Annuities

When You Change Jobs…

Presented by Jim Guynan When you change jobs, you may have an important decision to make…what to do with your money in an employer-sponsored retirement plan, such as a 401(k) plan. Since these funds were originally intended to help provide financial security during retirement, you need to carefully evaluate which of the following options will best ensure that these assets remain available to contribute to a financially-secure retirement. You can withdraw the funds in a lump sum and do what you please with them. This is, however, rarely a good idea unless you need the funds for an emergency. Consider: * A mandatory 20% federal income tax withholding will be subtracted from the lump sum you receive. * You may have to pay additional federal (and possibly state) income tax on the lump sum distribution, depending on your tax bracket (and the distribution may put you in a higher bracket). * Unless one of the exceptions is met, you may also have to pay a 10% premature distribution tax in addition to regular income tax. * The funds will no longer benefit from the tax-deferred growth of a qualified retirement plan. You can leave the funds in your previous employer’s retirement plan, where they will continue to grow on a tax-deferred basis. If you’re satisfied with the investment performance/options available, this may be a good alternative. Leaving the funds temporarily while you explore the various options open to you may also be a good alternative. (Note: If your vested balance in the retirement plan is $5,000 or less, you may be required to take a lump-sum distribution.) You can take the funds from the plan and roll them over, either to your new employer’s retirement plan (assuming the plan accepts rollovers), to a traditional IRA or, possibly, a Roth IRA, where you have more control over investment decisions. This approach offers the advantages of preserving the funds for use in retirement, while enabling them to continue to grow on a tax-deferred basis.
Life Insurance

College Planning – Easy as 1,2,3,4,5

Presented by Brian Leising You may have heard about using life insurance as a component of college planning. You may even incorporate college planning with your client reviews. Do you explore all the options available with your clients? These five ideas can lead to writing not one, but several policies per household. All designed to maximize the use of life insurance in college planning. Step 1 – Register to use the Smart Track Tool Kit college planning system through our website. The Smart Track Toolkit can help your clients learn how to rearrange their assets to optimize money available for college. Combined with the Leads on Demand system, you can place yourself in front of prospects with a great sense of urgency. Step 2 – One or both parents should purchase a life insurance policy with Foresters. Children of Foresters members are eligible to apply for scholarships worth $2000 per year. Step 3 – Establish a cash value or return of premium (ROP) term life insurance policy on a parent. Both offer death benefit protection if the parent dies prior to the child starting college, or a lump sum available to pay tuition when due. Step 4 – Ask grandparents to rearrange their assets in a more tax-efficient manner. Many grandparents have IRA’s and qualified plans with benefits larger than they will need for retirement income. By taking this money and placing it into a life policy it will produce a larger legacy at death. Step 5 – Utilize a fact finder that takes college funding into account. Both ING and Mutual of Omaha have software tools to help you plan the future costs of a college education.
Annuities

Tax-deferred Investment vs. a Taxable Investment

Presented by Matt Nutzman How much would you have to earn each year from a taxable investment in order to equal earnings on a tax-deferred investment? Annual Tax-Deferred Yield Federal Income Tax Bracket: 10%          15%           25%          28%          33%          35% Annual Taxable Equivalent Yield 3%          3.33%       3.53%       4.00%       4.17%       4.48%       4.62% 3.5%       3.89%       4.12%       4.67%       4.86%       5.22%       5.38% 4%          44%          4.71%       5.33%       5.56%       5.97%       6.15% 4.5%       5.00%       5.29%       6.00%       6.25%       6.72%       6.92% 5%          5.56%       5.88%       6.67%       6.94%       7.46%       7.69% 5.5%       6.11%       6.47%       7.33%       7.64%       8.21%       8.46% 6%          6.67%       7.06%       8.00%       8.33%       8.96%       9.23% 6.5%       7.22%       7.65%       8.67%       9.03%       9.70%      10.00% 7%          7.78%       8.24%       9.33%       9.72%     10.45%      10.77% 7.5%       8.33%       8.82%     10.00%     10.42%     11.19%      11.54% 8%          8.89%       9.41%     10.67%     11.11%     11.94%      12.31% 8.5%       9.44%     10.00%     11.33%     11.81%      12.69%      13.08% 9% 10.00% 10.59% 12.00% 12.50% 13.43% 13.85% 9.5% 10.56% 11.18% 12.67% 13.19% 14.18% 14.62% 10% 11.11% 11.76% 13.33% 13.89% 14.93% 15.38% This chart illustrates the potential benefits of a tax-deferred investment vs. a taxable investment. For example, if an investor in the 25% federal income tax bracket purchases a tax-deferred investment with a 5% annual yield, that investor’s taxable equivalent yield is 6.67%. This means the investor would need to earn at least 6.67% on a taxable investment in order to match the 5% tax-deferred annual yield. This chart is for illustrative purposes only and is not indicative of any particular investment or performance. In addition, it does not reflect any federal income tax that may be due when an investor receives distributions from a tax-deferred investment. Please contact my office if you’d like more information on taxable vs. tax-deferred investments.
Life Insurance

Give me some “SIZZLE”

Presented by John Schraut In a recent conversation I was having with a life insurance agent, he asked me to give him some “Sizzle”.  He wanted to know some term product options that are value added or in his terms “Sizzle”.  A lot of times as agents we look for just the best price on term products, but maybe we need to talk more about the “Sizzle”.  A 20 year term is a 20 year term, but what if we add a rider that offers Critical illness or perhaps Disability Income.  How about some no-cost riders that offer Chronic illness (LTC benefits) or an Accelerated Death Benefit.  This is the “SIZZLE” he was looking for that helped him close the sale.  So next time you are presenting a life product, think about the “SIZZLE” you can add to the sale.