Help Frugal Clients Minimize RMDs - Turn Objections into Opportunities
We've all heard it... Do I have to take my RMDs? The perfect solution for clients happily living within their means is Integrity/Western and Southern's IncomeSource Select Qualified Longevity Annuity Contract (QLAC).
3 Key Facts
1. Defer IRA money beyond RMD age.
2. Potentially saves $40k in taxes by removing the contribution from the RMD calculation.
3. Excellent source of income if an LTC need arises.
QLAC SPECS
· $210,000 contribution limit regardless of IRA size.
· Exemption from RMD calculations on contributions.
· Payments can be delayed up to a client's 85th birthday.
· Payment start date can be changed while the contract is inforce.
· Additional premium allowed in the event future contribution limits increase.
Click this LINK for more info!
A QLAC can be a viable tool for frugal clients who are comfortable living on social security, investment income, etc. If you have a client that comes to mind, schedule a call to learn more!
Spotlight Client Solution*
Case Study: Income Now, Or Income Later?
If a 65 year old deposits $100k, they’ll get $7,600 of income right now and each year for as long as they live. That income payment jumps to $11,600 if they wait until age 70. That’s a 50% higher paycheck each year by delaying 5 years.
Is it worth the wait?
· Cash flow crossover at age 79 if they defer 5 years vs taking income immediately.
· Actuarial tables indicate 50% of 65 year olds will live to see their 90th birthday.
· The IRR is 5.88% if they take income immediately.
· 6.65% IRR if they delay income to age 70.
Our initial analysis says defer income until the client reaches age 70, but there are several other factors to consider. What other assets do they have to generate income? What’s the impact on the rest of their portfolio? What’s going to give them peace of mind in retirement?
There isn’t a right or wrong answer to income now or income later since each client’s situation is unique. However, if we isolate the lifetime income annuity there’s significant material benefit based on today’s pricing for a 65 year old to delay their annuity income 5 years.
Notable Client Solutions*
"Refinancing" Older Annuities
Ibexis's FIA Plus 5 is an excellent option for growth annuities still in surrender that were sold when interest rates were low.
· 8.00% cash bonus to offset the surrender charge
· 6.25% S&P annual cap
Note- The S&P 500 annual cap bailout is 3.50%. Often times the bailout cap is higher than the cap at the current company.
8.50% Guaranteed S&P Cap
MassMutual Ascend's Legend 7 is a go-to for cash growth FIAs.
· S&P annual cap guaranteed at 8.50% for all 7 years of the surrender schedule.
· 10% liquidity available each year.
A++ rated insurance company
*Rates may be subject to premium banding. Products may not be available in all states. Replacement must be suitable and meet all requirements.