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.
