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Securing Your Clients Financial Future
What Would Your Clients Like to Have? ,[object Object],[object Object],[object Object]
Security of Principle ,[object Object],[object Object],[object Object],*May be penalty for early withdrawal than in contract **Based on contract limits
Tax-Deferral ,[object Object],[object Object],[object Object],[object Object],[object Object]
Liquidity ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],*Based on withdrawal privileges of the contract, surrender charges may apply. If client is under 59 ½ , IRS penalty will apply
The Real Rate of Return ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],*CDs are FDIC insured
The Real Rate of Return * *This is a hypothetical example $590 Net Loss $99,410 Amount Left -3,605 3.50% Inflation $103,015 Amount after Tax -1,485 33% Taxes +4,500 (4.50% Interest Rate) $100,000 Premium Amount
Taxable Equivalent Yields ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Annuity earnings will be taxed in the “pay out” or distribution phase 12.31% 11.11% 9.76% 8% 11.54% 10.42% 9.15% 7.5% 10.77% 9.72% 8.54% 7% 10% 9.03% 7.93% 6.5% 9.23% 8.33% 7.32% 6% 8.46% 7.64% 6.71% 5.5% 7.69% 6.94% 6.10% 5.% 6.92% 6.25% 5.49% 4.5% 35% Taxable 28%  Taxable 18% Taxable Tax-Deferred Interest
What is their Risk Tolerance?
What is your Risk Tolerance? CD
What is your Risk Tolerance? CD Safety
What is your Risk Tolerance? CD Safety 2/3/4+ %?
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √ √
What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √ √ Annuity Deferred or Immediate
The Taxing of Social Security
Social Security History
Social Security Became Law ,[object Object]
Social Security Became law ,[object Object],[object Object],The first monthly payment was issued on  January  31,  1940  to  Ida May Fuller  of  Brattleboro ,  Vermont .
Tax Law Was Changed ,[object Object],[object Object]
What Causes Social Security  to be Taxed?
What Causes Social Security  to be Taxed? ,[object Object],[object Object]
Provisional Income – How it Works - Married ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
If you are married, Social Security is taxed when your threshold income exceeds $32,000 Income (Threshold) No Tax on Social Security $32,000  and  Under Up to 50% of Social Security is taxed $44,000 to  $32,000 Up to 85% of Social Security is taxed Over $44,000
Provisional Income – How it Works - Single ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
If you are single, Social Security is taxed when your threshold income exceeds $25,000 Income (Threshold) No tax on Social Security $25,000  and  Under Up to 50% of Social Security is taxed $34,000 to  $25,000 Up to 85% of Social Security is taxed Over $34,000
What is Provisional Income 1099 Income from Savings & Investments Provisional Income Contributes to Taxing Social Security
What is Provisional Income? Income from these accounts may be the reason you pay more taxes including the tax on your Social Security ½ Social  Security Corporate Bonds Tax Free Bonds Dividends Capital Gains Mortgage Certificates US Treasury Money Market Certificate Of Deposits IRA Distributions Threshold Income
There  May be a Better Way ,[object Object],[object Object]
There  May be a Better Way ,[object Object],[object Object]
Reduce Provisional Income ,[object Object]
Section 72 ,[object Object],[object Object],[object Object],[object Object],Based on Section 72, income credited inside an annuity will not create a tax on Social Security!
Sam Q. Prospect ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sam Q. Prospect * Estimated Income Tax *$6,828 Total Federal Income Taxes $47,400 Total Income Received $4,400 Money Market $12,400 CD’s, Mortgage Certificates $11,400 Social Security $19,200 Pension
Sam’s Social Security Threshold … Triggered a tax on Sam’s Social Security!! <$16,800> Over Threshold   $25,000 Threshold limit $41,700 Threshold Income $4,400 Money Market $12,400 CD’s, Mortgage Certificates $5,700 ½ Social Security $19,200 Pension
Sam’s Tax on Social Security *Estimated based on tax table $2,665* Tax on Social Security $9,690 Social Security  (subject to tax) $11,400 Social Security
An Annuity would have stopped the tax on Sam’s Social Security Income *Assumes the interest paid by the Annuity is the same as paid by the Certificates of Deposit and Money Market Accounts. *With Annuity *Without Annuity $6,828 $1,598 Federal tax due $2,665 $0 Tax on Social Security $9,690 $0 Social Security taxed Over Below Over or Below Threshold $25,000 $25,000 Threshold limit (single) $41,700 $24,900 Threshold income $0 <$16,800> *Annuity (Deferred interest) $41,700 $41,700 Total Threshold Income
An Annuity is the  only  interest producing asset that will not create a tax on Social Security Yes  No √ Gains-Mutual Fund √ Dividends – Mutual Fund √ Bonds including Tax Free √ Money Market Account √ Certificates of Deposits √ Annuity – Deferred
