Frequently asked questions

The word Tontine has two syllables and is pronounced as tohn-teen although we often also see it spelt phonetically also as taunteen or even tauntine.

When you join a tontine, you invest enough of your savings to ensure that you receive a suitable level of steady income for the rest of your life.

BUT, the golden rule of a tontine is that when a member dies, they no longer need their monthly income and this income is put towards supporting those surviving members of your tontine community that still need the income. ‍ Therefore, members that are unfortunate to die at younger ages may not have received back their investment in full however they will have benefited in different ways:

1. They will have enjoyed spending their retirement income without the ongoing stress of worrying about running out of money in later years. ‍
2. They can look down from the pearly gates and know that they have helped sustain their fellow members that were blessed with a longer life.

We are working to make rollovers as simple and smooth as possible and will shortly publish a full guide as to how to rollover existing plans into your TontineIRA™.

Your savings are deposited in a Trustee-directed IRA rather than a self-directed IRA at a US custodian selected by our chartered trust partners (the 'Trustees').

The Trustees ensure that all of the monies are held in individual trust IRA accounts for each member and that the monies are invested in FDIC insured deposits/CDs.

The Trustees expect to offer a broader range of investment options via model retirement investment portfolios and target date funds in the near future.

You may elect to switch your underlying investment portfolio partially or fully from the FDIC insured assets into these retirement portfolios however they will require you to complete a questionnaire before making these available to you to ensure that they are broadly suitable for someone of your risk profile.

The Trustees will not be offering individual financial advice.

While we happen to believe that the TontineIRA™ is something of a silver bullet when it comes to retirement income, here are some examples where a TontineIRA™ may NOT be suitable for you:

1. You are in poor health and/or have been diagnosed with a chronic disease that will reduce your life expectancy.

2. You may suddenly need access to all of your savings in one lump sum rather than in monthly payments based upon life expectancy.

3. You need a fixed amount every month and could not afford to see your monthly payments adjusted downwards in the slightest regardless of how unlikely or rare such downward adjustments could arise.

These are the main caveats however you should not consider these to be the ONLY ones. We will add to this list in the future as we find more.

Tontine Trust is a financial technology ('fintech') firm that enables savers and retirees to open and control TontineIRA™s through us at our partner banks, trusts and credit unions whom are the ultimate responsible institutions for ensuring safe custody of our members' assets.

The TontineIRA™ is designed to be the ultimate lifetime income plan by supplementing investment returns with mortality credits which are balances inherited by you when other members pass away and no longer need the income.

It is obvious that if the TontineIRA™ allowed members or their families to terminate (surrender) their membership of the TontineIRA™ just before a bereavement then this would penalise the returns for the surviving members for which the TontineIRA™ is essentially a lifelong agreement.

Therefore it is important to understand that a TontineIRA™ is an irrevocable undertaking that CANNOT be terminated/surrendered.

If a TontineIRA™ member needs liquidity then they should immediately enable monthly income payments which will start to return the capital plus interest plus mortality credits over time.

For savers where the immediate liquidity of their retirement savings is crucial then a TontineIRA™ is NOT a suitable account for them.

In this case they should rather find out more about using a traditional IRA or an annuity from a reputable insurance company which offers surrender terms which match their needs.

Tontine 401(k)s etc. are not available yet however the IRS allows the following plans to be rolled over to your TontineIRA™:

• Traditional IRAs,
• 401(k)s,
• 403(b)s,
• SEP IRAs,
• 457(b) Government plans
• Qualified plans
• Simple IRAs

In general, each plan can only be rolled over once per year so if you have recently rolled over your plan, you may have to wait before rolling it over into your TontineIRA™. For further details, see the IRS notes on IRA rollovers here.

The projected income from a tontine adjusts based upon changes in interest rates, investment returns and the mortality of the members. This flexibility is the hallmark of the safest pension funds in the world.

This means is that our systems are constantly monitoring investment returns and death rates and then adjusting each members expected future payments usually by a few cents up or down.

