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Anyone figure out MYGAs?

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(@hines202)
Honorable Member Customer
Joined: 4 years ago
Posts: 428
Topic starter  

I have a new client that's got some 5-year MYGAs paying out 4.5%. I can model all that under the annuity section, but not for example what happens after the five years if they decide to take the money (I guess roll back into an IRA). Has anyone else modeled this? I hate to classify it as something it's not (IRA, etc) but that might be the only way. Perhaps a separate asset class. If the annuity page had a field to roll it back into an IRA like I've seen elsewhere in the tool I think that would solve it.


   
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(@golich428)
Estimable Member
Joined: 4 years ago
Posts: 100
 

@ hines202, These are very similar to CDs so you may want to treat MYGAs just like you do for CDs in your model to be consistent.

I have a number of 5-year MYGAs that are all IRA accounts so I will either roll them forward to another MYGA or transfer back to my Vanguard IRA account. Either way, I have no plans to annuitize them. Therefore, to keep things simple, I just add another asset class called MYGA's and then use a ROR that is more in line with 10-year bond YTM not the yield of 5.25% that I am currently getting on the MYGAs. Given all the other uncertainties in the modeling we do, this is not a big deal to me. I have six MYGAs, all with slightly different rates so I don't want to go into that kind of detail. If you were going to annuitize them after 5-years, then you can treat them as annuity purchases in the software but you will have to estimate on what kind of payout you will receive.

If you come up with a better way, please post, I am open to options.


   
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(@hines202)
Honorable Member Customer
Joined: 4 years ago
Posts: 428
Topic starter  

@golich428 After marinating on this a while yesterday, I decided to do that as well. Created a MYGA asset class with the return they expect and no volatility (so the MC and historical doesn't vary it like stocks/bonds) and allocated their IRAs to 100% that asset class as they converted their IRAs to it. If they roll back in after 5 years the asset allocation just needs to be fixed to stocks/bonds. I think if Stuart or Charlie adds that annuity page field like pensions have where it gets rolled percentage wise back into an IRA at a certain point, it would handle this. I think I added that to the feature request.


   
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