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Bibliography

Merits Of Using A Deferred Annuity To Fund An IRA,


401(k), 403(b) Or Other Tax Qualified Retirement Plan

Table 1 (independent views) - Part 1 Part 2 Part 3 Part 4 Part 5 Part 6
Table 2 (annuity industry views) - Part 1 Part 2


Table 2, Part 1
(annuity industry views)


Citation Summary Excerpt
70 Gary S. Mogel, One on
One With Bob Cassato of
John Hancock Financial
Services Inc.,
INVESTMENT NEWS,
May 1, 2006 at 35
Bob Cassato is executive vice president of distribution for John
Hancock Financial Services Inc. in Boston. He is asked: Do you
advocate selling tax-deferred variable annuities in qualified plans,
given that these plans already provide tax deferral to clients? Mr.
Cassato responds: VAs can be in qualified plans, because tax
deferral is no longer the primary selling point for VAs. The primary
selling points are the living benefits, which can provide a minimum
5% increase to the benefit when accumulating, and guaranteed
withdrawals of 5% for life once the contract holder starts taking
income. About 75% of VA sales include living benefits.

69 Warren S. Hersch, The
Allure of Guarantees:
More Boomers Are
Putting VAs In Their
Qualified Plans or IRAs,
NATIONAL
UNDERWRITER LIFE &
HEALH/FINANCIAL
SERVICES EDITION,
April 24, 2006 at 8
The new guaranteed living benefits of variable annuities are
attracting advisors to recommend variable annuities to risk-adverse
baby boomers with IRAs and qualified plan money to invest,
although not all advisors see the guarantees as worth the extra
fees, which can add two percentage points or more to the annuitys
cost. Kevin Meehan, a principal of CDHM Financial Advisors, of
Itasca, Ill. says that VAs are increasingly price competitive with
mutual funds, a development he attributes to increased regulator
scrutiny and bad press in prior years respecting the products high
cost.

68 Joseph Matters, Investing
IRA Money In Annuities,
DAILY SOUTHTOWN
(CHICAGO), February 5,
2006
The author is president of JM Financial Consultants in Homer
Glen.

Many people feel that because of the tax-deferred growth of
annuities, an IRA may be best suited for non-tax-deferred
products. One thing to remember is that although annuities are a
tax shelter, they still have other features that make them attractive
for IRAs. The author then discusses annuity payout options and
includes that Annuities offer a great place to park retirement
dollars.


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67 Michael David Schulman,
A Primer on Annuities,
TAX ADVISER, January
2006 at 48
Questions often arise regarding the suitability of annuity contracts
within IRAs and pension plans. As noted above, contract owners
pay annuity companies for the privilege of having their money
invested on a tax-deferred basis. Because an IRA or pension
investment is, by law, tax-deferred, there is no reason to incur
these additional costs by placing annuities inside otherwise
tax-deferred investments. Nonetheless, many investors feel that
the other benefits of variable annuities (i.e. professional money
management, and income and benefit guarantees) make such
investments suitable.

The author is a registered representative authorized to conduct a
securities business in five states.

66 Alan E. Peters, Variable
Annuities Guarantee
Features Make Them
Especially Attractive In
Planning For Retirement,
INVESTMENT NEWS,
November 28, 2005 at 10
The author is president of Alan E. Peters & Associates in
Wilmington, Del.

He says that there is no charge for the income tax deferral of the
annuity and that the variable annuity offers significant benefits
for retirement not available in most other mutual fund products.
Given the valuable riders available with newer variable
annuities, he thinks that it is appropriate to recommend a variable
annuity, among other investments, to any company or institution
setting up a 401(k).

65 Betty Harris Custer,
Annuities Can Have A
Place In IRA Plans, THE
CAPITAL TIMES
(Madison, WI), September
3, 2005
The author is managing partner at Custer Financial Services in
Madison, WI.

She argues that while the death benefit is one reason that financial
advisors use deferred annuities in IRAs and other qualified plans, it
is usually the least important reason. The real gem locked
inside of that wrapper is the option to convert the deferred
annuity into a payout annuity. While acknowledging that it is true
that one could accumulate an IRA outside an annuity and then
convert to an annuity for annuitization, she states that the
advantage of locking in todays annuity tables into existing
contract benefits has value without any actuarial analysis
supporting her opinion.

