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Individual Retirement Accounts: September 2, 1974- the day when the Employee Retirement Income Act of 1974 was established; things have changed in the last 40 years. We are living longer and in need of securing as much safety and predictability as possible. Are you speaking with your clients about IRAs? We spend time discussing rolling over a 401k into an IRA when the client has left a job, but are we bringing the important topic of annual IRA contributions to the forefront, especially this time of year? How can we protect the spouse of the IRA holder should the unexpected occur? Consider:
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This could be a great way to work with Centers of Influence during tax season. Annuities are the only way to turn an IRA into a JRA (joint retirement account) for income purposes and this is relevant because IRAs are the one asset clients have to make a decision with at age 70 ½ as in how to approach RMDs.
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Joint Income Scenario Click Here (illustration attached see page 8)**
Male/Female both age 60
Deposit 1,000,000
5.25% joint withdrawal rate after 5 years deferral = $67,005
6.25% joint withdrawal rate after 10 years deferral = $ 101,806 joint income
Looking for the latest 2016 tax summary guide? Download here
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How will you guide your clients and prospects this year with new ideas? As we have known and anticipated for the last several years, interest rates are now on the way back up, and retirement income will be affected if bonds are the primary source. Have you considered the importance of showing a client what a guaranteed income would look like, one that has the opportunities to increase as the index performs?
Events For March
Ø Protective Life Insurance Company will join us in presenting a Life Insurance Workshop in our office locally on Tuesday, March 15, 2016 at 12 Noon to 1pm with Andy West, Regional Vice President. There are so many creative uses for Life Insurance from retirement supplement income, charitable giving, legacy planning, and more. Someone is asking your clients are their life insurance- why isn’t it you? A light lunch will be served at 11:30am. Please call our office to reserve your seat at 248-644-1144.
Eschels Financial Group
TAX DIVERSIFICATION AND THE ADVANTAGES OF LIFE INSURANCE AND ANNUITIES
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Your clients must pay taxes during at least one of three time periods: contribution, accumulation, or distribution. That’s the bad news. The good news is that the IRS effectively allows you to pick which phase their savings will be taxed during via the use of different financial products.
Furthermore, while it may not feel like it, current effective federal tax rates are near historic lows. And with the Congressional Budget Office projecting that the total Federal debt is set to explode over the next 10 years, it’s reasonable to wonder if your clients’ effective tax rates will be higher in the future. Which is when traditional retirement vehicles, such as 401(k)s and IRAs, would be at their highest values and expected to be called upon to begin providing distributions.
Thankfully, life insurance policies that accumulate value are one of the few options that are not taxed during accumulation and have tax-advantaged methods of distribution. So consider suggesting life insurance to your clients as a tax diversification strategy and help protect them against the risk of future tax increases.
Below you’ll find resources to help you describe the tax advantages of annuities and life insurance to your clients. Review and call me to discuss how we can help you implement these strategies into your practice!
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| Insights That Shape the Future Tax Rate Outlook: |
- At current tax rates and expenditure levels, tax revenues are projected to be fully consumed by 2030
- The federal government had $74.3 trillion in debts, liabilities, and unfunded obligations at the close of its 2014 fiscal year
- Budget deficits are projected to nearly double by 2024 as retiring baby boomers strain the health and retirement systems
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The stock market can be an uncomfortable place for some clients.
Consider these three recent bull markets*:
- 1997-2000: Up 100% before declining 86%
- 2003-2008: Up 90% before declining 53%
- 2009-2014: Up 142%… where do you think the market will go from here? Now could be a great time to exercise a “correction protection” strategy for your clients by investing in the Protective Indexed Annuity II.
If you have clients nearing retirement who are concerned about another decline, ,help them exercise “correction protection” by taking their gains out of the market and investing it in the Protective Indexed Annuity II. This solution provides protected growth, opportunities for higher returns, and even offers secure retirement income with SecurePay SE, an optional withdrawal benefit.
Contact me now for more information:
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