If many members are dying sooner than expected, the payouts will start to rise faster. If many members are living longer than expected then the payouts will rise more slowly and may even stop rising for a while.

Through over 7 years of research we have found that that these tiny ongoing micro-adjustments ensure that the tontine always has enough money on hand to sustain the surviving members even if they live exceptionally long lives.

Simple answer: Whenever you like.

You have complete control over when the monthly payouts start and you can pause and change the starting date whenever and as often as you like just by changing the income start date in your account settings.

Please bear in mind however that the IRS imposes penalty taxes if you start receiving your income sooner than 59.5 years young or if you delay the start later than April 1 of the year following the calendar year in which you reach age 72 (73 if you reached age 72 after Dec. 31, 2022).

For further information, see the IRS website here.

This is one of our favourite questions mostly because we have spent over 5 years building a system that keeps everything mathematically fair for every single member.

The easiest way to understand this is using an example:

Adam (age 70), Bob (67) and Charlie (65) have each deposited the same amount to their TontineIRA™ and have been assigned to a Tontine Trust community for males aged between 65 & 70.

The income they each receive is calculated on a pro-rata basis taking into account each members account balance, remaining life expectancy as well as interest rates.

When another member of their Tontine community passes away, his remaining balance is distributed amongst the surviving members with Adam (70) getting a slightly larger share than Bob (67) who gets slightly more than spring chicken Charlie (age 65).

Why do we do it like this?

Well strictly speaking, Adam (70) is taking slightly more risk being in a Tontine with Bob (67) and both are taking slightly more risk than Charlie (65) so it is only fair that both Adam and Bob are rewarded for taking that little bit extra risk.

That said, even though the math keeps everything perfectly fair, as we grow and add hundreds of thousands more members, it's likely that Adam, Bob and Charlie will eventually be re-assigned to Tontine communities where every other member is born in the same year as them.

You can add as much as you want to your TontineIRA™.

Unlike with an annuity which is limited to to $200,000 of your IRA savings, there's no limit to the amount of savings that you can tontinize in your TontineIRA™.

The benefit of increasing your TontineIRA™ balance is that you will stand to inherit a greater share of the balances of other members that pass away before you.

It is important to note though that like pets, Tontines are for life not just for Christmas.

Therefore you should only subscribe those monies that are committed to supporting your lifetime spending needs.

For this reason, where they can afford to do so, many Tontiners may find it sensible to also set aside some cash that can be accessed in the event of an emergency. If in doubt, speak to a financial advisor.

With existing retirement accounts, your children could have to wait 30+ years until you pass away to see if they stand to inherit any leftover savings.

A TontineIRA™ makes it easier for you take care of your children financially now without them having to wait.

In a TontineIRA™, you tontinize enough of your savings to secure your ideal level of lifetime income and then use the leftover balance to help your children now when they need it most to pay university fees, buy a house or start a business.

At the same time, your TontineIRA™ also reduces the risk that you will become a financial burden to your children in later years.

As Nobel Laureate Richard Thaler put it: "the best bequest you can give your kids is a guarantee that you will never need to move in with them".

We typically form communities of members by selecting individuals of the same sex that were born within a few years of each other.

As new members get onboarded to our platform, we will continously add new members to the already established communities until they reach a maximum of 10,000 members at which point we start a new community for that demographic.

Your "job" in retirement is then to take the best care of yourself with the goal of outliving as many of those other 10,000 members as possible.

Once you are fully onboarded together with our partner banks and your account is funded, as soon as possible thereafter you will be assigned to a community of members that are the same sex as you.

Typically these community of members will all have been born within a couple of years of each other.

For example, Alice was born in 1958 and so could be assigned to a Tontine solely for females born between 1955 and 1960.

In future years, as our membership numbers grow Alice may be re-assigned to a new community that more precisely matches her profile, for example, a Tontine solely for females born in 1958.

Federally insured bank deposits are currently paying up to ~5.32% which represents what financial experts refer to as the "risk-free return".

Nobody can predict with certainty how long these rates will last however history tells us that they are unlikely to remain static for the next few decades.