64 Donald Jay Korn, Perfect
For Each Other?, ON
WALL STREET, January
1, 2005
The bottom line is that billions of dollars are being invested ear
year in variable annuities held inside of retirement plans. Are
investors being bilked? Not at all, say many reps, who insist that
clients are informed and are picking this structure for some good
reasons.

John Napolitano, chairman and CEO of U.S. Financial Advisors in
Braintree, Mass., says that when suggesting a variable annuity for a
tax-deferred account, there is a huge fiduciary responsibility on
reps to make sure that clients are making informed decisions that
the guarantees are worth the extra cost.

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63 Gil Weinreich, Seller
Beware: With A
Regulatory Crackdown
Looming, Advisors Should
Take Extra Precautions To
Make Sure Any VA Sales
Are In Keeping With
Industry Best Practices,
RESEARCH
MAGAZINE, August 1,
2004
An insurance wholesaler (marketing representative for an
insurance company) saw his own mother nearly fall prey to a
shady annuity salesman. The elderly womans entire net worth
was in an IRA, and the broker proposed putting the funds in a
variable annuity. The broker met with her in her home, sweet-
talked investments over milk and cookies before handing grandma
a pen and the contract. Fortunately, her son got wind of the deal
while there was still time to rescind. Purchasing an annuity in an
IRA is only the best known annuity-related abuse by
unscrupulous salesmen. . . [b]ut the overriding abuse involved in
annuity sales is selling the product to the vast majority of investors
for whom the product is not suitable.

62 Gail Buckner, IRA + VA
= Bear Market
Protection, Fox News,
October 10, 2003
The author has insurance licenses to sell variable annuities in all 50
states, and is a registered securities representative associated with
Putnam Retail Management LP.

She writes that while some people argue that it doesnt make
sense to invest an IRA in a variable annuity, the death benefit is
bear market protection for your heirs. Without knowing how
much was paid in insurance charges over the years, or what the
death benefit was relative to the account value, she tells a reader
whose deceased grandmother had a variable annuity in her IRA
that his grandma looks like one smart cookie who clearly. . .felt
that the insurance was worth the cost.

61 Norse N. Blazzard and
Judith A. Hasenauer,
Annuities Are Good For
Tax-Qualified Retirement
Plans, NATIONAL
UNDERWRITER LIFE &
HEALTH/FINANCIAL
SERVICES EDITION,
April 7, 2003 at 14
The authors are annuity industry regulatory attorneys.

The article does not distinguish between deferred annuities and
payout annuities, but instead argues generally that lifetime income
payments make sense for some persons. The article does not
mention that owners of mutual funds or any other investment can
purchase a payout annuity in the future with their qualified plan
assets if they decide they want one, and therefore do not need a
deferred annuity to have this option.

In support of the argument that it is the payout feature that justifies
deferred annuities in qualified plans, the article claims that the
charge for the death benefit feature of variable annuities is
usually separately stated or is an incidental portion of the
mortality and expense risk (M&E) charge, which, according to the
article, is really for the insurance companys promise to sell a
payout annuity in the future to the deferred annuity owner at the
contract rates. However, the article does not compare the actuarial
value of the insurers promise to sell a payout annuity in the future
to the customers cost of paying M&E charges for decades. There
is no discussion of what types of individuals could know decades in
advance that they are going to need a payout annuity.

The article also observes that in 1974, just as defined contribution
plans came on the scene, Congress amended section 403(b) of the
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tax code to allow 403(b) plans to invest in mutual funds, since
there was no need to require payout annuities or impose any
defined benefit requirement on 403(b) plans.

60 John P. Huggard, Do
Variable Annuities Belong
In Qualified Plans?, ON
WALL STREET,
December 1, 2002
The author disagrees with critics who contend that putting a
variable annuity in a qualified plan is redundant and inappropriate.
The article states that tax deferral feature of variable annuities
costs nothing and therefore the higher fees associated with
variable annuities cannot harm qualified plan investors because
insurance benefits account[] for the cost disparity. However, the
article does not support this contention with any actuarial analysis.
In discussing the death benefit feature, the article omits any
mention of the economics of protecting heirs with a tax-free
payout from a life insurance policy, rather than a variable annuity
death benefit that will be taxable to heirs to the extent it is ever
triggered.

