Secondary Market Annuities (SMAs)

America's Leading Source for Secondary Market Annuities: Highest rates. Largest inventory on the net. Updated 4X daily. Many of these SMAs can be reserved with no money down!

secondary market annuities
+New to SMAs? Click to Read Our Tutorial FAQs

Q. What is a Secondary Market Annuity?

A Secondary Market Annuity (also called an 'SMA') refers to a transaction in which the current owner of an income annuity sells his future income steam to a third-party in exchange for a lump-sum payment. Annuity income streams most commonly originate from lawsuit settlements, lottery winnings, or immediate annuities.

Q. Why are the interest rates on secondary market annuities so high?

The yields on a secondary market annuity are often higher than the interest rates on an immediate annuity because the current owner of the secondary market annuity is willing to sell his income stream at a discount to receive quick cash today.

Q. What does the "COLA" column mean?

“COLA” stands for cost of living adjustment. If you see an SMA listing that shows a percentage in the COLA column, it means that the income listed will increase by that percentage each year. The majority of SMAs do not have COLAs, but from time-to-time you will see one with a 2% or 3% COLA listed.

Q. If I buy a secondary market annuity is my interest rate guaranteed?

Yes, the secondary market annuity income stream is guaranteed by the financial strength of the insurance company or state lottery commission that originally issued the annuity.

Q. If I buy a secondary market annuity is it covered by my State Guaranty Association?

No, SMA's are not covered by your state guaranty association. However, immediate annuities, deferred annuities, deferred income annuities, and fixed index annuities are all covered by your state guaranty association.

Q. How is the yield on a secondary market annuity determined?

The yield on a secondary market annuity is based on when the particular secondary market annuity makes its first payment and the length of time during which the income stream continues to be paid. In most cases, secondary market annuities with deferred (delayed) starting dates and longer payment periods offer higher yields.

Q. What are the typical terms and purchase amounts for an SMA?

The typical purchase price of a secondary market annuity varies between $50,000 and $500,000, but can be higher or lower. The purchase amount is determined by what the current annuity owner will accept as payment and what a buyer is willing to pay. The terms can range between 1 and 35 years, but most are between 5 and 20 years.

Sometimes, you need to buy multiple smaller contracts in order to achieve a target income stream.

Q. Who are the parties to a secondary market annuity transaction?

The following parties are typically involved in a secondary market annuity transaction: the insurance company (or state lottery commission) which originally issued the annuity, the present owner of the annuity ("Seller"), the payee ("Buyer"), the factoring company, and the payment servicing company. Once the deal is completed the Buyer becomes the assignee of the Seller.

Q. Who governs secondary market annuity transactions?

A secondary market annuity transaction is usually governed by state laws and requires approval by a state court. A judge usually reviews the proposed transaction and grants approval when he believes it is in the best interests of the current owner.

Q. Who pays me the promised income?

In most cases, ongoing income payments will be made by the insurance company through the payment servicing company. If the income stream being purchased was originally a lottery payout, then the state lottery commission will continue payments to the buyer.

Q: To whom is the SMA transferred through the court approval process?

A. It depends on the particular secondary market annuity (SMA). Some transactions name the SMA buyer in the court order and some name a third party servicing company. In recent years, naming the third party servicing company has become the norm. Using a third party servicer is much more convenient to the SMA buyer because it allows him to set up direct deposit for the payments and also sell the SMA in the future. When an SMA buyer is named in a court order neither of these features are available.

When a third party servicer is named in a court order, payments are transferred to the buyer through an “irrevocable assignment.” This document with many others are included in the Closing Book, which serves as the contract. At no point does the payment servicer actually take ownership of the payments. They are simply contracted to receive the payments from the insurance company and direct them to you (via direct deposit).

Q. Can I transfer or sell these payments later on?

The new buyer's rights in the secondary market annuity are typically not transferable, meaning once the first sale has been completed, the new owner must retain the contract for the duration of the income stream.

Q. Are secondary market annuities considered safe investments?

Secondary market annuities are financial obligations of the issuing insurance company. Continued payments are under court order and failure to continue payments is deemed contempt of court.

Q. Are there any drawbacks to secondary market annuities?

First and foremost, secondary market annuities are not liquid investments. Once the court order is in place and the payments are transferred to you, you cannot undo the transaction. Also, there is no opportunity to take a withdrawal from your secondary market annuity other than the contractually specified payments.

Additionally, secondary market annuities take some time to place and occasionally contracts are not approved by the court. This happens for a variety of reasons usually relating to the seller.

