Goals Based Investing | Retirement Income | Annuities
G R E E N P A S T U R E S W E A L T H M A N A G E M E N T
Solve For Principal Protection
Example: Fixed Index Annuity with a 1-Year Term and 10.00% Upside Performance Trigger
FIAs can be purchased for their principal protection, fixed income and/or tax-deferred growth … or for their guaranteed future lifetime income.
Most FIAs offer optional Income Rider guarantees for you to create your own efficient "pension-like" guaranteed income stream for life. FIAs with Income Riders compete with Deferred Income Annuities (DIAs) to deliver you guaranteed future lifetime income.
Sometimes FIAs with Income Riders will generate the highest guaranteed income stream for life, and sometimes DIAs will generate the highest number. If you’re looking for guaranteed future lifetime income, we will quote both strategies among the highest rated insurance companies to find the best contractual guarantee unique to your financial situation and retirement income planning goals.
Solve For Principal Protection
MYGA Summary
FIXED INDEX ANNUITIES ("FIA") - For Accumulation
Solve For Flexibility
Delivering You Principal Protection, Fixed Income And Tax-Deferred Growth
Solve For Annuity Rescue
Solve For Tax-Deferred Growth
MYGAs are used for clients nearing or in retirement and are designed to fully protect your principal from any stock or bond market downturns. MYGAs are non-correlated to the stock market and can help mitigate Sequence Of Returns Risk by lowering the risk of your overall long term investment and retirement income portfolio, helping you stay the course on your long term plan.
Most (not all) MYGA contracts allow you to withdraw up to a specified percentage of interest and/or principal each year during the life of the contract without being subject to an early surrender charge. This penalty-free feature can be used in conjunction with Social Security, pensions, etc. as part of your retirement income plan.
* Surrender charges, market value adjustments and other contract charges may apply that can reduce the principal if liquidated before maturity.
** Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.
*** The insurance company charges no liquidation penalty if held until maturity; however, similar to assets held in an IRA, FIAs are typically designed for long-term tax-deferred investing. If you take withdrawals before you reach age 59 1/2, then you may have to pay a 10% early withdrawal federal tax penalty in addition to ordinary income taxes. You should request and review a Product Fact Sheet, for complete information and restrictions that may apply, prior to making any decision to purchase a FIA product.
**** The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan. In addition to surrender charges, withdrawals are subject to income tax.
***** Please consult with and rely on your own legal or tax advisor and refer to your contract.
****** Please consult with and rely on your own legal or tax advisor and refer to your contract for situations of joint owners and annuitants.
How FIAs Work
FIAs are used for clients nearing or in retirement and guarantee your principal from any loss. FIAs can help mitigate Sequence Of Returns Risk by lowering the risk of your overall long term investment and retirement income portfolio, helping you stay the course on your long term plan.
Fixed Index Annuity Sample Rates
Additional Considerations
Solve For Annuity Rescue
Solve For Fixed Income (as part of your fixed income asset allocation)
Interest Rate Crediting Strategies
FIA Summary
Most (not all) FIA contracts allow you to withdraw up to a specified percentage of interest and/or principal each year during the life of the contract without being subject to an early surrender charge. This penalty-free feature can be used in conjunction with Social Security, pensions, etc. as part of your retirement income plan.
Investors cannot count on traditional bond portfolios for safety or yield, so they are turning to the simplest annuity of all – the Multi-Year Guarantee Annuity (“MYGA”).
MYGAs, also known as Fixed Rate Annuities or CD Type Annuities, are essentially the insurance industry’s version of a tax-deferred Certificate Of Deposit (“CD”). MYGAs provide a predetermined and contractually guaranteed interest rate for a specified number of years.
Many people turn to MYGAs – not bonds or cash – for their fixed income allocations, to complement equities and help improve portfolio performance, especially during rising interest rate environments, when bonds may lose value and inflation may erode the value of cash.
The primary functional difference between a MYGA and a CD is that with a MYGA held in a non-qualified account (for example, assets held in an individual or joint account that you already paid taxes on) - you do not pay taxes on the interest until interest is withdrawn - so your interest can compound and grow tax-deferred. With CDs held in non-qualified accounts, you have to pay taxes on the interest annually.
"Steadily Growing... Safe And Secure!"
Contrary to the oftentimes misleading sales pitches that you may hear about Fixed Index Annuities, they are NOT investments with market-like returns. The reality is that Fixed Index Annuities ("FIAs") were designed to compete with CDs, bonds, MYGAs and other fixed-income products - not the stock market. A FIA is not an investment in the stock market - and contrary to what many investors believe - FIAs are not variable annuities.
