Calculating RMD’s
Brought to you by Matt Nutzman The objective of the required minimum distribution rule is to ensure that the entire value of a traditional IRA or employer-sponsored qualified retirement plan account will be distributed over the IRA owner’s/retired employee’s life expectancy. IRS regulations include a “Uniform Lifetime Table” that is generally used to calculate the required minimum distributions that must be made from qualified plans, including 401(k) plans, Section 403(b) annuities and regular IRAs. To calculate your annual required minimum distribution, follow these simple steps: Example:Step 1: | Account balance as of the previous December 31: |
$______ $200,000 |
Step 2: | Distribution period factor based on your age as of December 31 in the year for which the distribution is being calculated: |
25.6 |
Step 3: | Divide Step 1 by Step 2; the result is your annual required minimum distribution for the year: |
$______ $7,812.50 |
Age |
Distribution Period Factor |
Age |
Distribution Period Factor |
Age |
Distribution Period Factor |
70 |
27.4 |
86 |
14.1 |
102 |
5.5 |
71 |
26.5 |
87 |
13.4 |
103 |
5.2 |
72 |
25.6 |
88 |
12.7 |
104 |
4.9 |
73 |
24.7 |
89 |
12.0 |
105 |
4.5 |
74 |
23.8 |
90 |
11.4 |
106 |
4.2 |
75 |
22.9 |
91 |
10.8 |
107 |
3.9 |
76 |
22.0 |
92 |
10.2 |
108 |
3.7 |
77 |
21.2 |
93 |
9.6 |
109 |
3.4 |
78 |
20.3 |
94 |
9.1 |
110 |
3.1 |
79 |
19.5 |
95 |
8.6 |
111 |
2.9 |
80 |
18.7 |
96 |
8.1 |
112 |
2.6 |
81 |
17.9 |
97 |
7.6 |
113 |
2.4 |
82 |
17.1 |
98 |
71 |
114 |
2.1 |
83 |
16.3 |
99 |
6.7 |
115 |
1.9 |
84 |
15.5 |
100 |
6.3 |
and later | |
85 |
14.8 |
101 |
5.9 |
Please contact my office if you would like additional information on required minimum distributions.
An alternative to CD’s being used for wealth transfer
Presented by Gary Peterson An alternative to CD’s being used for wealth transfer: Would you like a simple way to transfer assets for your clients? If they die with unused funds, their heirs will be forced to pay ordinary income tax on the gains. You can easily help them avoid this unnecessary tax by repositioning their funds in a wealth transfer life insurance policy. National Western’s Lifetime Returns Select makes wealth transfer easy:No Medicals | |
12 minute interview | |
12 Knockout Questions | |
Accept/Decline at point of sale |
Components to an Indexed Annuity
Brought to you by David Corwin Indexed Annuity Contract Features will have an effect on Annuity Performance? Before purchasing an indexed annuity, it is important to understand various contract features and their potential impact on annuity performance. The Index Indexed annuities credit interest based on the movement of the stock market index to which the annuity is linked. A market index tracks the performance of a group of stocks representing a specific market segment or the entire stock market. The S&P 500 is the index most commonly used for this purpose. Another index, however, may be used, such as the Dow Jones Industrial Average, NASDAQ 100 or Russell 2000. It is important to understand that when you buy an indexed annuity, you are purchasing an insurance contract and not shares of any stock or index. Indexing Method An indexed annuity earns a minimum rate of interest and then offers the potential for excess interest earnings based on the performance of the index to which the annuity is linked. The indexing method is the approach used to measure the amount of change in the index and, as a result, has a direct impact on the potential growth of an indexed annuity. Participation Rate The participation rate determines how much of the increase in the index will be credited to the indexed annuity. The participation rate is usually less than 100%. For example, if the S&P 500 increases by 10% and the participation rate is 80%, the indexed annuity would be credited with 8%. The insurance company may have the right to change the participation rate from year to year or when the annuity is renewed for a new term. Margin/Spread/Administrative Fee Some indexed annuities subtract a specific percentage from the calculated change in the index before crediting interest to the contract. This “margin,” “spread” or “administrative fee” which may be charged instead of, or in addition to, a participation rate, is subtracted only if the change in the index produces a positive interest rate. Index Term This is the period over which index-linked interest is calculated and/or the length of time during which withdrawals or surrenders are subject to a charge. Cap Rate Some indexed annuities put a cap or maximum on the index-linked interest that will be credited to the annuity. For example, if the market index increases 20% and the annuity has a 15% cap rate, only 15% will be credited to the annuity. Not all annuities have a cap rate. Floor This is the minimum guaranteed interest that will be credited to the annuity. This guarantee is based on the claims-paying ability of the issuing insurance company. Averaging Some indexed annuities use an average of the changes in the index’s value rather than the actual value of the index on a specified date. Interest Compounding Some indexed annuities pay simple interest during the index term, while others pay compound interest, meaning that index-linked interest that has already been credited to the contract during the term also earns interest in the future. Exclusion of Dividends In measuring index gains, most indexed annuities count only equity index gains from market price changes and exclude any gains from dividends. Vesting In some indexed annuities, none or only part of the index-linked interest is credited to the contract if the annuity is surrendered before the end of the term. The combination of these policy features found in any particular indexed annuity will make a difference in the amount of money your annuity investment will earn and in the amount of money you will receive if you surrender the annuity early. As a result, before you purchase an indexed annuity, it is important that you fully understand the various features in the contract you are considering.Use Life Insurance to Maximize Your Client’s Retirement Income
Authored by Brian Leising With increasing life spans, reductions in 401(k) plans, and unplanned serious illnesses you can reduce seniors’ fears by offering these solutions:- Select the maximum life annuity pension option.
- Take a lump sum surrender payment from life insurance cash value.
- Elect periodic withdrawals from life insurance policy cash value.
- Exercise the accelerated death benefit option when terminal illness occurs.
- Combine the need for life and long term care with a linked benefit policy.
- Contribute additional funds to an indexed life policy for growth.