Q. What documents do I receive as a secondary market annuity buyer?

When a secondary market annuity transaction is settled the buyer typically receives the following documents called the "closing book": a letter of benefits from the seller demonstrating that the seller has the right to sell the annuity; a due diligence document proving that no other financial claims exist to that income stream; an official court order and acknowledgment letter demonstrating that the income stream has been transferred to the buyer.

Q. Who is a typical secondary market annuity investor?

Investors seeking above average returns with limited portfolio risk are ideal secondary market annuity investors. SMAs are excellent alternatives to bank issued CDs and other traditional fixed income investments. Secondary market annuity investors should also have a strong financial position and sufficient liquidity to be able to invest a suitable portion of their net worth into this type of illiquid investment.

Q. Can I purchase a secondary market annuity with IRA monies?

Yes. Self-directed IRAs provide a platform for investors to diversify their portfolio into traditional and non-traditional assets. Currently, self-directed IRA funds may be utilized to invest into SMAs. When completing this transaction using qualified funds, it is essential that it is conducted properly in order to maintain the IRA's favorable tax status.

Q. If I buy an SMA with IRA monies how is the annual IRA RMD (after age 70 1/2) calculated especially on a deferred SMA?

In order to direct the payout check to the IRA, the IRA is named in the court order for the benefit of the investor. We are not tax experts and can’t comment on the RMD. To establish a cost basis, an amortization schedule is provided for your records.

Q. If I die before an SMA runs out how would my beneficiary (I have an adult son) get the remaining payments?

You won’t be able to name a beneficiary on the annuity, however, the annuity is a period certain obligation and will continue to your estate.

Q: Do secondary market annuities charge any fees?

A: Generally, secondary market annuities will not charge you any fees. However, some secondary market annuities use “payment servicing companies,” which will sometimes charge small ongoing fees in the range of $7-$10 per monthly payment. Additionally, if you are buying your SMA within a self-directed IRA, your IRA custodian will likely charge annual fees between $75-$125 per year.

Q: What is the purpose of a payment servicing company?

A: Oftentimes, when you buy a secondary market annuity, a payment servicing company will be named in the court order rather than yourself (as the buyer). Basically, the payment servicing company is set up to receive the payment from the insurance company and forward it immediately to you. This may sound extraneous, but using a payment servicing company provides a variety of benefits. For example, you can set up direct deposit through your payment servicing company, whereas you would normally only be able to receive a paper check directly from the insurance carrier. Having a payment servicer also allows you to re-sell your SMA if a need arises in the future. If you are named directly in a court order, you cannot re-sell your SMA. Lastly, having a payment servicer named in the court order allows you to make an anonymous purchase, rather than having your name included in public record.

Q. What is a life-contingent SMA?

A life contingent SMA is based on an annuity which was initially set up to only pay during the lifetime of the original annuity owner. So while this person is living the annuity insurance company continues to make regular payments to him. The annuity payments stop at his death.

Q. If I buy a life-contingent SMA how will I receive the full term of promised payments if the underlying annuity policy is over at the death of the original annuitant?

The future income payments from a life-contingent SMA are typically guaranteed by a separate fully-paid insurance policy taken out on the life of the original annuitant. So when that person dies the beneficiary of this life insurance policy -- usually, the intermediary company -- receives a lump sum payment from the insurance company in the amount of the policy's face value. The intermediary uses these proceeds to continue to make its promised payments to you. As the investor, you are made the collateral assignee (but not the direct beneficiary) of the life insurance policy. You receive the life insurance policy with the collateral assignment at closing.

These annuities are listed in the order of their STARTING DATES. To change the sort order click: Company, Start Date, Cost, Payout, Rate, or Status. To reserve your SMA click the 'Get More Info' button, or call 800-872-6684 (M-F, 9-5 eastern). Click to save, download, or print today's SMA list.

