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What is the Distribution Solution?

Most people who diligently save for retirement in a 401(k) or other qualified retirement plan have no idea that they will lose nearly 40 percent of their savings to income taxes when they begin taking distributions. In addition to income taxes, those who fail to take their Required Minimum Distributions at age 70 ½ will be charged up to a 50 percent penalty.

Using a little known strategy called The Distribution Solution, business owners are one of the few groups that can escape these exorbitant income taxes and RMD penalties.

How does the Distribution Solution work?

The Distribution Solution is a tax-favored program for business owners who have successfully saved for retirement using a 401(k) or another qualified retirement plan. The Distribution Solution allows business owners to retain a larger portion of their hard-earned money by repositioning retirement assets into a flexible and permanent life insurance policy, thus allowing potential tax-advantaged distributions.

What’s the benefit of the Distribution Solution?

By transferring your savings from a qualified retirement account to a life insurance policy, your assets are subject to significantly less taxes upon withdrawal each month. You can avoid the stress of figuring out how to pay your taxes each year and actually enjoy your retirement savings that you so diligently accrued.

Also, when your assets are passed on to your beneficiaries, they will receive them tax-free.

How do I know if this strategy is right for me and my family?

To find out whether The Distribution Solution is a good fit for your retirement needs, contact us today and we’ll walk you through the process! And check out this video for more information.

It’s your money…until you give it away.

Retirement planning is an essential part of growing older and thinking towards the future. However, when there are multiple options for savings, which do you choose? Fixed index annuities have become extremely popular within the past few years, and for good reason. Let’s take a look at FIAs and what benefits they have to offer you and your family.

What is a fixed index annuity?

To put it simply, the purpose of an annuity is to protect against the possibility of running out of money later in life. Fixed index annuities are tax-favored accumulation products issued by insurance companies. Similar to a 401(k), these are tied to the stock market. The major difference with an FIA is the insurance company bears the risk if the stock market declines. As with other index annuities, they are subject to rate floors and caps, meaning it will not rise or fall out of its set levels as the stock market fluctuates. With an FIA, you cannot lose any of your principal and many of them offer premium bonuses.

What are the benefits?

Fixed index annuities come with various benefits, which is why they’ve become so popular. For starters, they are tax-deferred, meaning you pay no income taxes until you withdraw money. Cool, right? Also, the Required Minimum Distribution that comes with IRAs and Roth IRAs is avoidable if you transfer to an FIA.

As we progress as a society, people are living longer and spending more on retirement, causing retirees to become concerned they’ll outlive their savings. Other than Social Security benefits, fixed index annuities are the only guaranteed paycheck that lasts until you pass away. FIAs are designed for a lifetime and ensure a steady stream of income that allows you to live comfortably. Also, if you pass away, your remaining cash value will be transferred to your designated beneficiaries.

Another important factor about FIAs is diversifying your retirement savings portfolio. When you are on a fixed income during retirement, a fixed index annuity will ensure a constant flow of predictable earnings. You can budget a comfortable lifestyle with no risk to your hard-earned cash.

Are there any drawbacks?

It is important to be mindful that fixed index annuities have a set contract limit, meaning you may have to wait several years before you can withdraw from your account or you can face a steep penalty. Some FIAs charge for early withdrawal if you wish to utilize your funds before your contract limit has passed. However, most FIAs allow owners to withdraw 10 percent of the cash value each year without facing surrender charges, allowing them to have access to the liquidity.

It is not recommended to purchase an FIA later in life. But for professionals who are 10 to 15 years from retirement, an FIA would be a reliable solution if you prefer to avoid the risks of stock market performance or want to diversify your existing portfolio.
If you’re curious about what a fixed index annuity can do for your future savings and if it’s the best decision for you, give Ray a call at 214-810-5881 or message him here!

Finance Your Retirement Just Like Your Home

When you decide to purchase a home, you search for the home of your dreams until you find it. Unless you have $100,000 to $200,000 sitting in an account, the next step involves securing the financing to purchase that dream home. In most situations, you provide a down payment, the bank loans you the rest, and you begin making payments which the bank expects for the next 15 to 30 years depending on the terms of your loan.

Did You Know?