Net Retirement income would have increased! Why pay tax on interest you don’t use? ,[object Object],[object Object],[object Object],[object Object],[object Object],*Assumes the Annuity interest rate to be the same as the taxable interest accounts with no withdrawals taken from the annuity. Taxable interest assumed to be reinvested back into savings. 0% 18% $23,772 $29,002 6,828 1,598 $30,600 $30,600 *Without Annuity *With Annuity
Summary of Tax Savings $1,598 $3,480 $6,828 0% 50% 100% $2,665 $623 0 Reduced tax amounts based on a percentage of taxable income ($16,800) illustrated as deferred income $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Total Federal Tax Tax on Social Security
Gary and Lisa ,[object Object],[object Object],[object Object],[object Object]
Gary and Lisa $15,000 Social Security $20,000 1099 Income $24,450 Pension/ IRA Distribution $59,450 Total Income
Gary and Lisa  Tax on Social Security *Estimated based on tax table @ 15% $1,913* Tax on  Social Security $12,750 Social Security  (85% subject to tax) $15,000 Social Security
Gary and Lisa  Tax on Remaining Income *Estimated based on tax table @ 15% $3,073* Tax on Remaining Income $20,000 1099 Income $24,450 Pension/IRA Income
Gary and Lisa  Potential Tax Liability *Estimated based on tax table @ 15% $1,913* Tax on  Social Security $12,750 85% subject to tax $15,000 Social Security $3,073* Tax on  Remaining Income $20,000 1099 Income $24,450 Pension/IRA Income $4,986 Total Tax Potential
There  May be a Better Way *With Annuity *Without Annuity *Assumes earnings from an annuity are not withdrawn and left to accumulate. Assumes standard deductions $3,073* $555.00* Federal tax due $1,913* $0 Tax on  Social Security $12,750 $0 Social Security taxed (assuming qualified deductions) Over Below Over or Below Threshold $44,000 $44,000 Threshold limit  (married) $59,450 $39,450 Threshold income $0 <$20,000> *Annuity  (Deferred interest) $59,450 $59,450 Total Threshold Income $4,986 $555.00* Total Tax Potential
There  May be a Better Way By repositioning Gary and Lisa’s 1099 assets (that created taxable income) into a Deferred Annuity, the tax of $1,913 on their Social Security was  eliminated! Potential total tax savings …$4,431 *Without Annuity *With Annuity 1099 Asset Created Income $1,913 *Assumes earnings from an annuity are not withdrawn and left to accumulate. Assumes standard deductions $3,073* $555.00* Federal tax due $0 Tax on Social Security $12,750 $0 Social Security taxed Over Below Over or Below Threshold $44,000 $44,000 Threshold limit  (married) $59,450 $39,450 Threshold income $0 <$20,000> *Annuity  (Deferred interest) $59,450 $59,450 Total Threshold Income $4,986 $555.00 Total Tax Potential
There  May be a Better Way ,[object Object],[object Object],[object Object],[object Object],[object Object],NET RETIREMENT INCOME *Retirement income is Pension and Social Security combined *$39,450 *$39,450 $38,895 $34,464 With a Deferred Annuity Without a Deferred Annuity
There  May be a Better Way ,[object Object],[object Object],[object Object],NET RETIREMENT INCOME *Retirement income is Pension and Social Security combined With a Deferred Annuity *$39,450 $38,895 *$39,450 $34,464 Without a Deferred Annuity
Annuity Values Accumulate  Tax Deferred ,[object Object],[object Object],[object Object],[object Object],[object Object]
To reduce the income taxes you pay on your Social Security while increasing the return you get “on” your money let’s compare your current rate of return?

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Reduce Taxes and Secure Your Clients' Financial Future with Annuities

  • 1. Securing Your Clients Financial Future
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7. The Real Rate of Return * *This is a hypothetical example $590 Net Loss $99,410 Amount Left -3,605 3.50% Inflation $103,015 Amount after Tax -1,485 33% Taxes +4,500 (4.50% Interest Rate) $100,000 Premium Amount
  • 8.
  • 9. What is their Risk Tolerance?
  • 10. What is your Risk Tolerance? CD
  • 11. What is your Risk Tolerance? CD Safety
  • 12. What is your Risk Tolerance? CD Safety 2/3/4+ %?
  • 13. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK
  • 14. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential
  • 15. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss
  • 16. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √
  • 17. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √
  • 18. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √ √
  • 19. What is your Risk Tolerance? CD Safety 2/3/4+ %? STOCK Upside Market Potential 100% Loss √ √ Annuity Deferred or Immediate
  • 20. The Taxing of Social Security
  • 22.
  • 23.
  • 24.
  • 25. What Causes Social Security to be Taxed?
  • 26.
  • 27.
  • 28. If you are married, Social Security is taxed when your threshold income exceeds $32,000 Income (Threshold) No Tax on Social Security $32,000 and Under Up to 50% of Social Security is taxed $44,000 to $32,000 Up to 85% of Social Security is taxed Over $44,000
  • 29.