Many people turn to FIAs – not bonds or cash – for their fixed income allocations, to complement equities and help improve portfolio performance, especially during rising interest rate environments, when bonds may lose value and inflation may erode the value of cash.
When FIAs mature, you may choose to:
(1) Cash in and surrender your contract without penalty,
(2) Renew your contract at the renewal cap and performance trigger rates without tax consequences so your gains can continue to grow and compound tax-deferred until later in retirement when you may be in a lower tax bracket and distributions may be taxed at lower rates. *
(3) Exchange your contract to another annuity without tax consequences so your gains can continue to grow and compound tax-deferred until later in retirement when you may be in a lower tax bracket and distributions may be taxed at lower rates. *
If you should die before liquidating a FIA, your beneficiaries will get the remaining value of your FIA as a death benefit – not the insurance company!
MULTI-YEAR GUARANTEE ANNUITIES ("MYGA")
Below is a sample of Multi-Year Guarantee Annuity Rates as of the date shown. Prices, ratings, yields, rates and availability shown are subject to change at any time.
Solve For Flexibility
How MYGAs Work
Example: Fixed Index Annuity with a 1-Year Term and 11.25% Upside Cap
When MYGAs mature, you may choose to:
> Cash in and surrender your contract without penalty,
> Renew your contract at the renewal rate, or
> Exchange your contract to another annuity without tax consequences to continue deferring taxes until later in retirement when you may be in a lower tax bracket and taxed at a lower rate. *
If you should die before liquidating a MYGA, your beneficiaries will get the remaining value of your MYGA as a death benefit – not the insurance company!
FIAs offer you a unique "floor-with-upside" method of crediting interest. FIAs will pay you a minimum guaranteed rate of return for the life of the contract (the "floor") - but also provide you with the potential to earn higher interest rates via other interest rate crediting strategies (the "upside") - and you earn the higher of the "floor" or "upside", for the life of the contract.
FIAs may make sense if you are looking to de-risk some of your bond portfolio as part of your fixed income asset allocation.
FIAs are insurance products that protect your principal from market losses, provide some market upside, and allow your interest to grow and compound tax-deferred.
Everyone is searching for yield but, most importantly, individuals want to make sure their principal is safe and fully protected - and that's a difficult combination. With FIAs, your principal is protected - and there is a possibility for gains a little higher than MYGAs (Multi Year Guarantee Annuities).
Below is a sample of Fixed Index Annuity Rates as of the date shown. Prices, ratings, yields, rates and availability shown are subject to change at any time.
Principal Protected Income Solutions
Green Pastures is a big proponent of keeping things simple. When you get to a certain point in life, there's a tendency to want to simplify your life - including your investment and retirement income portfolio - and Multi-Year Guarantee Annuities can help you accomplish this goal.
We believe the best way to put MYGAs to use is in conjunction with your investment portfolio. If you are nearing or in retirement, you may want to consider diversifying a portion of your investment portfolio into MYGAs, to de-risk some of your bond portfolio, as part of your fixed income allocation within your overall retirement income plan.
While MYGAs aren't for everyone, they are a great transfer of risk solution that specifically solve for principal protection and guaranteed income that can compound and grow tax-deferred. If you need to solve for one of these items, then you may want to consider adding a MYGA to your long term investment and retirement income portfolio.
The best way to gain an understanding of how MYGAs work is to request a Personalized Annuity Illustration unique to your situation. We will help you make an informed decision and select among the best rates available among the highest rated insurance companies that fit your unique financial situation and retirement income goals.
To learn more, email lee@greenpastureswm.com.
Key Features And Benefits
- Create A Legacy That Lasts
Spousal Beneficiaries And Inherited FIAs
The taxes your spouse may owe will be dependent upon the distribution option he or she chooses when he or she inherits your annuity. Any taxes owed on
distributions are deferred until he or she receives them. Qualified (IRA) Annuities: A Spousal Beneficiary may elect to: (a) receive a one-time lump sum payment, (b) keep the FIA in your name, continue to enjoy the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time, (c) switch the FIA into his or her name, continue to enjoy the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time, or (d) exchange the inherited annuity to another annuity if it is more beneficial to his or her specific situation, continue enjoying the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time Options (b), (c) and (d) potentially may help your spouse significantly reduce taxes on inherited qualified FIAs by deferring taxes until later years when he or she may be in a lower tax bracket. ******
Non-Qualified (non-IRA) Annuities:
A Spousal Beneficiary may elect to: (1) receive a one-time lump sum payment, or (2) select from options (b), (c) or (d) above. Options (b), (c) and (d) are referred to as a "Non-Qualified Stretch" and potentially may help your spouse significantly reduce taxes on inherited non-qualified FIAs by deferring taxes until later years when he or she may be in a lower tax bracket. ******
Non-Spousal Beneficiaries And Inherited FIAs
The taxes a non-spousal beneficiary may owe will be dependent upon the distribution option he or she chooses when her or she inherits your annuity. Any taxes owed on distributions are deferred until he or she receives them.