SECONDARY MARKET ANNUITIES (?)No deposit required for Secondary Market Annuity products with a Status 'In Stock' or 'No Deposit'. These are available for purchase immediately. May 25, 2016 (sorted by Start Date)
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
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- American General (?)AM Best Rating: AN/A$3,898$7,0004.30 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2030-05-02$7,000.001 lump sum2030-05-02None
- Hartford (?)AM Best Rating: A-2016-06-01$115,612$254,6165.00 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-01$500.001 lump sum2016-06-01None
2016-07-01$2,500.001 lump sum2016-07-01None
2016-08-01$500.0012 payments2017-07-01None
2016-11-22$10,000.001 lump sum2016-11-22None
2017-01-01$2,500.001 lump sum2017-01-01None
2028-11-22$45,000.001 lump sum2028-11-22None
2033-11-22$80,000.001 lump sum2033-11-22None
2038-11-22$108,116.001 lump sum2038-11-22None
- Transamerica (?)AM Best Rating: A+2016-06-09$48,680$165,7504.75 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-09$6.00103 monthly payments2024-12-093% Annual Increase Each March
2025-01-09$613.002 monthly payments2025-02-09None
2037-03-09$962.00144 monthly payments2049-02-093% Annual Increase Each March
- Hartford (?)AM Best Rating: A-2016-06-15$581,445$770,0944.01 %No Deposit (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-15$3,756.00168 monthly2030-05-153%
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
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- MetLife (?)AM Best Rating: A+2016-06-15$282,349$343,4603.84 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-15$2,642.00130 monthly payments2027-03-15None
- Genworth (?)AM Best Rating: B++2016-06-16$109,189$202,0004.50 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-16$293.0078 monthly payments2022-12-16None
2025-01-16$14,243.001 lump sum2025-01-16None
2030-01-16$61,243.001 lump sum2030-01-16None
2035-01-16$102,493.001 lump sum2035-01-16None
- Transamerica Life (?)AM Best Rating: A+2016-06-25$186,204$330,3004.28 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-25$750.00162 monthly payments2029-11-25None
2029-12-25$1,450.00144 monthly payments2041-11-25None
- Transamerica Life (?)AM Best Rating: A+2016-06-26$141,147$229,5004.28 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-06-26$750.00306 monthly payments2041-11-26None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
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- American General (?)AM Best Rating: A2016-07-01$179,584$257,2404.00 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-07-01$1,090.00236 monthly payments2036-02-01None
- Pacific Life (?)AM Best Rating: A+2016-07-16$214,909$459,6014.50 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-07-16$3,214.0023 monthly payments2018-05-16None
2034-07-16$3,214.00120 monthly payments2043-12-16None
- Prudential Life (?)AM Best Rating: A+2016-07-24$95,532$105,0003.21 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-07-24$15,000.007 annual payments2022-07-24None
- Liberty Life (?)AM Best Rating: A2016-08-15$291,666$432,0284.35 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-08-15$1,296.00232 monthly payments2035-11-151% Annual Increase Each December
2016-09-28$5,000.0020 annual payments2035-09-28None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
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- Genworth (?)AM Best Rating: B++2016-08-25$48,432$62,4774.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-08-25$226.0070 monthly payments2022-05-25None
2022-06-25$826.0057 monthly payments2027-02-25None
- Prudential (?)AM Best Rating: A+2016-12-01$39,060$49,6064.15 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-12-01$1,993.0025 / sa2028-12-01None
- Berkshire Hathaway (?)AM Best Rating: A++2016-12-04$79,012$144,0004.50 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-12-04$1,200.00120 quarterly payments2046-09-04None
- Hartford (?)AM Best Rating: A-2016-12-05$76,951$82,2002.98 %No Deposit (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2016-12-05$11,850.001 lump sum2016-12-05None
2017-09-13$14,625.001 lump sum2017-09-13None
2017-12-05$11,850.001 lump sum2017-12-05None
2018-09-13$14,625.001 lump sum2018-09-13None
2019-09-13$14,625.001 lump sum2019-09-13None
2020-09-13$14,625.001 lump sum2020-09-13None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Allstate (?)AM Best Rating: A+2017-02-13$236,412$345,1624.25 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-02-13$814.00240 monthly payments2037-01-133.00%
2019-02-13$34,993.001 lump sum2019-02-13None
2024-02-13$49,993.001 lump sum2024-02-13None
- American General (?)AM Best Rating: A2017-04-11$143,299$179,7513.80 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-04-11$1,258.00120 monthly2027-03-113%
2027-04-11$1,690.004 monthly2027-07-11None
- Genworth (?)AM Best Rating: B++2017-10-03$216,766$372,9274.28 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-10-03$842.00288 monthly payments2041-09-033%
2021-10-03$25,000.001 lump sum payment2021-10-03None