The article also suggests that some states provide creditor
protection for variable annuities inside IRAs, as opposed to IRAs
funded by other investments, and therefore using a variable
annuity in an IRA to obtain creditor protection, even though the
tax-deferral feature would be duplicated can be worthwhile.
However, no such state is named and no caselaw or other legal
precedent is cited.

The author is an estate planning attorney. He teaches personal
finance courses at North Carolina State University. He is also a
licensed insurance agent for the purpose of selling annuities. His
earlier articles lauding the tax advantages of variable annuities
caught the attention of annuity insurers, and on their behalf, he
tours the nation promoting the merits of variable annuities to their
sales agents.

59 Christopher Jarvis and
David Mandell, Variable
Annuities, Depending On
Terms, Can Offer
Protection, BUSINESS
COURIER (Cincinnati,
OH), November 22, 2002
Although variable annuities have insurance features, some funds
are not suited for a variable annuity. First, we dont recommend
investing in a variable annuity within a retirement plan, as you are
already getting tax deferral. . . Unless your main concern is the
death benefit, I wouldnt recommend paying for the tax deferral
twice.

The authors are with Jarvis & Mandell LLC, a firm that according
to its website provides Wealth Protection planning to
professionals, business owners, and wealthy families.
58 New Schwab Studies
Shed Light On Variable
Annuity Debate; Studies
Look At Suitability of
Annuities, Business Wire,
November 6, 2002
Two new studies from the Schwab Center for Investment Research
provide objective analysis on the factors that investors should
consider when considering a variable annuity purchase.

Through analysis of several key features of variable annuities, the
study shows that it typically takes 5 to 15 years before tax benefits
outweigh the often-higher fees imposed by variable annuities.

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The study also concludes: As qualified retirement plans offer tax
advantages beyond those offered in a VA, investors should
generally contribute the maximum allowable amount to qualified
retirement plans prior to contributing to a non-qualified VA.
Moreover, it is generally not appropriate to purchase a VA within a
qualified retirement plan.

57 Hartford Pioneer Still
Bullish on VAs,
INSURANCE
CHRONICLE, November
2001 at 1
Class action lawsuits that have been filed that, according to the
article, assert that sales of the products for tax deferred
retirement accounts represent an actionable use of client funds.
For 15 years, Peter Cummins has directed the variable annuities
operation of The Hartford Financial Services Corp. and he takes
issue with the lawsuits.

Peter Cummins says: The most misunderstood part of a VA is tax
deferral. It is free. Insurance companies do not charge for this
feature. The guarantees of minimum death benefit, annuitization,
fixed accounts, spousal continuation, dollar cost averaging and
other benefits makes variable annuities products appropriate for
qualified plans.

56 Patricia J. Abram, Its
Time To Speak Out:
Annuities Have A
Legitimate Place In
IRAs, NATIONAL
UNDERWRITER -
LIFE/HEALTH EDITION,
October 8, 2001 at 14
The author is senior vice president and chief marketing officer at
American Skandia, Inc. She argues that annuities do have a
legitimate place in IRAs.

She says that a regulatory crackdown against deceptive sales of
deferred annuities for IRAs has put so much pressure on
insurance company sales representatives that many of these
investment professional have simply stopped using this strategy --
to avoid increased scrutiny by their broker/dealers. She
concludes that the regulators misinformed prejudice is tying the
hands of those trying to do the best job they can for their clients.

While acknowledging that there is no question that VAs do cost
more than mutual funds, she states that a person who makes a
decision to purchase anything based simply on price, without any
consideration of value, is a fool.

Without any consideration of the value or cost of a VA compared
to buying a life insurance policy, she asserts that most Americans
would gladly pay the increased cost of a VA, versus a mutual fund,
for the sole benefit of the death benefit protection included in most
of todays VAs.

55 Charlie Petrizzo, A VA
Inside An IRA? Educate
Clients, Let Them
Choose, NATIONAL
UNDERWRITER -
LIFE/HEALTH EDITION,
September 10, 2001 at 20
The author is national sales manager for First Union Insurance
Group, Charlotte, NC. He argues that the VA death benefit feature
can provide economic value to IRA owners. He calculates the
cost difference between the most expensive of the B-share
mutual funds and the average VAs to be only 7 basis points
(0.07%) more for the VA. His analysis ignores commission
breakpoints for mutual fund purchasers. He also assumes, without
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disclosing his assumption, that all mutual fund owners will be
churned every few years (to keep their expensive B-shares from
converting to the lower A-share fee levels).

