“I am a divorced 53-year-old lady and inherited an IRA from my aunt (she passed in Dec 2020). It is currently invested in Pacific Life Annuity (Pacific Innovations Select). In the past 12 months or so, the value has decreased from $242,000 to $192,111 with only $10,303 actually being withdrawn (minimum required distributions).
I am worried about the rapid decline and am considering withdrawing a large portion to pay off an auto loan and also invest some in a safe short term cd ( at least by paying off my auto loan I’d have something tangible to show for this money).
My question is, if I make this withdrawal, at a loss, can I deduct the loss when I file taxes for 2022?”
Sadly, losses on an IRA are not deductible on your 1040.
However, you may have options you haven’t yet considered:
- Explore the investment options Pac Life offers for potential changes
- Explore rolling the funds from Pac Life into an IRA with a different company offering different investments
- Rather than taking a huge tax hit in one year – use the required annual distributions to pay off your auto loan over multiple years
- Look at investment options that allow you to sleep at night and still provide you with solid long-term returns
- Remember you have 40 or 50 years to have these funds work for you and create an investment strategy that reflects that reality
If you wish a detailed analysis of your Pacific Life annuity and a thorough review of your options you need only ask and a More than Money advisor will provide that to you at no cost or obligation.
“In 2003 when we bought our current home, we got life insurance on each of us (both working at that time) to pay off the mortgage, in the event that one of us should pass. We paid our house off in 2019, and the 20-year life insurance term will be ending in 2023.
Here is the question: Do we really need to purchase any more life insurance? We have no one dependent on us at this time, and could certainly do without the expense.
Just wondering if there are reasons to do it that we are not aware of at this time, and hoping you can assist with that information.
Thank you so much and keep up your good work!”
Thank you for your kind words. And thank you for your question.
You were wise to have life insurance to cover your mortgage. Now that reason for life insurance is gone and so soon will the original term policy be also. Do you need a new set of policies? That depends.
The basic reasons for having life insurance do not seem to apply to you. Paying off debt. Paying for estate tax bills. Protection of a loved one reliant on your income. All good reasons, but not for you.
Assuming you are in good health and would qualify for newly issued policies, there are a couple of reasons you might consider new life insurance.
If you have a church or charity that is important to you that you wish to continue to receive your support after your passing – that’s a great use of life insurance.
If you have loved ones that you want to be sure receive an inheritance on your passing (even if you have used up your assets along the way) – that’s a great use for life insurance.
The key to either of these plans is your ability to secure quality life insurance at premiums that fit your cash flow. Many life insurance salesmen represent one or two companies – not what you want. A few brokerage firms represent dozens and dozens of the best life insurance companies. You can explore coverage with all those companies with one application – saving you time and (hopefully) money along the process.
If you wish to start that exploration process, please connect with our office for a referral to our life insurance partner.
“You previously talked about an investment on your show where the husband can take out all the money in his IRA when he’s alive and his wife gets it all back when he dies. How does that work? Why wouldn’t everyone do this if it’s for real?”
It is real, but you ask an appropriate question – why wouldn’t everyone do this?
First, like you, many people don’t know this type of program exists.
Second, this is an annuity-based program and understanding annuities can be challenging.
Third, while this program works as you describe – there is a cost. Some folks don’t wish to pay that cost.
This annuity program is often used to create income in retirement. The investments (often proceeds from a 401(k) or IRA) are made within such a platform. The investments are selected by and controlled by the owner (perhaps with the assistance of their financial advisor).
The investor then has the option to select riders to provide guaranteed lifetime income for themselves and a return of the original investment to their spouse upon their passing. The investor pays an annual fee for these riders. The fees vary from annuity company to annuity company. Anyone considering such a program would be wise to carefully evaluate the fees involved to determine if the cost of the program is worth the benefits they expect to receive.
Too good to be true? No. Pros and cons? Absolutely. Take the time to explore your options and make the choice that best fits you and the ones you love.
“My best friend recently turned 65 and took her Social Security benefits. She is now having some regrets. Things have changed rather dramatically for her and she would like to return to the workforce.
Two questions: 1) Can she stop receiving benefits and return to the workforce without penalty? 2) Will her monthly benefit increase if she works for two or three more years or will monthly benefits remain what was first offered to her at 65?
Thank you for considering my question. You help an awful lot of needy people!”
Thank you. You are too kind.
If your friend has been receiving her benefits for less than a year, she can change her mind. She will need to repay the benefits she’s received to date to achieve her ‘do over’.
Her benefits will increase over the next two or three years on a month by month basis. So, every month she works, her benefit will rise a bit. If her income during these next years is higher than some of her previous years of employment, that could help increase her benefits as well.
If she needs guidance from our Social Security partner, Mark Bacak, please have her contact our office.
Want your own copy of our newsletter? Email: Megan@AskMtM.com