- Genworth (?)AM Best Rating: B++2017-10-03$193,844$347,9274.28 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-10-03$842.00288 monthly payments2041-09-033%
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Hartford (?)AM Best Rating: A-2017-10-30$140,574$389,5005.00 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-10-30$500.0059 payments2022-08-30None
2032-09-30$2,000.00180 payments2047-08-31None
- Prudential Life (?)AM Best Rating: A+2017-11-07$143,293$232,2454.14 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-11-07$515.008 monthly2018-06-07None
2018-07-07$563.0012 monthly2019-06-07None
2019-07-07$612.0012 monthly2020-06-07None
2020-07-07$663.0012 monthly2021-06-07None
2021-07-07$715.0012 monthly2022-06-07None
2022-07-07$769.0012 monthly2023-06-07None
2023-07-07$824.0012 monthly2024-06-07None
2024-07-07$881.0012 monthly2025-06-07None
2025-07-07$940.0012 monthly2026-06-07None
2026-06-07$1,000.0013 monthly2027-06-07None
2027-07-07$1,063.0012 monthly2028-06-07None
2028-07-07$1,127.0012 monthly2029-06-07None
2029-07-07$1,193.0012 monthly2030-06-07None
2030-07-07$1,261.0012 monthly2031-06-07None
2031-07-07$1,331.0012 monthly2032-06-07None
2032-07-07$1,404.0012 monthly2033-06-07None
2033-07-07$1,478.0012 monthly2034-06-07None
2034-07-07$1,555.0012 monthly2035-06-07None
2035-07-07$1,634.0012 monthly2036-06-07None
- Hartford (?)AM Best Rating: A-2017-12-01$104,499$136,8944.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2017-12-01$153.0012 monthly payments2018-11-01None
2018-12-01$274.0012 monthly payments2019-11-01None
2019-12-01$398.003 monthly payments2020-02-01None
2020-03-01$893.009 monthly payments2020-11-01None
2020-12-01$993.0012 monthly payments2021-11-01None
2021-12-01$1,093.0012 monthly payments2022-11-01None
2022-12-01$1,193.0012 monthly payments2023-11-01None
2023-12-01$1,318.0012 monthly payments2024-10-01None
2024-10-10$49,993.001 lump sum2024-10-10None
2024-12-01$1,454.0012 monthly payments2025-11-01None
- Hartford (?)AM Best Rating: A-2018-04-02$46,386$71,4344.25 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2018-04-02$6,993.001 lump sum2018-04-02None
2028-04-02$64,528.001 lump sum2028-04-02None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
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- John Hancock (?)AM Best Rating: A+2018-05-05$23,496$24,9063.75 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2018-05-05$24,993.001 lump sum2018-05-05None
- Hartford (?)AM Best Rating: A-2018-06-01$682,646$1,618,5485.00 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2018-06-01$1,150.00480 payments2058-05-012%
2021-08-30$95,000.001 lump sum2021-08-30None
2026-08-30$165,000.001 lump sum2026-08-30None
2031-08-30$190,000.001 lump sum2031-08-30None
2036-08-30$335,000.001 lump sum2036-08-30None
- American General (?)AM Best Rating: A2018-07-15$55,991$73,9594.00 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2018-07-15$18,760.001 lump sum2018-07-15None
2022-07-15$23,620.001 lump sum2022-07-15None
2027-07-15$31,579.001 lump sum2027-07-15None
- New York Life (?)AM Best Rating: A++2018-09-15$79,219$95,3213.50 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2018-09-15$35,000.001 lump sum2018-09-15None
2023-09-15$60,321.001 lump sum2023-09-15None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Allstate (?)AM Best Rating: A+2018-12-09$74,189$119,1514.25 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2018-12-09$10,000.001 lump sum2018-12-09None
2028-12-09$109,151.001 lump sum2028-12-09None
- Genworth (?)AM Best Rating: B++2019-02-04$87,731$133,7894.11 %No Deposit (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2019-02-04$557.00180 monthly2034-01-044%
- Allstate (?)AM Best Rating: A+2019-10-07$109,903$139,9003.85 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2019-10-07$47,954.001 lump sum2019-10-07None
2024-10-07$91,946.001 lump sum2024-10-07None
- MetLife (?)AM Best Rating: A+2020-01-01$215,854$404,0004.80 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2020-01-01$1,100.0060 monthly payments2024-12-01None
2025-01-01$2,000.00169 monthly payments2039-01-01None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Hartford (?)AM Best Rating: A-2020-09-19$87,244$118,6524.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2020-09-19$11,337.0011 annual payments2030-09-19None
- American General (?)AM Best Rating: A2021-05-09$243,526$416,9554.50 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2021-05-09$1,795.00172 monthly payments2035-08-094% Annual Increase Each September
- Genworth (?)AM Best Rating: B++2021-06-19$139,505$225,0004.30 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2021-06-19$50,000.001 lump sum2021-06-19None
2026-06-19$50,000.001 lump sum2026-06-19None
2031-06-19$125,000.001 lump sum2031-06-19None
- Metlife (?)AM Best Rating: A+2021-07-03$81,111$99,7674.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2021-07-03$49,993.002 annual payments2022-07-03None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Allstate (?)AM Best Rating: A+2021-07-20$42,020$49,1503.30 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2021-07-20$49,150.001 lump sum payment2021-07-20None
