This article only applies if you do not have inStream's Fixed Index Annuity Module. If you do have the module, please click here for more information.
Modelling the purchase of an Annuity
If you want to model the purchase of an annuity, you can enter a withdrawal from a specific client account with the same Start Year and End Year for the year of purchase.
- Create a Lifestyle Goal for the Annuity Premium
- Set the dollar amount of the premium. If the premium is being paid all at once, then enter the same start and end year. If the premium is being paid over time, adjust the start and end year to reflect the duration of the payment.
- To reflect the the value of the Annuity in the client's net worth statement, add an Annuity Policy under the client's insurance section. Remember to input the premium amount in the current surrender value of the policy.
Modelling Annuity Income
To model an annuity income, you will enter as an Income with Start Year and End Year defining the duration of payout stream. Annuity Payments can be fixed over time (set inflation rate to 0%) or grow by the inflation rate. If your annuity payout is non-taxable you can use the Tax Classification to change the status to 100% untaxed.
- Go to the Profile tab and select Finances.
- From Finances, select Income then click Add a New Income.
- Enter in a name for the annuity. From Income Type drop-down menu, select Other. Fill in the rest of the information for the annuity. After all of the information is entered click Save.
Using Withdrawals to Model Annuity Income
If the annuity payout is non-taxable and you want to direct the annuity payout from a specific client account, you can also enter the payout as a Withdrawal with Start Year and End Year defining the duration of payout stream.
- Go to Accounts
- Select the appropriate client account to withdraw the funds from.
- Enter the value of each payout/withdrawal and set the duration for the years the payouts are expected to occur.
How do you model an annuity that has differing income payouts each year?
If annuity income differs by a certain rate, you can input the growth rate as “inflation rate” and annuity income will increase at this rate each year.
If annuity income is different every year and not growing at a certain rate, it will involve manual inputs for each income stream. If payouts happen for next 15 years, will need to individually input 15 individual income streams.
Do you show where the annuity funding comes from?
Annuity funding comes from available money in the client’s accounts. If funding from a specific account, user can use the Account Withdrawals to designate which account is funding the annuity. Otherwise, all goals (including funding for annuity premium) will be funded in the following order:
- Account Withdrawals
- Taxable Distribution
- Tax Deferred Distribution
- Tax Exempt Distribution