How to:
Tax Diversify Your Retirement Income
A stool requires 3 legs for stability. There are different types of company
So does your Retirement. pension plans such as a Traditional
Pension Plan, 401(k) or company Profit
Sharing Plan. But fewer people can
count on these for a significant part of
their retirement income.
Social Security was never intended to be
the only source for retirement and may
not be enough.
Assets
For the third leg most people have more
al
ny
n
questions than answers:
Plan
Person
Social
Security
Pensio
• How much will I NEED?
Compa
• How much will I HAVE?
• How much do I need TO SAVE to
make up the shortfall and WHERE
should I put it?
When saving for the third leg (Personal
Assets) – taxes often play a significant
role in decision-making.
In fact, if there was a tax-perfect plan:
1.CONTRIBUTIONS: Tax Deductible
Most people have two “legs” on their retirement stool — Pension and 2.ACCUMULATION: Tax Deferred
Social Security. If you’re not building significant personal assets, your 3.DISTRIBUTIONS: Tax-Free
stool may not be stable.
That Plan doesn’t exist, so you have
some decisions to make.

It’s all about Taxes… CONSIDER PERMANENT LIFE INSURANCE:
You can implement plans that combine Generally, an income tax free death benefit
1 & 2 (Qualified Plans) or 2 & 3 (Roth IRA) • Which can replace income lost in retirement when
one spouse dies (such as pension income or Social
Security).
• Which can complete your family’s retirement plan if
you’re not there to complete it for them.
BEFORE tax AFTER tax
contribution contribution Self-completing upon total disability through the purchase
of the optional waiver of premium rider.
Flexible enough to meet individual needs.
Life insurance can be pledged as collateral for a loan.
Protection from creditors (in some states)
ADDITIONAL BENEFITS:
Premiums are paid with AFTER tax dollars
Cash value accumulation is TAX DEFERRED
DISTRIBUTIONS can be structured to be tax-free
• First, policy values are withdrawn* up to the policy
owner's cost basis, which is not a taxable distribution.
Distributions Distributions (providing the policy is not a Modified Endowment
TAXABLE TAX FREE Contract (MEC))***.
• Then loans* can be made against the cash value of the
policy. Loan interest will be at current rates and can
Where do you think tax rates are going? simply be added to the outstanding loan. Neither the
Would it make sense to “tax diversify” your retirement savings? loan nor the loan interest needs to be repaid.**
AS A PART OF YOUR “PERSONAL ASSET LEG” ON YOUR RETIREMENT PLANNING “STOOL” Protect your family’s retirement income! Consider
adding permanent life insurance to help supplement your retirement income – potentially income-tax free
*Loans and withdrawals will reduce the policy’s cash value and death benefit. Policy loans accrue interest at the current rate.
** The Internal Revenue Code requires that taxes be paid on all gains when a policy is surrendered or lapsed for non-payment of premiums. Policy loans, which exceed cost basis, are treated as gains, if the policy goes out of
force prior to death. Therefore, policies should be kept in force until death.
***When too much money is put into a life insurance policy the IRS characterizes the policy as a Modified Endowment Contract (MEC) and withdrawals and loans from the policy are taxed less favorably. MEC policies are not
usually considered suitable for providing supplemental retirement income. 00334360CV