This only applies to non-qualified annuities
where the advisory fee is deducted from the annuity.
Planning Point:Joint ownership of non-qualified annuities
creates more problems than it solves, including forced distribution at either owner's death.
This includes all types of qualified retirement plans such as IRAs, all non-qualified assets such as mutual funds, all non-qualified annuities
, and all cash value of life insurance.
If you have clients with existing cash value life insurance and/or non-qualified annuities
, there may be attractive ways to provide LTC protection with tax advantages and an avoidance of out-of-pocket premiums.
Moreover, life insurance policies and non-qualified annuities
can be exchanged tax-free for traditional LTC insurance policies.
Both life insurance and non-qualified annuities
can be exchanged tax-free under Section 1035 for a QLTCI (see page 554).
These hybrid Annuity/LTC plans are only available on non-qualified annuities
(qualified plans can't have a rider).
Taxable capital, whose earnings are subject to income taxes each year as it accumulates, may be placed inside of non-qualified annuities
and enjoy the advantage of not having to pay taxes on the investment earnings until withdrawal.
RW/A also overlays a variety of annuity illustration options, so that you can do the "with" and "without" annuity comparison for qualified plan balances, lump sum distributions from defined benefit plans, or ordinary individual non-qualified annuities
, using SPIAs, deferred annuities, or delayed income annuities.
All examples in this series are for non-qualified annuities
This is because the 10-year period-certain SPIA is not payable over the lifetime or life expectancy of the SPIA owner according to one of the permitted SEPP life expectancy calculation methods of IRS Notice 2004-15 for non-qualified annuities
With some solutions, assets such as existing non-qualified annuities
, CDs and even qualified money can be used.