54 Donald Jay Korn,
Happier Returns:
Guaranteed Death Benefit
Options Within Variable
Annuities, FINANCIAL
PLANNING, July 2001
Do variable annuities belong inside tax-deferred retirement plans,
where their tax deferral is redundant? Terry Mullen, a senior vice
president with SunAmerica in Los Angeles , says the death benefit
may well be the deciding factor. There is no tax benefit to holding
a variable annuity in an IRA but the guaranteed death benefit is an
important reason to make this type of an investment."

A new wrinkle to the death benefit feature in newer contracts,
available at an extra cost, is an "enhanced earnings benefit" that
will pay beneficiaries a percentage of contract gains, to offset the
income taxes that are due as a result of using a VA to protect heirs
rather than life insurance (life insurance pays a tax free death
benefit).

53 Evan Cooper, Susan Konig
& Nancy R. Mandell,
Sold On VAs: These
Brokers Have Made
Variable Annuities A
Major Part Of Their
Business. Here's How
They Did It, ON WALL
STREET, June 1, 2001
[W]hen a VA is wrong, it's usually all wrong. For instance, one of
the controversies associated with variable annuities is their value in
an IRA. I'd never do a VA in an IRA, Manny [Manuel Rey, of
A.G. Edwards & Sons, Inc., Short Hills, NJ] says. The IRA itself is
tax-deferred. Why would you put one tax-deferred vehicle inside
another?"
52 Kathleen Lynn, Hard
Lessons For Teachers;
High Fees Cut Into
Retirement Returns, THE
RECORD (Bergen
County, NJ), May 2, 2001
at B1
The variable annuity industry defends the products for 403(b)
plans in the face of class action lawsuits and a regulatory
crackdown. Deborah Tucker, a spokesperson for the National
Association for Variable Annuities, states that the ability to have
payout options that provide an income for life, and the guaranteed
death benefit, are important benefits. Other industry spokesmen
say that the extra annuity fee helps pay for the commission to a
sales representative who makes sure their 403(b) contributions
stay within Internal Revenue Service limits.

51 Christian Financial
Network, January 2001
The web site markets the sale of fixed annuities and indexed
annuities. Under the heading Should I put an annuity inside an
IRA? the article notes that advisors recommend against using
deferred annuities in IRAs, but the purchase of a payout annuity
for lifetime income with your IRA assets may be advantageous for
some people.

50 Ron Panko, Can
Annuities Pass Muster?,
BESTS REVIEW, July
2000 at 103
The life insurance industry defends the use of annuities in
tax-qualified retirement plans, pointing to a section of the tax code
that allows for their use. Investors might want to include annuities
in a tax-qualified retirement plan because of other benefits they
offer, such as the right to annuitize, or convert the contract into a
guaranteed stream of monthly payments for life.

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But some plaintiffs law firms have uncovered some real-life
evidence that sheds light on the issue. When Hartford Life was
asked in the discovery process how much in death benefits the
company had paid in the 17 years the San Diego and Los Angeles
plans had existed, Hartford claimed it had paid a single death
benefit totaling only $119 in San Diego and no death benefits in
Los Angeles.

49 American Skandia CEO
Supports SEC Alert;
Stands Up for VA Industry;
Dokken Clarifies Remarks
On Deceptive Sales
Practices, BUSINESS
WIRE, June 12, 2000
In response to the SECs consumer warning on variable annuities, a
press release issued by American Skandia states:

American Skandia CEO Wade Dokken issued a statement in
response to the S.E.C.'s on-line alert, which maintains that it is
inappropriate to sell variable annuities as part of a qualified
retirement savings plan, based on any promised tax benefit. In
agreeing with the S.E.C.'s remarks, Dokken said variable annuities
funding 401(k) plans and other qualified plans are `appropriate, but
not as a tax advantage.

Dokken further explained: "Variable annuities offer qualified plans
many advantages including multiple asset classes, a wide range of
investment options, asset allocation programs, exchange privileges,
death benefits, fixed accounts and annuitization rights. The tax
deferral of the variable annuity is immaterial to the qualified plan
sale," he said.

