Month: February 2016

Stabilize Your Asset Allocation Model with Annuities

Annuities are the Financial Footings of Your Portfolio & Retirement Annuities can be the cornerstone your retirement income and the financial foundation of your portfolio. They can anchor your portfolio during economic uncertainty and market upheavals. Tax-advantaged annuities are the financial footings to a firm foundation in a comprehensive financial strategy. For many consumers looking for some financial stability, annuities may be the answer. Insurance companies offer guaranteed annuity fixed interest rates and guaranteed lifetime income. Presently, the insurance industry is the only industry offering such guarantees. But guaranteed interest rates and income payouts can be dramatically different from...

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Guaranteed Annuity Income in Retirement

The Income Strategies Can Really Make a Difference in Retirement Purchasing guaranteed lifetime income with a cost of living adjustment rider (COLA) is growing in popularity among financial advisors to help solve three retirement risks: longevity, inflation and market volatility. Some seniors have elected to purchase “blocks of income” that stagger distribution start dates at critical milestones in retirement. In fact, the government created a Qualified Longevity Annuity Contracts (QLAC) to defer portions of qualified plan required minimum distributions (RMDs) beyond age 70 without a penalty. Guaranteed income in retirement is now the name of the game. Guaranteed lifetime...

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Tax-Deferred Annuities and The Exclusion Ratio

The Tactical Use of Basis in Non-Qualified Annuities Qualified plan distributions are fully taxable as ordinary income at the effective tax bracket of the plan participant. Annuities held inside a qualified plan are subject to the same taxation. However, non-qualified annuities maintain their non-taxable basis, but are subject to the “last in, first out” rule under the 1982 TEFRA regulations, meaning taxable earnings are recognized first and then a tax-free basis. Over time, non-qualified tax deferred annuities can accumulate unencumbered by annual taxation of earnings. The longer the “holding period” the greater the economic leverage of tax deferral. But...

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Annuities Can Be Enhanced by a Potpourri of Riders

The Benefits of Annuity Riders Can Be Customized to Your Situation Interestingly enough, most advisors are familiar with popular annuity riders such as cost of living/inflation adjusted for annual payout increases, guaranteed lifetime income and long-term care (or nursing home) benefits. But there is quite a selection of rider benefits to consider beyond these more recognizable ones. When you’ve selected an annuity based on your financial needs and risk tolerance, you need to review the entire menu of rider provisions available. For most consumers, these riders provide benefits that annuity purchaser never knew existed. You just don’t know what...

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The Annuity Alternative

What’s the Word on Tax Deferred? Tax-deferred annuities could be an alternative for your portfolio holdings if you’re looking for a tax-advantaged product that delays the annual ordinary income taxation on policy earnings. It also offers multiple crediting methods using fixed interest rates, equity subaccounts and indices both domestic and foreign. Selecting a crediting method is based on your risk tolerance in your financial profile. If your ordinary income tax bracket is high, the odds are so is your capital gains tax bracket (20 percent). In fact, many affluent Americas may be paying as much as 23.8 percent in...

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