How do I add Annuities to an Income Lab plan?

Welcome. This video will walk you through how to add annuities in your Income Lab plan. First, from your households page, select a household.

Then, click the pencil icon to get into your plan edits. Next, select assets.

And on the assets page, locate the annuity section, which is the second tab on the page.

Once you're on the annuity section, simply fill out the initial information. So we can add a name for the annuity.

Select the annuity type, whether that's variable or a fixed index annuity, select the type of account tied to that annuity. So whether that's a traditional IRA, qualified annuity, Roth annuity, you have the full options here from the drop down. Select the owner and then add the balance.

For annuities, it's important to then click the gear icon to enter more inputs for that annuity.

Inside the options on the right side here, you'll be able to select the annuity distribution type. You'll have the options between living benefit, so for those annuities that have a living benefit rider, or you can select custom plan, which we'll use more for growth annuities or SPIAs that have more of a custom plan tied to it. I'll go through both scenarios in this tutorial.

So, to start off, let's talk about the living benefit option. Once you select the distribution type, then click annuity settings.

Here's where you can enter more of the information for that annuity. So here we can enter the benefit base, the guaranteed withdrawal rate. Here it's important to put the annual percentage here, the covered lives, so whether that's one individual or both members of the household, when the withdrawals begin. You can use the calendar icon here to select the month and the year.

And then when the withdrawals will end.

If it's lifetime withdrawals, you can just keep this checkbox on.

Next, you can then enter information on how the benefit increases during deferral as well as during the withdrawal phase. The top section will handle the deferral phase. So here, if the annuity is using a rollup, we can enter the rollup rate below. If it's using the withdrawal rate increase, we can select that option and then enter the annual addition to the withdrawal rate during deferral.

Next, you can then select how the benefit will increase during the withdrawal phase, whether that's using the balance high watermark or asset allocation returns.

You'll then want to just open the advanced settings below and then enter just some additional information. The additional settings below will help you model how you want the software to show the annuity projections as you look into the future years of the plan. So here you can either select average returns to have the growth modeled based off average assumed annuity returns or select guaranteed growth and specified rates to put in a specific displayed annual income growth you'd like to see during the withdrawal phase.

You can then enter the end of the guaranteed growth during deferral point here. And you'll have a few options here to select how the guaranteed growth of the benefit base should be shown. Whether that's simple or compounded, stackable or non-stackable. You can select any combinations here.

You'll see these green icons spread out through the annuity settings. These are helpful if you're looking for simple definitions just to help you make sure you set up the correct settings.

And then at the bottom, you can then enter the amount on which the rollup is based.

Next, we can then input our crediting methods. You can either select a method based off of a cap, a participation rate, or a fixed rate. If you have an annuity that's using multiple crediting methods, you can uncheck this box that says use a single crediting method for this annuity. And then you'll see a table view here where you can select a specific allocation for each crediting method and then enter the value tied to that specific crediting method.

The advanced settings here will allow you to model any reduction in asset class returns to make sure you remove dividends and then select the end of term period for the first value and then enter the value after that term is ended.

Next, if you're modeling any Roth conversions from your annuity, you can select the Roth conversions tab here.

Check on the box to convert this annuity into a Roth IRA and then use the calendar to select the year in which you want the Roth conversions to begin and the year you want the Roth conversions to end.

And then lastly here, the other tab will allow you to select the anniversary month if you want to have the software withdraw RMDs even if it's greater than the plan withdrawals. You can leave this checked on as yes or check no if you don't want the software to withdraw additional withdrawals for RMDs.

Then at the bottom here, you can add any annuity expenses or advisor fees tied to this as well as any living benefit fees.

Once you're done, click save.

So those are your settings when you're entering a living benefit. If you have an annuity like a growth annuity or a SPIA that has more of a custom plan tied to it, click the custom plan, open up the annuity settings, and then here the main difference here is that you'll see a tab for distribution settings.

If you'd like to model any withdrawals coming from this annuity, you can then click specify distribution for this account and then say whether you are currently taking distributions from the plan, have used installments or lump sum as your distribution plan type.

Enter the correct frequency. So, if it's monthly, we'll leave the default. If we're looking at annual withdrawals, we'll change that from month to years.

We'll enter the date of the next installment or the first installment.

Enter the final installment or keep this check if it continues through the end of the plan.

You can then below enter the distribution method. With the stretch method here, the account balance will be distributed across this specific period.

The dollars method will allow you to put a specific dollar amount that you want to see come out at the frequency. You can then have that adjust for inflation, not adjust for inflation or use your own custom inflation.

If this is a growth annuity or SPIA where you have two income phases, the second phase might just be the client fully funding the total account balance out. You can have your initial monthly number here and then add the second phase. Choose when you want the second phase to begin and then select the amount that will be distributed during that second phase.

It's important to note when you're using the distribution settings. No surrender charges will be modeled for these distributions. So be sure to include only distributions that would be free from surrender charges here.

Next, you can enter the credit methods and follow the same steps as we saw on the previous example. And here you can also model Roth conversions from this annuity.