48 Susan M. Miller,
Explaining Annuities To
Prospects, LIFE
INSURANCE SELLING,
May 2000 at 42
The author oversees annuity sales at Revere Federal Savings Bank
in Chelsea, Massachusetts. She writes that, even though many
brokers are opposed to selling qualified annuities because it is not
in the best interests of their clients, her philosophy is `why
not? She believes that the higher expenses for a variable annuity
pay for the advantage of being able to choose among many
different fund companies in one product.

47 Letter to the Editor, In
Defense of Annuities,
BARRONS, April 24,
2000
Bruce C. Long, President of Guardian Investor Services, responds
to the Just Say No to Annuities article in the March 27, 2000
issue of Barrons.

He writes that variable annuities were specifically designed for
the qualified market and have been recognized by Congress in
specific sections of the Internal Revenue Code to be a legitimate
funding vehicle for qualified plans.

46 Letters to the Editor,
WALL STREET
JOURNAL, November 26,
1999
Letters from Mark J. Mackey, President and CEO, National
Association for Variable Annuities, and Carroll A. Campbell, Jr.,
President and CEO, American Council of Life Insurance, protest
the Wall Street Journals coverage of class action lawsuits against
annuity insurers. An annuitys fee have nothing to do with its
tax-deferred treatment, but are for getting the insurance features
cited as appropriate by the NASD. To be sure, variable annuities
insurance features help explain why they are an attractive and
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desirable choice for many retirement plans.

45 Forum: Do Variable
Annuities Belong In
Qualified Plans?
ANNUITY MARKET
NEWS, August 1, 1999
Recently, variable annuities have been criticized for being
included in qualified plans because an annuity duplicates the tax
deferral that is already available within such plans. But the
insurance industry argues that annuities have a long history in the
qualified market, and their benefits go far beyond tax deferral.


44 Thomas Streiff, Facing
Down the Negative Press
on Fees, NATIONAL
UNDERWRITER, LIFE &
HEALTH/FINANCIAL
SERVICES EDITION,
July 12, 1999 at 9
The author defends qualified annuities on the basis that, although it
is true that variable annuities have additional fees when compared
to mutual funds, none of those additional fees are actually labeled
as being for tax-deferral. Tax-deferral is free.

Moreover, the death benefit is a perfect fit for risk adverse
investors.
43 Thomas J. McInerney,
Letter to the Editor,
THE NEW YORK
TIMES, July 11, 1999 at
C16
The author is president of Aetna Retirement Services.

In response to the June 13, 1999 NEW YORK TIMES article on
teachers fed up with annuities in their 403(b) plans, he states that
Aetna uses annuity fees to benefit the teachers and the school
districts we serve, such as by providing a world-class call
center and expert advice, information and personal service.

42 Qualified Plan Annuities
Defended, INSURANCE
ACCOUNTING, vol. 10,
No. 21, May 24, 1999 at 1
Speaking at a seminar last week in New York [sponsored by the
National Association for Variable Annuities], Joseph McKeever,
partner in the Washington D.C. law firm of Davis & Harman, said
that variable annuities originated in qualified plans dated back to
the 1950s. `This is not a recent development or something the
industry has just glommed on in the past few months.

41 Carroll A. Campbell, Jr.,
Annuities Offer Unique
Features, Flexibility,
TIMES UNION (Albany,
NY), May 22, 1999 at A6
We strongly object to Jane Bryant Quinns assertion in a recent
column that only `unscrupulous sellers of tax-deferred annuities
offer them for inclusion in qualified retirement plans. . . . In fact,
there is no fee for the tax deferral feature. . . . In or out of a
qualified retirement plan, annuities offer features and flexibility
that no other financial product can.

The author is President of the American Council of Life Insurance,
Washington, DC.

40 Virginia B. Morris,
Creating Retirement
Income (Lightbulb Press
1998)
This 153 page book states that it was written in collaboration with
the National Association for Variable Annuities and seeks to
explain the valuable role annuities can play in helping you
achieve your retirement goals. The colorful, glossy book
repeatedly promotes the use of deferred annuities for funding
qualified plans based on the insurance features of the contract,
which many people think are valuable.

