of representative can deal with
all qualified money, such as individual retirement accounts (IRAs), even though IRAs are not pension plans.
Categorize your clients — know where
their qualified money is and their non-qualified.
At the heart of the fiduciary duty and specified under the BICE for variable and indexed annuities and Exemption 84 - 24 for fixed rate annuities is the requirement that any recommendation to move (or keep put)
qualified money must meet «Impartial Conduct Standards» and triggers the fiduciary duty of the advisor.
By comparison, «
the qualified money would likely already be locked up by that stage in life,» Baker says.
First — deplete assets that are already tax effected (Non-Qualified money above) since it buys you more time for
your Qualified money to grow.
If
you qualify the money is made available to you immediately.
«At age 70 1/2, under most circumstances you must take distributions from
your qualified money — that is, traditional IRA's and 401 (k)'s.
Withdrawals that come from contributions aren't taxable (unless it's
qualified money, a rare occurence).