- Genworth (?)AM Best Rating: B++2021-10-03$21,078$25,0003.30 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2021-10-03$25,000.001 lump sum payment2021-10-03None
- American General (?)AM Best Rating: A2021-10-16$59,744$104,5524.50 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2021-10-16$10,000.001 lump sum2021-10-16None
2026-10-16$25,000.001 lump sum2026-10-16None
2031-10-16$70,000.001 lump sum2031-10-16None
- Prudential Life (?)AM Best Rating: A+2022-06-24$130,883$245,5054.75 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2022-06-24$1,100.00180 monthly payments2037-05-243%
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Farmers2023-03-19$46,277$59,0933.75 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2023-03-19$59,093.001 lump sum2023-03-19None
- Genworth (?)AM Best Rating: B++2023-08-22$112,291$148,2244.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2023-08-22$148,609.001 lump sum2023-08-22None
- Liberty Life (?)AM Best Rating: A2024-04-29$26,486$45,8894.46 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2024-04-29$382.00120 monthly2034-03-29None
- Prudential (?)AM Best Rating: A+2024-07-01$116,091$195,0334.50 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2024-07-01$14,511.004 annual payments2027-07-01None
2027-07-01$16,685.004 annual payments2030-07-01None
2028-07-01$17,584.004 annual payments2031-07-01None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Hartford (?)AM Best Rating: A-2024-07-01$140,509$218,1324.25 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2024-07-01$3,000.0014 monthly payments2025-08-01None
2025-09-01$3,500.0010 monthly payments2026-06-01None
2026-07-01$3,714.0038 monthly payments2029-08-01None
- Hartford (?)AM Best Rating: A-2025-01-17$61,483$97,1434.50 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2025-01-17$2,271.004 monthly payments2025-04-17None
2025-05-17$2,347.0036 monthly payments2028-04-173.00%
- Berkshire Hathaway (?)AM Best Rating: A++2025-07-27$36,685$73,0004.75 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2025-07-27$500.00146 monthly payments2037-08-27None
- American General (?)AM Best Rating: A2025-08-12$11,010,045$150,0003.50 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2025-08-12$150,000.001 lump sum2025-08-12None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- American General (?)AM Best Rating: A2025-08-15$47,762$115,7064.98 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2025-08-15$486.00238 monthly payments2045-05-15None
- Genworth (?)AM Best Rating: B++2025-09-12$76,951$130,8174.50 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2025-09-12$49,993.001 lump sum2025-09-12None
2030-09-12$81,493.001 lump sum2030-09-12None
- John Hancock (?)AM Best Rating: A+2026-03-11$1,218,003$2,386,8114.65 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2026-03-11$16,421.00120 monthly payments2036-02-114.19%
- John Hancock (?)AM Best Rating: A+2026-03-11$1,338,682$2,386,8114.00 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2026-03-11$16,421.00120 payments2036-02-114.19%
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- MetLife (?)AM Best Rating: A+2026-03-28$64,916$140,5724.85 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2026-03-28$837.00168 monthly payments2040-02-28None
- Metlife (?)AM Best Rating: A+2026-09-01$68,536$115,8264.50 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2026-09-01$2,466.0047 monthly payments2030-07-01None
- American General (?)AM Best Rating: A2026-12-22$24,632$54,0004.56 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2026-12-22$300.00180 monthly2041-11-22None
- Hartford (?)AM Best Rating: A-2027-02-08$76,888$120,0004.25 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2027-02-08$120,000.001 lump sum2027-02-08None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Prudential Life (?)AM Best Rating: A+2027-03-15$53,303$132,0004.66 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2027-03-15$550.00240 monthly2047-02-15None
- Prudential Life (?)AM Best Rating: A+2027-07-24$46,607$75,0004.39 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2027-07-24$75,000.001 lump sum payment2027-07-24None
- Genworth (?)AM Best Rating: B++2027-09-25$32,278$65,1594.50 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2020-11-01$2,500.001 lump sum2020-11-01None
2025-11-01$2,500.001 lump sum2025-11-01None
2027-09-25$528.0067 payments2033-03-25None
2030-11-01$2,500.001 lump sum2030-11-01None
2035-11-01$5,000.001 lump sum2035-11-01None
2038-11-01$5,000.001 lump sum2038-11-01None
2040-11-01$5,000.001 lump sum2040-11-01None
2043-11-01$7,263.001 lump sum2043-11-01None
- John Hancock (?)AM Best Rating: A+2028-02-09$88,836$166,1234.75 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2028-02-09$688.0060 monthly payments2033-01-09None
2028-02-09$24,993.005 annual payments2032-02-09None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Liberty Life (?)AM Best Rating: A2028-04-07$34,305$69,3604.30 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2028-04-07$578.00120 monthly payments2038-03-07None