Qualified (IRA Annuities):
A non-spousal beneficiary may elect to: (a) receive a one-time lump sum payment; or (b) distribute 100% of inherited qualified FIAs within 10 years which may help significantly reduce taxes by deferring taxed until later years when he or she may be in a lower tax bracket . ******
Non-Qualified (non-IRA) Annuities:
A non-spousal beneficiary may elect to: (a) receive a one-time lump sum payment, (b) switch the FIA into his or her name, continue to enjoy the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time, or (c) exchange the inherited annuity to another annuity if it is more beneficial to his or her specific situation, continue enjoying the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time. Options (b) and (c) are referred to as a "Non-Qualified Stretch" and potentially may help your non-spousal beneficiary significantly reduce taxes on inherited non-qualified FIAs by deferring taxes until later years when he or she may be in a lower tax bracket. ******
We Are Here To Help You Make An Informed Decision
Additional Considerations
Green Pastures is a big proponent of keeping things simple. When you get to a certain point in life, there's a tendency to want to simplify your life - including your investment and retirement income portfolio - and Fixed Index Annuities can help you accomplish this goal.
We believe the best way to put FIAs to use is in conjunction with your investment portfolio. If you are nearing or in retirement, you may want to consider diversifying a portion of your investment portfolio into FIAs, to de-risk some of your investment portfolio from your bond portfolio, as part of your fixed income allocation within your overall retirement income plan.
While FIAs aren't for everyone, they are a great transfer of risk solution that specifically solve for principal protection and fixed income that can grow and compound tax-deferred. If you need to solve for one of these items, then you may want to consider adding a FIA to your long term investment and retirement income portfolio.
"Enjoy The Upside Of Limiting The Downside!"
Delivering You Principal Protection, Fixed Income And Tax-Deferred Growth
Following is a summary of key features and benefits that FIAs offer:
- Most FIAs Have No Annual Fees (if no Income Rider is attached).
- Principal Protection: Unlike variable annuities that can lose value, FIAs are not subject to penalties or market losses if held to maturity. Your principal is fully protected against stock or bond market downturns. FIAs are issued by life insurance companies and guarantees are backed by the financial strength and claims paying ability of the issuing insurance company. We work with only the highest rated insurance companies in the industry. FIAs are regulated at the state level. *,**,***
- Sequence Of Returns Risk Mitigation: FIAs help protect your income from stock or bond market down turns which, as you near or are in retirement, helps lower your stress level, and gives you Peace Of Mind.
- FIAs Can Become A Part of Your Fixed Income Allocation Within Your Overall Investment And Retirement Income Portfolio.
- Potential To Outperform CDs and MYGAs
- Guaranteed Minimum Return
- Interest Rate Crediting Strategies: Strategy choices can be changed annually.
- Gains Permanently Locked In On Contract Anniversary Dates: Gains can be sent directly to your bank account… or automatically added to your annuity contract to compound and grow tax-deferred.
- Can Be Used To Create Income Ladders That Mature At Different Ages In The Future: Similar to laddering CDs or bonds, FIAs work well in conjunction with MYGAs, SPIAs, DIAs and QLACs to create annuity income ladders.
- Penalty-Free And Systematic Withdrawal Options: Most (not all) FIA contracts allow you to withdraw up to a specified percentage of interest and/or principal each year during the life of the contract without being subject to an early surrender charge.
- Flexible Funding: All FIA policies can be funded with a lump sum and some FIAs allow you to add money over time.