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39 Steven A. Haxton,
Design Group Annuities
For Changing Needs,
NATIONAL
UNDERWRITER, LIFE &
HEALTH/FINANCIAL
SERVICES EDITION,
September 28, 1998 at 14
Since retirement plan sponsors are obligated by law to design
plans that are suitable to their participants from a fiduciary
perspective, they must be cautious not to overwhelm participants
with unneeded options and their related fees.

For group annuities, there is typically a charge on assets, which is
most commonly associated with the record-keeping and
administrative expenses of the plan.

The author is head of sales at Aetna Retirement Services, Hartford,
CT.

38 Danny Fisher, Why Put
IRA Money Into A Fixed
Annuity?, NATIONAL
UNDERWRITER, LIFE &
HEALTH/FINANCIAL
SERVICES EDITION,
September 28, 1998 at 12
If a bank, savings and loan, or credit union is paying a higher
interest rate, you should put your money there. But, if a fixed
annuity contract is paying a higher rate, you should put your
money in one of those. It boils down to a simple comparison of
rate to rate.

Danny Fisher, CLU, CHFC, is publisher of Fisher Annuity Index,
which tracks fixed annuity crediting rate trends.

37 Michael P. Nelan,
Productive Uses For
Variable Annuities,
BROKER WORLD,
September 1998 at 28
Annuities make sense in IRAs, according to the author, because
some annuities offer conveniences that some mutual fund
companies do not offer, such as automatic asset rebalancing.

The author is director of sales for ORBA Financial Management
Company.

36 Humberto Cruz,
Commissions Can
Influence What Youre
Offered,
SUN-SENTINEL (Ft.
Lauderdale, FL), August
1, 1998 at 17A
On a message board used by stockbrokers, one user asked 'Can
anyone give me a good reason why a person would invest in a
variable annuity in an IRA account?' The answer, by a former
insurance agent: '`The first reason is commissions . . .' Annuities,
one of the most popular investment products of the 1990s, are a
prime example of hidden commissions and fees.
35 Peter J. Vogt, The Latest
View From The 401(k)
Market: Our World Is
Turning Upside Down,"
NATIONAL
UNDERWRITER, LIFE &
HEALTH/FINANCIAL
SERVICES EDITION,
July 20, 1998 at 51
The author is an assistant vice president at Hartford Life Insurance
Company.

For 401(k) plans, [t]he real value behind what insurers provide
are products. Those products are group annuities[.]

Although some may criticize annuity fees as excessive, this
argument sounds hollow when the true costs are measured against
the quality of service and scope of benefits available through such
401(k) plans.

The author describes the value of the insurance fees is the
investment education for participants that the insurer provides, as
well as the insurers helpful customer service centers.

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34 Funds Hope Death
Benefits Will Earn Salute:
Annuity Slip Feared, So
American Skandia,
SunAmerica Innovate,
InvestmentNews, March
23, 1998
SunAmerica and America Skandia announce a death benefit
product for mutual funds, which offers a tax-free death benefit for
a 20 bp annual charge. Variable annuities offer a death benefit that
heirs must pay taxes on, for a much higher charge. Will people still
buy variable annuities?

SunAmerica and Skandia executives dismiss the cannibalization
threat. They say annuity owners buy the product more for the tax
advantages than for the death benefit.


33 Dominic J. Vricilla,
Variable Annuities: Dead
or Alive?, LIFE
INSURANCE SELLING,
March 1998 at 188.
The first question the agent should ask the prospect is, `Are you
maxing out your Section 401(k) plan or individual retirement
account (IRA)? The agent should keep in mind that VAs do not
offer an advantage over these kinds of accounts. . . . Only after
these accounts are funded do investments in the annuity make
sense for retirement planning. . . .The [annuity]s real value will be
the tax deferral it offers. . . . [T]here never should be a time when
we dont `do the right thing for [the client]. If we dont try to
force square pegs into round holes, we all will have wonderful and
profitable relationships with our clients.


Dominic J. Vricella, CFP, owns and operates the Professional
Consulting Group, LLC, in Marlton, NJ.

32 Valerie Morris, Interview
with Lon Smith, CNNfn
Television, February 9,
1998 at 5:52 pm
Lon Smith, president and CEO of Hartford Life, one of the largest
sellers in the nation of deferred variable annuities for funding
qualified plans, is asked: Many financial planners who say,
annuities, that's not really the way to go because, for one, they're
extremely expensive. How would you respond?