- MetLife (?)AM Best Rating: A+2028-08-07$88,266$150,0004.49 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2028-08-07$150,000.001 lump sum payment2028-08-07None
- NY Life (?)AM Best Rating: A++2028-08-14$70,715$137,1875.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2028-08-14$3,711.0037 monthly payments2031-08-14None
- MetLife (?)AM Best Rating: A+2029-03-23$159,579$442,3324.44 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2029-03-23$1,117.009 monthly2029-11-23None
2029-12-23$1,178.0012 monthly2030-11-23None
2030-12-23$1,240.0012 monthly2031-11-23None
2031-12-23$1,305.0012 monthly2032-11-23None
2032-12-23$1,371.0012 monthly2033-11-23None
2033-12-23$1,439.0012 monthly2034-11-23None
2034-12-23$1,509.0012 monthly2035-11-23None
2035-12-23$1,581.007 monthly2036-06-23None
2036-07-23$1,656.005 monthly2036-11-23None
2036-12-23$1,731.0012 monthly2037-11-23None
2037-12-23$1,807.0012 monthly2038-11-23None
2038-12-23$1,886.0012 monthly2039-11-23None
2039-12-23$1,968.0012 monthly2040-11-23None
2040-12-23$2,051.0012 monthly2041-11-23None
2041-12-23$2,138.0012 monthly2042-11-23None
2042-12-23$2,227.0012 monthly2043-11-23None
2043-12-23$2,318.0012 monthly2044-11-23None
2044-12-23$2,412.0012 monthly2045-11-23None
2045-12-23$2,510.0012 monthly2046-11-23None
2046-12-23$2,610.0012 monthly2047-11-23None
2047-12-23$2,713.0012 monthly2048-11-23None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Hartford (?)AM Best Rating: A-2029-06-01$220,312$788,6616.00 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2028-12-07$100,000.001 lump sum2028-12-07None
2029-06-01$1,294.00324 payments2056-05-012%
2033-12-07$140,000.001 lump sum2033-12-07None
- MetLife (?)AM Best Rating: A+2029-10-01$19,331$35,0004.58 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2029-10-01$35,000.001 lump sum payment2029-10-01None
- MetLife (?)AM Best Rating: A+2029-10-01$48,151$94,6854.58 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2029-10-01$35,000.001 lump sum payment2029-10-01None
2032-10-01$59,685.001 lump sum payment2032-10-01None
- Athene2029-11-04$60,649$152,2295.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2029-11-04$993.00132 monthly payments2040-10-043.00%
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Transamerica Life (?)AM Best Rating: A+2029-12-25$39,872$100,8004.95 %In Stock (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2029-12-25$700.00144 monthly payments2041-11-25None
- American General (?)AM Best Rating: A2030-05-02$3,480$7,0004.30 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2030-05-02$7,000.001 lump sum2030-05-02None
- Prudential (?)AM Best Rating: A+2032-04-15$29,149$78,4134.50 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2032-04-15$456.00127 monthly payments2046-07-15None
- MetLife (?)AM Best Rating: A+2032-10-01$27,753$59,6854.83 %No Deposit (f)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2032-10-01$59,685.001 lump sum payment2032-10-01None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- USAA Life2032-12-07$63,502$124,4644.25 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2032-12-07$124,993.001 lump sum2032-12-07None
- Monumental Life2034-02-27$65,334$210,5675.50 %Pre-order (d)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2034-02-27$52,942.001 lump sum2034-02-27None
2040-02-27$157,625.001 lump sum2040-02-27None
- Athene2034-05-29$19,626$46,2954.89 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2034-05-29$46,295.001 lump sum2034-05-29None
- Hartford (?)AM Best Rating: A-2034-08-31$33,949$88,8804.57 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2034-08-31$1,058.0084 monthly2041-07-31None
(?)If the company name is followed by (?) you can see the company's AM Best rating by putting your mouse over the (?).
(?)Start date is when you begin to receive income payouts from your SMA.
(?)Cost is the estimated price of this SMA. Occasionally, the final price may vary slightly from the listed price if the SMA is funded by you later than initially calculated.
(?)Payout is the total amount of income you receive over the life of this SMA.
(?)Rate is the effective annual percentage return you earn in this SMA.
(?)Status tells you whether or not this SMA has been approved for transfer by the court and whether you need to make a good faith deposit in order to reserve it.
Click to
- Prudential Life (?)AM Best Rating: A+2036-07-07$111,739$340,4074.63 %In Stock (e)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2036-07-07$2,792.00108 monthly2045-06-073%
- Symetra (?)AM Best Rating: A2039-02-01$118,186$400,0005.00 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2039-02-01$200,000.001 lump sum2039-02-01None
2044-02-01$200,000.001 lump sum2044-02-01None
- Genworth (?)AM Best Rating: B++2040-07-15$53,056$176,1465.00 %Pre-order (b)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2040-07-15$86,278.001 lump sum2040-07-15None
2041-07-15$90,161.001 lump sum2041-07-15None
- MetLife (?)AM Best Rating: A+2042-10-22$45,490$221,7605.25 %Pre-order (c)
Start Date Income Amount No. of Payments/Frequency End Date COLA/Amount
2042-10-22$1,848.00120 monthly payments2052-09-22None