- Can Be Purchased In IRA, Roth IRA And Non-IRA Accounts ****
- Your Interest Can Compound And Grow Tax Deferred In Non-IRA Accounts: Unlike CDs, the interest on FIAs compounds and grows tax deferred in non-qualified accounts (for example, assets held in individual or joint accounts) until interest is withdrawn. When FIAs mature, they can be renewed or exchanged to another FIA or other type of annuity without tax consequences to defer taxes until later in retirement when you may be in a lower tax bracket and taxed at a lower rate. ****
- May Reduce Or Eliminate Taxes On Social Security Income: Potentially up to 85% of your Social Security benefits may be subject to income tax depending upon: (a) your Social Security benefits, (b) the amount of income you are earning, and (c) the sources of your income during retirement. Unlike interest on taxable bonds, municipal bonds, CDs, savings accounts, and money market accounts that is used to help calculate what percentage of your Social Security benefits will be taxed each year, interest on FIAs can compound and grow tax-deferred and be excluded from that calculation until the interest is withdrawn. By moving some of your funds into a FIA, you may be able to help reduce taxes on your Social Security income, by controlling the timing and amount of distributions from your FIA. *****
- Income Riders Can Be Attached For Future Guaranteed Lifetime Income
- Some Income Rider Benefits Provide Confinement Care
- Can Be Converted To A SPIA For Lifetime Income Guarantees
- May Avoid Probate: Any remainder in your FIA may potentially pass efficiently outside of probate and be paid discreetly and directly to your heirs (not the insurance company) within weeks after all required paperwork is received in good order. That allows your loved ones to bypass the long, painful and costly probate process - saving them time, court costs, administrative costs and legal fees - and leaves your heirs money instead of family court battles and legal fees.*****
- If you die before liquidating a FIA, your beneficiaries will receive the remaining value of your annuity as a death benefit - not the insurance company!
* Surrender charges, market value adjustments and other contract charges may apply that can reduce the principal if liquidated before maturity.
** Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.
*** The insurance company charges no liquidation penalty if held until maturity; however, similar to assets held in an IRA, MYGAs are typically designed for long-term tax-deferred investing. If you take withdrawals before you reach age 59 1/2, then you may have to pay a 10% early withdrawal federal tax penalty in addition to ordinary income taxes. You should request and review a Product Fact Sheet, for complete information and restrictions that may apply, prior to making any decision to purchase a MYGA product.
**** The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan. In addition to surrender charges, withdrawals are subject to income tax.
***** Please consult with and rely on your own legal or tax advisor and refer to your contract.
****** Please consult with and rely on your own legal or tax advisor and refer to your contract for situations of joint owners and annuitants.
If you own an existing fixed or variable annuity, you may want to explore the potential opportunity of exchanging your current annuity into a MYGA.
Our freeANNUITY RESCUE SERVICE can provide you with an evaluation of your existing annuity contracts to determine if it is possible to achieve your goals more efficiently. *
FIAs are more complex than MYGAs and understanding the ins and outs of FIAs, along with product variations and the different interest rate crediting strategies available, may require additional expertise. Before you decide to buy a FIA, you need to fully understand the benefits and limitations.
We will help you make an informed decision and select the best FIA interest rate crediting strategies available among the highest rated insurance companies that fit your unique financial situation and retirement income goals.
We will provide you with a FIA Client-Approved Brochure and Personalized Annuity Illustration unique to your situation, with complete information and restrictions that may apply, prior to you making any decision to purchase a FIA.
To learn more, email lee@greenpastureswm.com.
Similar to CDs, MYGAs contractually guarantee a specific annual interest rate for a specified number of years (or an effective yield for the life of the annuity contract) that you choose at the time of application. MYGAs have no annual fees and no moving parts.
Unlike CDs, MYGA interest rates are often higher, allowing the possibility for greater accumulation over the life of the annuity. Generally, we have found that MYGAs provide higher rates than CDs when the contractual period is 3 years or more. Conversely, we have found that CDs generally provide higher rates than MYGAs when the contractual period is less than 3 years.
The majority of MYGAs range from as short as 2 years to as long as 10 years.
Depending upon the interest rate crediting strategy you choose, FIAs offer a "cap" option, a "performance trigger" option or a "participation rate" option that provide you with a level of performance when the market goes up. The cap option and the performance trigger option are the most popular interest rate crediting strategies.
Each interest rate crediting strategy is the combination of the index you select (for example, the S&P 500 Index, Nasdaq-100 Index, Russell 2000 Index, etc.), the crediting method you select (also called an index strategy), and the time period for measuring the index performance that you select (term).
Cap
Caps provide you with the potential to earn a portion of the increase in an index over a contract term.
For example, if you select a 1-year term with a 9.00% Cap based upon the performance of the S&P 500 Index:
(1) If the S&P 500 Index gains any amount equal to a greater than 9.00% for the contract term, then you will earn 9.00%.
