Starting at age 70, the IRS requires that you withdraw a minimum amount annually from your qualified retirement account — and pay tax on the funds – whether you need the income or not. This withdrawal is called a required minimum distribution (RMD), and it may take an unexpected toll on your nest egg.
Four features that make an annuity an attractive RMD solution for legacies:
Premium Bonus annuities include a Premium Bonus Vesting Schedule and may include a lower Cap Rate, lower Participation Rate, higher Spread Rate or other limitations not included in similar annuities that don’t offer a Premium Bonus.
Unlike many alternative retirement saving vehicles, you can take an RMD in any Contract Year without incurring withdrawal charges. This is true even if the RMD is more than amounts available under your annuity’s free withdrawal provision or is taken before the Withdrawal Charge Period is over.
Indexed Crediting Strategies
When you allocate money to one or more Indexed Crediting Strategies, you can satisfy your RMDs while potentially earning interest credits that can keep your Accumulated Value growing — leaving more to pass on to your beneficiaries.
Protection from Market Loss
Your money is not directly exposed to the risks of the stock market or individual stocks. While you may earn 0% in any interest crediting period, you’ll never earn less than 0% — guaranteed.
Facts about RMDs:
- RMDs are determined by age, account balance and life expectancy.
- RMDs must be taken annually beginning at age 70 ½.
- RMDs are not required from Roth IRAs while the owner is alive.
- Withdrawals in excess of your RMD can’t be applied to the following year.
- A significant tax penalty will be assessed for withdrawing less than your RMD.
How does this work?
Meet Sara: Sara retires at age 60. Because she has other sources of retirement income, she decides to roll over $100,000 from an existing qualified 401(k) plan into a fixed indexed annuity with a built in death benefit provision.3 She chooses to allocate all of her premium to the BNP Paribas Multi Asset Diversified 5 Index with a 2-Year No Cap Point to Point Strategy that earns interest credits based in part on the performance of an external market index.4
Sara takes RMDs from her annuity each year, until she passes away at the age of 85.
Here’s how annuity can help Sara build a legacy — even while taking RMDs.
Each scenario has a total combined benefit greater than the full amount of the premium paid. But, by utilizing an indexed crediting strategy, Sara and her beneficiaries could, under the best case scenario, receive up to 3X more!
See for yourself: Ask your financial professional to show you how an annuity can help grow your qualified assets and leave a lasting legacy for your loved ones! To learn more : Click Here
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