Important note about this table: Secondary Market Annuities (SMAs) are policies being transferred by an annuitant pursuant to state transfer laws. Annuities listed are subject to prior purchase, prior sale, or withdrawal by seller. Interest, payments, and prices are calculated using industry standards. All information in this list is subject to change and is not guaranteed. In case of a discrepancy, information in the final closing documents will govern.

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Comments (22)

  1. Sidney:
    May 13, 2015 at 12:49 PM

    Are all of the SMAs in your list exempt from the Excise Tax set out in IRS Bulletin 2004-30?

  2. Hersh Stern:
    May 13, 2015 at 12:57 PM

    Hi Sidney-

    Yes, all the SMAs in the above list go through a proper court approval process prior to funding. A qualified court order (signed by a judge) is obtained and included in the closing book you receive when you buy these SMAs. This process exempts your SMA from having any excise tax applied.

    Hersh

  3. Judy:
    May 21, 2015 at 10:05 AM

    What does pre-order mean?

    If there is a good faith deposit, is it returned if the SMA is not approved by the court?

  4. Hersh Stern:
    May 21, 2015 at 10:06 AM

    Hi Judy-

    Pre-order means the SMA needs to go through a court-approval procedure for the income stream to be transferred from the present owner to the new buyer. Typically the approval process takes from one to three months.

    If you paid a good faith deposit and the court (judge) did not approve the present owner’s request to transfer his or her payments to you, then your full deposit is refunded to you.

    Hersh

  5. Bonnie:
    Jun 05, 2015 at 02:06 PM

    Can a beneficiary inherit the SMA? What are the restrictions?

  6. Hersh Stern:
    Jun 05, 2015 at 02:07 PM

    Hi Bonnie-

    While you won’t be able to name individual beneficiaries in your SMA paperwork or contract, any remaining payments owed to you after you die would be paid to your estate. In other words, you can instruct the executor of your estate to direct the SMA payments it receives to your beneficiaries. Another option would be to have your SMA owned by a trust, which bypasses probate, and instruct the have the trustee to distribute payments to the beneficiaries .

    -Hersh

  7. Rich:
    Jun 12, 2015 at 12:07 PM

    What does the “COLA/amount” column mean?

  8. Hersh Stern:
    Jun 12, 2015 at 12:08 PM

    Hi Rich-

    “COLA” stands for cost of living adjustment. If you see an SMA listing that shows a percentage in the COLA column, it means that the income listed will increase by that percentage each year. The majority of SMAs do not have COLAs, but from time-to-time you will see one with a 2% or 3% COLA listed.

    Hersh

  9. Bahman:
    Jun 24, 2015 at 11:41 AM

    What is the downside risk or disadvantage with SMAs compared to immediate annuities?

  10. Hersh Stern:
    Jun 24, 2015 at 11:42 AM

    Hi Bahman-

    I’ll list a couple of drawbacks with SMAs that come to mind. To be fair, know that our firm has sold SMAs to clients who are very happy with their purchases, especially because they were able to capture higher interest rates than available with immediate annuities.

    First, a secondary market annuity (SMA) will never provide “lifetime” income like an immediate annuity. SMAs will only provide income for a specified period of time. SMAs are always period certain annuities.

    To offset this limitation, many of our clients who purchased SMAs try to match the payment period with their estimated life expectancy. But there’s always a chance you can outlive your SMA income stream.

    A second drawback is that no SMA is covered by the state guaranty system. Immediate annuities, however, are covered. For this reason, our clients select SMAs issued by strong insurance companies. You can read more about the state guaranty system here:

    https://www.immediateannuities.com/state-guaranty-associations/

    -Hersh

  11. Dan:
    Sep 14, 2015 at 11:27 AM

    How are the payments I receive from an SMA treated for Federal income tax purposes?

  12. Hersh Stern:
    Sep 14, 2015 at 11:28 AM

    Hi Dan,

    Payments you receive from a Secondary Market Annuity (SMA) are typically not reported to the IRS by the servicing companies. So it’s up to you to calculate and report the interest you’ve earned from your SMA investment. And because I’m neither a CPA nor a tax attorney I strongly advise you to seek the opinion of someone who is better qualified than me to answer your question.