(2) If the S&P 500 Index gains any amount from 0% to 9.00% for the contract term, then you will earn the same percentage of interest that the index gains. For example, if the index gains 2.13% for the contract term, then you will earn 2.13%.
(3) If the S&P 500 Index declines in value for the contract term, then you will earn 0.00%. Your principal is guaranteed even if the S&P 500 Index crashes like in 2007-2009.
Performance Trigger
Performance triggers provide you with the potential to earn a specified percentage if the index gains any amount equal to or greater than 0% for the contract term.
For example, if you select a 1-year term with an 8.50% Performance Trigger based upon the performance of the S&P 500 Index:
(1) If the S&P 500 Index gains any amount equal to or greater than 8.50% for the contract term, then you will earn 8.50%.
(2) If the S&P 500 Index gains any amount from 0% to 8.50% for the contract term, then you will earn 8.50%. For example, if the index only gains 2.13%, than you will earn 8.50%.
(3) If the S&P 500 Index declines in value for the contract term, then you will earn 0.00%. Your principal is guaranteed even if the S&P 500 Index crashes like in 2007-2009.
No single interest rate crediting strategy consistently delivers the best return under all market scenarios. Performance will vary depending upon market conditions.
Notes:
(a) The interest rate crediting strategies typically can be changed annually throughout the contract period.
(b) You can combine different interest rate crediting strategies.
(c) The interest rate crediting strategy gains are locked in annually on each contract anniversary date.
(d) The interest rate crediting strategy cap rates, performance trigger rates and participation rates typically change each year, and
(e) The ratings, fixed rates and availability are subject to change at any time.
Most FIAs have no annual fees (if no Income Rider is attached).
The majority of FIAs range from as short as 3 years to as long as 10 years.
Examples
Following are two detailed charts that illustrate how FIAs with caps and performance triggers work:
(1) The first chart illustrates a FIA With A 1-Year Cap, and
(2) The second chart illustrates a FIA With a 1-Year Performance Trigger.
"A Floor-With-Upside Approach To Income"
Solve For Tax-Deferred Growth
If you purchase a FIA in a non-qualified account (for example, assets held in individual or joint accounts that you already paid taxes on) - you don't pay taxes on the interest until the money is withdrawn - so your interest can grow and compound tax-deferred.
FIAs With Income Riders Solve For Guaranteed Future Lifetime Income
Multi-Year Guarantee Annuity Sample Rates
Solve For Fixed Income (as part of your fixed income asset allocation)
If you own an existing fixed or variable annuity, you may want to explore the potential opportunity of exchanging your current annuity into a FIA.
Our free ANNUITY RESCUE SERVICE can provide you with an evaluation of your existing annuity contract(s) to determine if it is possible to achieve your goals more efficiently. *
Key Features And Benefits
MYGAs provide a guaranteed rate of return if you are looking to de-risk some of your bond portfolio as part of your fixed income allocation within your overall retirement plan.
Following is a summary of key features and benefits that MYGAs offer:
- MYGAs Have No Annual Fees
- Simple: Once a MYGA is funded, the only work on your part is to collect your regular payments... which can be sent directly to your bank account... or automatically added to your annuity contract to compound and grow tax-deferred.
- Principal Protection: MYGAs are not subject to penalties or market losses if held to maturity. Your principal is fully protected against stock or bond market downturns. MYGAs are issued by life insurance companies and guarantees are backed by the financial strength and claims paying ability of the issuing insurance company. We work with only the highest rated insurance companies in the industry. MYGAs are regulated at the state level. *, **, ***
- Non-Correlated To The Stock Market
- Sequence Of Returns Risk Mitigation: MYGAs help protect your income from stock or bond market down turns which, as you near or are in retirement, helps lower your stress level, and gives you Peace Of Mind.
- MYGAs Can Become A Part of Your Fixed Income Allocation Within Your Overall Investment And Retirement Income Portfolio.
- Typically Higher Interest Rates Than U.S. Treasury Securities And CDs: Similar to CDs, MYGAs provide a fixed rate of interest for a guaranteed term, typically as short as 2 years and up to 10 years. MYGA interest rates are generally higher than U.S. Treasury Securities and CD rates when the contractual period is 3 years or more.
- Can Be Used To Create MYGA Income Ladders That Mature At Different Ages In The Future: Similar to laddering CDs or bonds, MYGAs work well in conjunction with other MYGAs, FIAs, SPIAs, DIAs and QLACs to create annuity income ladders.