Mr. Smith responds: You should not buy an annuity, generally
speaking, unless you have filled up your 401k, unless you have
taken advantage of other things. But at that point it becomes a very
important product.


31 Ron Panko, Qualifying
for Retirement, and
Four Companies, Four
Strategies BESTS
REVIEW, LIFE/ HEALTH
INSURANCE EDITION,
February 1998 at 35
To many customers, mortality and expense charges may appear
redundant within qualified plans. But Hartis Chorney, national
insurance director for KPMG Peat Marwick, has some advice for
sales representatives trying to overcome these objections. He says
that one of the ways you begin to sell this product is to hype the
annuitization option. You can ask, `Youve worked all these
years; how do you want to protect what youve earned? . . . They
should play that up for the consumer, the importance of annuitizing
an annuity.

Meanwhile, Dan Schreiber, vice president of pension marketing,
CUNA Mutual Life Insurance Company, acknowledges that
anyone can annuitize any investment whenever they want:
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Anybody can annuitize any 401(k) program, Schreiber said, by
rolling over the plans assets into an IRA and then annuitizing with
an insurance company. `Its available to anyone whether theyre in
annuities now or not.

30 David Shapiro and Thomas
F. Streiff, Annuities
(Dearborn R&R Newkirk,
2d ed. 1997) at 100, 129
Annuities can serve as excellent funding vehicles for qualified
plans, due to their safety, yield and asset value protection.

Because tax deferral is free, one need only consider other
features, benefits and performance to determine if qualified monies
fit in the annuity. Youll find that they often do and are so used
about 50 percent of the time.

29 National Association for
Variable Annuities, Why
Use A Variable Annuity To
Fund A Qualified Plan?
(1997)
This 4-page consumer brochure argues that millions of Americans
have wisely chosen to invest their qualified plan savings in variable
annuities. Shouldnt you be one of them? The benefits of variable
annuities are described to be the annuitization option and the death
benefit.
28 Gary H. Snouffer, The
Sales & Marketing Guide
to Variable Annuities (The
National Underwriter Co.
1997)
In this 198-page book, the authors number one variable annuity
sales idea is to sell variable annuities to fund IRAs, given the
popularity of IRAs. (pp. 51-57). He also recommends selling
variable annuities as the funding vehicles for 401(k) and other
qualified plans. (pp. 156-64).

Earnings on the variable annuity inside the IRA accumulate with
a deferral of income tax generally until the values are taken out. Of
course, values in variable annuities, which are not in IRAs, also
accumulate on a tax deferred basis. (p. 159).

27 Stephen Blakely, Are
Variable Annuities For
You?, NATIONS
BUSINESS, December
1997 at 20
The article discusses the advantages and disadvantages of using an
annuity in a tax qualified plan. The only advantages cited were the
insurance features and the guaranteed fixed rate subaccount. The
article notes that GICs perform the same investment function as
fixed rate subaccounts inside an annuity.

The treasurer and co-owner of a company that uses a group
annuity in its 401(k) says that "All of my employees who are
eligible are participating and contributing to the plan," and
`"[j]udging from that, I think they're pretty happy with it."
However, the employer does not say that his employees were ever
apprised of the extra layer of annuity fees that are being deducted
from their accounts, or that he offered his employees the choice of
any other investment option for their 401(k) dollars.

26 Why Variable Annuities
In A Tax Qualified Plan?,
New York Life Insurance
Company document,
December 1997
In December 1997, New York Life Insurance Company posted on
their Internet site a defensive article about qualified variable
annuities. The article claims that variable annuities make sense in a
qualified plan because they have a fixed account investment option
and a guaranteed death benefit, both of which are of value to
prudent individuals.

Bibliography - Using A Deferred Annuity To Fund A Qualified Retirement... http://www.insurancelaw.com/bib7.htm
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A more recent revision describes the limited fund selection
(flexibility) and surrender fees (liquidity) of variable annuities
as benefits.



Table 1 (independent views) - Part 1 Part 2 Part 3 Part 4 Part 5 Part 6
Table 2 (annuity industry views) - Part 1 Part 2



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Ronald A. Uitz
Uitz & Associates
1717 K St NW Ste 600
Washington, DC 20036
202-296-5280


Bibliography - Using A Deferred Annuity To Fund A Qualified Retirement... http://www.insurancelaw.com/bib7.htm
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