Again, following the same steps with this being more of a custom option, you'll have the option to also select to pay estimated taxes directly from the annuity during the Roth conversions.

Here you can set a floor or basis that shouldn't be accessed for tax payments, as well as the percentage you want to be modeled for tax withholding.

And then on the other tab here, you'll follow the same steps to enter the anniversary month, whether you want to withdraw RMDs if it's greater than the plan withdrawals, and the annuity expenses.

The living benefit fee field here is grayed out because this annuity does not come with a living benefit.

You'll hit save once you're done. In this example, I will just hit the X to cancel it out.

Last thing to note here as you're looking at the asset allocation of your annuities by default, let's say we're on the fixed index option here, we can just keep it on the FIA index option and then you'll see that that just uses a large cap price index.

You can click customize here to then set your own asset allocation for the annuity, use a custom option or even use a based off model allocations.

If you're modeling a variable annuity, for example, you'll see that you don't have the fixed index option, and that is just based off of our standard asset allocation inputs.

That's it. That covers how to add a fixed index annuity into your Income Lab plans. When you're done, click save, and then you can click finish to have it save into your plan and then get right into your plan dashboard.

One great place to see the annuity income is in LifeHub. On the LifeHub page here, we can quickly expand the inputs and then on the right side here under investment accounts, we'll see our fixed index annuity under the investment accounts and we can scroll year by year to see how the annuity income changes as we go through the plan.

That's it. Thank you for viewing this video. Please reach out to our team if you have any feedback and watch our next tutorial that covers how to best analyze annuities inside Income Lab where we walk through all the different features in your Income Lab plan that helps you to show off the annuity to the client to help them understand how the annuity will work inside their overall plan.

And if you're looking at comparing different annuities, we'll also talk through how to compare different annuities side by side.

Welcome. This video will walk you through how to analyze annuities in Income Lab and compare different annuities and how they impact your plan.

This is part two of our annuity tutorial series. So, if you'd like to know how to add annuities into Income Lab, please watch part one and then come back to this video. But once you have an annuity entered into your plan, there's a few places you can see it represented in your Income Lab household.

First, if we're on the dashboard, if the annuity has a living benefit and we are seeing that turned on during this period when the clients start retirement, we will see that as part of this retirement paycheck number. We can click into that retirement paycheck. And for example, here we will see how much of the income is coming from the annuity on a monthly basis.

The other place you can see this is in LifeHub. So, LifeHub is great because you can see the overall plan and look into it year by year. And if we simply expand here, we can see the annuity balance here in LifeHub as well as the annuity income.

In 2026, we haven't started the income yet. And so we can go one year over. We still see the annuity balance here. But we can see that in 2027, we have started taking some annuity from this.

If you're also modeling Roth conversions from the annuity, that will show up in the Roth conversions tab. You can click the Roth conversions section here. And you will see that in this case, we are taking 71,000 from the annuity and putting it into our annuity Roth. And we'll see that the software will actually create an annuity Roth section here to model the conversions happening and going into an annuity Roth account.

As I go to the next year, we see how the balance goes down and we're doing those conversions.

So, it's a great way to see how the annuity plays year by year and I could get to the point where we fully done those annuity conversions. We are now taking income from the annuity but from the annuity Roth and it's coming from our annuity Roth account.

As you know with annuities, while the balance may go down or even get to zero at some point in the plan like we see here in 2042, we are still having that lifetime income coming to play.

So LifeHub gives you a great way to see how the annuity starts and how it continues through the entirety of the plan even if the balance goes away and even if you're doing Roth conversions from the annuity.

The next place is the retirement stress test. The retirement stress test allows you to see how the plan performed in different historical periods and analyze the type of adjustments needed. While you can see the overall income plan here as you scroll, when you have an annuity in a plan, you can actually go to the A tab here for annuity.

When you're on the annuity tab in the stress test, we can then analyze how the specific annuity performed in this historical period. So for example, in the global financial crisis we can see that this annuity had consistent income and then we can also see the step-ups along the way which are represented by the green vertical lines.

Then you can scroll down to the balance and benefit base chart where you can analyze how the balance changed during this period. So in the blue line we see the balance going down in the plan as we're spending that down. But we can also see how the benefit base increases because of our step-ups and things like that.

You can also open the table view and get a great spreadsheet view of the balance, the benefit base, withdrawal rate, and the annual withdrawal amount, giving you a great place to really analyze how this annuity specifically performs if you put it in a specific historical market.

The other feature here is if you have another annuity or a plan with a different annuity, this is a great place to compare how different annuities might perform. Maybe you're deciding on one annuity versus another.

And so here, let's say we've got just a different annuity with maybe different features or different withdrawal amounts. We can put those side by side.

And now as we hover again, we are seeing how each of these annuities performed, the income that was driven by each of these annuities, as well as the change in the balance and benefit base.

This is a great way if you're analyzing the impact of two different annuities and trying to decide which one maybe makes the most sense for a plan.

So that's it. Between the dashboard, the LifeHub, and the stress test, you've got three great places to really analyze the impact of annuities, compare annuities, and see how it plays into the overall plan.

Thank you for viewing this video. Please reach out to our team if you have any questions.