- Penalty-Free And Systematic Withdrawal Options: Most (not all) MYGA contracts allow you to withdraw up to a specified percentage of interest and/or principal each year during the life of the contract without being subject to an early surrender charge.
- Can Be Purchased In IRA, Roth IRA And Non-IRA Accounts ****
- Your Interest Can Compound And Grow Tax Deferred In Non-IRA Accounts: Unlike CDs, the interest on MYGAs compounds and grows tax deferred in non-qualified accounts (for example, assets held in individual or joint accounts) until interest is withdrawn. When MYGAs mature, they can be renewed or exchanged to another MYGA or other type of annuity without tax consequences to defer taxes until later in retirement when you may be in a lower tax bracket and taxed at a lower rate. ****
- May Help Reduce Or Eliminate Taxes On Social Security Income: Potentially up to 85% of your Social Security benefits may be subject to income tax depending upon: (a) your Social Security benefits, (b) the amount of income you are earning, and (c) the sources of your income during retirement. Unlike interest on taxable bonds, municipal bonds, CDs, savings accounts, and money market accounts that is used to help calculate what percentage of your Social Security benefits will be taxed each year, interest on MYGAs can compound and grow tax-deferred and be excluded from that calculation until interest is withdrawn. By moving some of your funds into a MYGA, you may be able to help reduce taxes on your Social Security income, by controlling the timing and amount of distributions from your MYGA. *****
- Can Be Converted To A SPIA For Lifetime Income Guarantees
- May Avoid Probate: Any remainder in your MYGA may potentially pass efficiently outside of probate and be paid discreetly and directly to your heirs (not the insurance company) within weeks after all required paperwork is received in good order. That allows your loved ones to bypass the long, painful and costly probate process - saving them time, court costs, administrative costs and legal fees - and leaves your heirs money instead of family court battles and legal fees.*****
- If you die before liquidating a MYGA, your beneficiaries will receive the remaining value of your annuity as a death benefit - not the insurance company!
- Create A Legacy That Lasts Spousal Beneficiaries And Inherited MYGAs The taxes your spouse may owe will be dependent upon the distribution option he or she chooses when he or she inherits your annuity. Any taxes owed on distributions are deferred until he or she receives them. Qualified (IRA) Annuities: A Spousal Beneficiary may elect to: (a) receive a one-time lump sum payment, (b) keep the MYGA in your name, continue to enjoy the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time, (c) switch the MYGA into his or her name and continue enjoying the benefit of compound tax-deferred growth, and take RMDs using his or her life expectancy or a payout option that provides income for a specified period of time, or (d) exchange the inherited annuity to another annuity if it is more beneficial to his or her specific situation, continue enjoying the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time. Options (b), (c) and (d) potentially may help your spouse significantly reduce taxes on inherited qualified MYGAs by deferring taxes until later years when he or she may be in a lower tax bracket. ****** Non-Qualified (non-IRA) Annuities:
A Spousal Beneficiary may elect to: (1) receive a one-time lump sum payment, or (2) select from options (b), (c) or (d) above. Options (b), (c) and (d) are referred to as a "Non-Qualified Stretch" and potentially may help your spouse significantly reduce taxes on inherited non-qualified MYGAs by deferring taxes until later years when he or she may be in a lower tax bracket. ******
Non-Spousal Beneficiaries And Inherited MYGAs
The taxes a non-spousal beneficiary may owe will be dependent upon the distribution option he or she chooses when her or she inherits your annuity. Any taxes owed on distributions are deferred until he or she receives them.
Qualified (IRA Annuities):
A non-spousal beneficiary may elect to: (a) receive a one-time lump sum payment; or (b) distribute 100% of inherited qualified MYGAs within 10 years which may help significantly reduce taxes by deferring taxes until later years when he or she may be in a lower tax bracket. *****
Non-Qualified (non-IRA) Annuities:
A non-spousal beneficiary may elect to: (a) receive a one-time lump sum payment, (b) switch the MYGA into his or her name, continue to enjoy the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time, or (c) exchange the inherited annuity to another annuity if it is more beneficial to his or her specific situation, continue enjoying the benefit of compound tax-deferred growth, and take out RMDs using his or her life expectancy or a payout option that provides income for a specified period of time. Options (b) and (c) are referred to as a "Non-Qualified Stretch" and potentially may help your non-spousal beneficiary significantly reduce taxes on inherited non-qualified MYGAs by deferring taxes until later years when he or she may be in a lower tax bracket. ******
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