    Notwithstanding the above, I’ll tell you what I know. The most common method I’ve seen used for calculating interest earnings from an SMA is the so-called “exclusion ratio” method, which the approach taken by insurance companies to figure the earnings from an immediate annuity. Using this method each payment you receive would be divided into a principal (i.e., cost basis) portion and an interest portion. The ratio of principal to interest is not changed for the life of the SMA. So this makes your tax reporting very simple.

    Hersh

  13. Charles:
    Sep 15, 2015 at 10:15 AM

    I’m thinking of buying an SMA with IRA money. If the annuity starts paying in 2036, when I am 77 years old, how would I handle my RMDs from age 70 until my annuity begins paying me?

  14. Hersh Stern:
    Sep 15, 2015 at 10:17 AM

    Hi Charles-

    Regarding an SMA that starts paying you after you’ve passed your RMD starting age (70-1/2) – because the SMA is not liquid you’ll have to draw RMDs to cover the SMA’s obligations from other IRA accounts. Another option would be to buy an SMA that starts paying you in 2029, in time for your first RMD.

    Regarding valuation for RMDs, know that the fair market value of your SMA increases each year before it starts to pay out.

    When you complete the purchase of an SMA you receive a “closing book.” The closing book includes the court order, acknowledgement by the insurance carrier, a copy of the Data page from the original contract, and your agreement with the servicing company (when a servicing company is involved). In the closing book is an Amortization schedule which gives you the values of your SMA at the end of each year. These are the values to use when calculating RMDs.

    Hersh

  15. Mike:
    Nov 16, 2015 at 07:11 AM

    Can I buy an SMA with IRA money?

  16. Hersh Stern:
    Nov 16, 2015 at 07:12 AM

    Hi Mike,

    Yes, you can buy a Secondary Market Annuity (SMA) with Traditional IRA monies.

    But you must first set up a “Self-Directed IRA” account. This is different than a typical prototype IRA account. Many of our clients set up their Self-Directed IRAs with Goldstar Trust Company. Here’s an overview of the steps you’ll need to take in order to buy an SMA with your IRA funds:

    1. Contact Goldstar and open a Self-Directed IRA.
    2. Transfer money from your current IRA into your self-directed IRA.
    3. Transfer money from your Goldstar account to buy the SMA.
    4. Goldstar becomes the “custodian” of the SMA that you purchased.
    5. Payments from the SMA are made directly to your Goldstar account and continue as pre-tax IRA monies until you withdraw them.

    -Hersh

  17. Jeff:
    Jan 08, 2016 at 02:23 PM

    Can I exchange the cash value from my deferred annuity that has reached its surrender period into an SMA tax-free under the 1035 exchange rule?

  18. Hersh Stern:
    Jan 08, 2016 at 02:25 PM

    Hi Jeff-

    Unfortunately, you cannot make a 1035 exchange from an existing annuity into a secondary market annuity (SMA). Here’s why – To qualify under Section 1035 the cash value must be exchanged between two insurance companies. When you purchase an SMA, your money is actually going to the individual selling the SMA, not to the insurance company that makes the monthly payments to you.

    If you would like to exchange your existing annuity for another “traditional” annuity (e.g., immediate annuity, multiyear deferred annuity, deferred income annuity, or index annuity) you can avail yourself of the 1035 exchange exemption. But not into an SMA.

    Hersh

  19. Dan:
    Feb 25, 2016 at 01:29 PM

    Can deferred payment SMAs be purchased with qualified funds and remain untaxed until the payout begins?

  20. Hersh Stern:
    Feb 25, 2016 at 01:30 PM

    Hi Dan-

    Yes they can. To purchase a secondary market annuity (SMA) with qualified funds you first establish a self-directed IRA (many of our clients have used an IRA custodian called Goldstar Trust Company). You buy the annuity within this self-directed IRA. When the income begins, it will be paid into this IRA and remain there until you take withdrawals. It’s only then that the income become taxable.

    PS – you’ll need to take RMDs when you reach age 70-1/2. You can read more about RMDs here:

    https://www.immediateannuities.com/required-minimum-distribution/

    Hersh

  21. Phil:
    Apr 18, 2016 at 02:02 PM

    Do state premium taxes apply to secondary market annuities?

  22. Hersh Stern:
    Apr 18, 2016 at 02:05 PM

    Hi Phil-

    No. SMAs are annuities which were issued years ago. A state premium tax only applies at the time the annuity is issued. So as the subsequent buyer of the annuities income stream, you are not charged another premium tax.

    Hersh