by John Darer CLU ChFC CeFT MSSC RSP CLTC
The Personal Settlement Annuity is an option for settlement funds where constructive receipt has already occurred . With a Personal Settlement Annuity, If constructive receipt has occurred "oops" doesn't mean the "poops".
There is a solution. Not an apples to apples solution mind you, but a solution that can provide predictable, safe, secure and stable core income using structured settlement annuity pricing , which is often more favorable than traditional single premium immediate annuities (SPIA).
A Personal Settlement Annuity is only available to settling plaintiffs within a very short time after a settlement has concluded
The premium used to fund the personal settlement annuity must come from a settlement that was for payment of damages under IRC 104 (personal physical injury).
- Unlike payments from a structured settlement for damages, a portion of the payments from a personal settlement annuity is taxable.
- Unlike a structured settlement annuity, a personal settlement annuity must comply with IRC 72(u) [ for example, in order to avoid a 10% penalty, payments must begin within 13 months, begin at or after age 59.5, ,or be spread out over the life expectancy of the annuitant]
- Pacific Life is the issuer of the Personal Settlement Annuity and is rated A+ by A.M. Best
Whether or not a Personal Settlement Annuity makes sense will depend on an individual's needs. Other forms of non qualified income annuities may also make sense and should be explored such as deferred income annuities (DIA) and/or indexed annuities. These types of annuities may be used, among other solutions in combination, to help a settling plaintiff achieve his or her financial goals.