This is why we are working with the trustees and custodians to support additional asset allocation strategies that can help offset any future declines in interest rates.

Such future asset allocation strategies which the trustees may enable for members' TontineIRAs could include:

• Balanced portfolios comprised of passive equity & fixed income ETFs.
• All weather endowment style funds investing in bonds, equities, private equity and commodities.
• Advisor driven portfolios where you bring your RIA whom is allowed to manage the assets within your TontineIRA subject to appropriately prudent guidelines.

A tontine is defined as an arrangement where multiple participants subscribe money in return for a pro-rata share of a regular dividend.

The share of the dividend however can only be collected by the original subscriber meaning that if the original subscriber passes away, they won't receive any further share of the dividend.

Over time, as subscribers die and the number of survivors keeps falling, each remaining subscribers receives a higher and higher share of the remaining dividends.

This typically continues until the second last subscriber dies at which point all of the remaining monies go to the remaining subscriber.

This is why tontines are also referred as a death pool or dead pool although such phrases are a bit harsh for a product that is loved by retirees because it protects & improves their quality of their retirement lifestyle.

In the app you can see your expected lifetime income until age 100+ based upon:

• Your current age,
• Your planned retirement date, and
• Your current expected contribution level (e.g. $500 per month).

Additionally, the app also shows your expected lifetime income until age 100+ even if you never add another cent.

If you are contributing by ACH Debit and you would like to pause or cancel your contributions, simply cancel your ACH Debit instruction in the app to avoid your bank charging penalty fees for returned transactions.

The TontineIRA™ offers additional protection from creditors compared to a regular IRA.

A regular 'custodial' IRA has a degree of creditor protection under federal and state laws however if the custodial IRA loses its tax status (which creditors seek to attach for just this reason), it loses those protections.

The TontineIRA™ however is a trust so even if its tax status as an IRA is successfully attached, it's continuing status as a trust will typically afford an additional layer of protection against creditors.

If in doubt, we would recommend seeking legal advice.

You can increase the balance in your Tontine Trust at any time subject to any contribution limits imposed by tax authorities such as the IRS.

In the case of the TontineIRA™, you can roll over unlimited amounts from a 401(k), 403(b) or an existing IRA and you can also contribute an addition $7,000 per year if you are under the age of 50 or $8,000 if you are over 50.

If you have non-qualified (already taxed) monies, you will be able to contribute these to other types of tontine product such as our upcoming Tontine ROTH IRA.

Currently we can only offer a TontineIRA™ to US taxpayers whether resident in the US or not.

These accounts are not suitable for non-US taxpayers because we are required to withhold tax from the income to be paid to the IRS.

In the very near future, international Tontines will be made available for non-US taxpayers.

Make sure to subscribe for updates so that we can keep you informed.

Absolutely not. Neither Tontine Trust nor our banking partners are ever allowed to touch capital that should be supporting the retirement lifestyles of our members.

Together with our banking partners we make sure that all of the monies are distributed to the members before they pass away.

We achieve this by allowing the monthly incomes to rise over time in response to the reality that year by year there are fewer surviving members with less remaining years of receiving income as they get older.

Tontine Trust partners with reputable firms of US regulated chartered trustees to safeguard the assets of our tontine members.

As of April 2024, it has been agreed with the chartered trustees that the assets of each TontineIRA™ will only be invested in deposits at Federal Deposit Insurance Company ("FDIC") insured banks.

The FDIC only insures the first $250,000 per person per bank which is why the chartered trustees will spread your deposits across multiple FDIC insured banks to enable up to $10m of FDIC coverage per TontineIRA™ account.

This stands in contrast to state Insurance Guaranty Associations which are not federally guaranteed and which limit annuity claims to a maximum of $250,000 with an overall cap of $300,000 in total benefits for any individual with one or multiple policies with an insolvent insurer.

After many years of research, we decided to base our anti-fraud system on Liveness Detecting facial recognition which protects against deep fakes and other fraud methods.

The partner that provides us with the underlying technology is so confident in their security that they have $600,000 in rewards on offer to anyone that can beat their system.