  • 30. If you are single, Social Security is taxed when your threshold income exceeds $25,000 Income (Threshold) No tax on Social Security $25,000 and Under Up to 50% of Social Security is taxed $34,000 to $25,000 Up to 85% of Social Security is taxed Over $34,000
  • 31. What is Provisional Income 1099 Income from Savings & Investments Provisional Income Contributes to Taxing Social Security
  • 32. What is Provisional Income? Income from these accounts may be the reason you pay more taxes including the tax on your Social Security ½ Social Security Corporate Bonds Tax Free Bonds Dividends Capital Gains Mortgage Certificates US Treasury Money Market Certificate Of Deposits IRA Distributions Threshold Income
  • 33.
  • 34.
  • 35.
  • 36.
  • 37.
  • 38. Sam Q. Prospect * Estimated Income Tax *$6,828 Total Federal Income Taxes $47,400 Total Income Received $4,400 Money Market $12,400 CD’s, Mortgage Certificates $11,400 Social Security $19,200 Pension
  • 39. Sam’s Social Security Threshold … Triggered a tax on Sam’s Social Security!! <$16,800> Over Threshold $25,000 Threshold limit $41,700 Threshold Income $4,400 Money Market $12,400 CD’s, Mortgage Certificates $5,700 ½ Social Security $19,200 Pension
  • 40. Sam’s Tax on Social Security *Estimated based on tax table $2,665* Tax on Social Security $9,690 Social Security (subject to tax) $11,400 Social Security
  • 41. An Annuity would have stopped the tax on Sam’s Social Security Income *Assumes the interest paid by the Annuity is the same as paid by the Certificates of Deposit and Money Market Accounts. *With Annuity *Without Annuity $6,828 $1,598 Federal tax due $2,665 $0 Tax on Social Security $9,690 $0 Social Security taxed Over Below Over or Below Threshold $25,000 $25,000 Threshold limit (single) $41,700 $24,900 Threshold income $0 <$16,800> *Annuity (Deferred interest) $41,700 $41,700 Total Threshold Income
  • 42. An Annuity is the only interest producing asset that will not create a tax on Social Security Yes No √ Gains-Mutual Fund √ Dividends – Mutual Fund √ Bonds including Tax Free √ Money Market Account √ Certificates of Deposits √ Annuity – Deferred
  • 43.
  • 44. Summary of Tax Savings $1,598 $3,480 $6,828 0% 50% 100% $2,665 $623 0 Reduced tax amounts based on a percentage of taxable income ($16,800) illustrated as deferred income $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Total Federal Tax Tax on Social Security
  • 45.
  • 46. Gary and Lisa $15,000 Social Security $20,000 1099 Income $24,450 Pension/ IRA Distribution $59,450 Total Income
  • 47. Gary and Lisa Tax on Social Security *Estimated based on tax table @ 15% $1,913* Tax on Social Security $12,750 Social Security (85% subject to tax) $15,000 Social Security
  • 48. Gary and Lisa Tax on Remaining Income *Estimated based on tax table @ 15% $3,073* Tax on Remaining Income $20,000 1099 Income $24,450 Pension/IRA Income
  • 49. Gary and Lisa Potential Tax Liability *Estimated based on tax table @ 15% $1,913* Tax on Social Security $12,750 85% subject to tax $15,000 Social Security $3,073* Tax on Remaining Income $20,000 1099 Income $24,450 Pension/IRA Income $4,986 Total Tax Potential
  • 50. There May be a Better Way *With Annuity *Without Annuity *Assumes earnings from an annuity are not withdrawn and left to accumulate. Assumes standard deductions $3,073* $555.00* Federal tax due $1,913* $0 Tax on Social Security $12,750 $0 Social Security taxed (assuming qualified deductions) Over Below Over or Below Threshold $44,000 $44,000 Threshold limit (married) $59,450 $39,450 Threshold income $0 <$20,000> *Annuity (Deferred interest) $59,450 $59,450 Total Threshold Income $4,986 $555.00* Total Tax Potential
  • 51. There May be a Better Way By repositioning Gary and Lisa’s 1099 assets (that created taxable income) into a Deferred Annuity, the tax of $1,913 on their Social Security was eliminated! Potential total tax savings …$4,431 *Without Annuity *With Annuity 1099 Asset Created Income $1,913 *Assumes earnings from an annuity are not withdrawn and left to accumulate. Assumes standard deductions $3,073* $555.00* Federal tax due $0 Tax on Social Security $12,750 $0 Social Security taxed Over Below Over or Below Threshold $44,000 $44,000 Threshold limit (married) $59,450 $39,450 Threshold income $0 <$20,000> *Annuity (Deferred interest) $59,450 $59,450 Total Threshold Income $4,986 $555.00 Total Tax Potential
  • 52.
  • 53.
  • 54.
  • 55. To reduce the income taxes you pay on your Social Security while increasing the return you get “on” your money let’s compare your current rate of return?