PR Newswire
March 15, 2018
INDIANAPOLIS, March 15, 2018 /PRNewswire/ -- About 18
percent of all U.S. households own a deferred annuity, estimates the LIMRA
Secure Retirement Institute, yet data suggest many annuities will never be
activated for monthly income, leaving potential tax consequences for
beneficiaries.
Many of these individuals can benefit by learning more
about exchanges under Internal Revenue Code section 1035 of the Federal Tax
Law, which can offer tax benefits for beneficiaries as well as provide tax-free
long-term care (LTC) benefits, should they be needed.
"Americans have nearly $3 trillion in assets in fixed
and variable annuities," said Chris Coudret, vice president and chief
distribution officer at OneAmerica®1. "Annuities can be a more
versatile way to provide income during retirement than many people – and
financial professionals – realize."
A new consumer resource, Guide to Long-Term Care Planning Using 1035 Exchanges,
explores the basics of how 1035 exchanges can benefit individuals and includes
several real-life scenarios.
"The Pension Protection Act (PPA) provides meaningful
tax- and long-term care planning advantages to consumers," said Jesse
Slome, director of the American Association for Long-Term Care Insurance
(AALTCI), publisher of the guide. "Few people are familiar with this
provision, which encourages individuals to plan for the possibility of needing
additional income to cover LTC needs."
Among other provisions, the PPA enables income tax-free
withdrawals from specific annuity contracts that pay for qualifying LTC
expenses or LTC insurance premiums. This includes fixed interest annuities with
LTC benefits, such as OneAmerica annuity-based hybrid LTC protection.
These annuities provide tax deferral and non-LTC
liquidity, while offering a guaranteed payout benefit and the option for
lifetime LTC benefits. If policyholders don't utilize their full LTC benefits,
a death benefit passes to the named beneficiary. They can be purchased for a
single person or shared between two people, and premiums won't increase.
For more information about OneAmerica LTC solutions, visit www.oneamerica.com.
Repositioning assets to take advantage of the PPA is relatively
simple, Coudret said. Under section 1035, an existing annuity can be exchanged
into a new annuity on a tax-free basis, so all one needs to do is transfer all
or a portion of the existing annuity into a hybrid annuity product featuring
LTC protection.
"This new guide can be a tremendous help to financial
professionals looking for information and resources for their client
conversations," said Coudret.
About OneAmerica®
A national leader in the insurance and financial services
marketplace for more than 140 years, the companies of OneAmerica have helped
customers build and protect their financial futures. OneAmerica offers a
variety of products and services to serve the financial needs of their
policyholders and customers. These products include retirement plan products
and recordkeeping services, individual life insurance, annuities, asset-based
long-term care solutions and employee benefit plan products. Products are
issued and underwritten by the companies of OneAmerica and distributed through
a nationwide network of employees, agents, brokers and other sources who are
committed to providing value to our customers. To learn more about our
products, services and the companies of OneAmerica, visit OneAmerica.com/companies.
OneAmerica® is the marketing name for the
companies of OneAmerica. AALTCI is not an affiliate of the companies of
OneAmerica. Provided content is for overview and informational purposes only
and is not intended as tax, legal, fiduciary, or investment advice. This
information is not designed to promote nor to endorse 1035 exchanges. Before
using a 1035 exchange carefully weigh all the benefits, costs, and implications
of replacing a policy.
Products issued and underwritten by The State Life
Insurance Company® (State Life), Indianapolis, IN, a OneAmerica
company that offers the Care Solutions product suite. All guarantees are
subject to the claims paying ability of State Life.
*On July 20, 2017,
State Life was rated A+ (Superior) by A.M. Best. This is the second highest of
16 possible ratings assigned by the agency.
1 Table 25, Year-End Deferred Annuity Assets by Market Type,
U.S. Individual Annuity Yearbook – 2016, LIMRA Secure Retirement Institute,
2017.
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SOURCE OneAmerica
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