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Making pre-tax contributions to a tax-deferred account is a great way to build retirement assets. But this protection from taxes can’t last forever. Starting at age 73, your clients are required to take (and pay taxes on) annual required minimum distributions (RMDs). But what happens when you have a client who doesn’t need the money from these withdrawals? What if protecting and passing wealth to their loved ones is a top priority?
Investor case study
Marian, 73, is retired and living comfortably within her means. She’s required to start taking RMDs from her tax-deferred retirement accounts, but she was hoping to preserve those assets to leave to Christine.
She asks her financial professional to help her create a plan that provides:
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Predictable income payments to satisfy RMD requirements
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Asset protection for Christine
After talking to her financial professional, Marian decides to invest in a Lincoln variable annuity with Lincoln ProtectedPay Select Core® and Estate LockSM – optional benefits for an additional cost.1 This powerful combination helps Marian fulfill her RMD obligations while protecting the assets she plans to leave for Christine.
1. Marian invests $500,000 qualified money
2. Protected Annual Income at 5.95%
3. Marian will receive $29,750 every year for the rest of her life
4. As the beneficiary, Christine will receive the full investment amount: $500,0002
More about Estate Lock℠
One of the most significant benefits a Lincoln variable annuity with Lincoln ProtectedPay Select Core® provides is guaranteed lifetime income — another is beneficiary protection with the Estate Lock℠ Death Benefit. When clients elect this combination of optional benefits, they receive guaranteed lifetime income and the assurance of knowing that their full investment amount is protected for their beneficiaries.
Lincoln ProtectedPay Select Core and Estate Lock with a $500,000 investment
Beneficiary receives the full investment amount or the account value, whichever is greater. Income payments will not reduce the death benefit2
Chart is for illustrative purposes only. It does not reflect a specific investment. Assume 0% growth rate net of fees and no increases to the Protected Income Base. Past performance does not guarantee future results. Guarantees are subject to the claims-paying ability of the issuer.
Explore more case studies showing the difference Estate LockSM can make.
1 Lincoln ProtectedPay Select Core® is available for an additional annual charge of 1.50% above standard contract expenses (maximum annual charge is 2.75%). Estate Lock℠ is available for an additional annual charge of 0.45% (maximum annual charge is 1.60%). The minimum issue age is 35, the maximum issue age is 75, and it is available for single life contracts only. Estate Lock℠ must be purchased at contract issue with Lincoln ProtectedPay Select Core®.
2 Excess withdrawals reduce Estate Lock℠ in the same proportion as the account value, but the benefit does not decline due to conforming or automatic required minimum distribution (RMD) withdrawals. Benefit terminates if account value reaches $0, but lifetime income would continue.
Lincoln Financial® affiliates, their distributors, and their respective employees, representatives, and/ or insurance agents do not provide tax, accounting, or legal advice. Please consult an independent professional as to any tax, accounting, or legal statements made herein.
Variable annuities are long-term investment products that offer a lifetime income stream, access to leading investment managers, options for guaranteed growth and income (available for an additional charge), and death benefit protection. To decide if a variable annuity is right for you, consider that its value will fluctuate; it’s subject to investment risk and possible loss of principal; and there are costs associated. All guarantees, including those for optional features, are subject to the claims-paying ability of the issuer.
Variable annuities have fees and charges, including mortality and expense, administrative, and advisory fees. The annuity’s value fluctuates with the market value of the underlying investment options, and all assets accumulate tax-deferred. Withdrawals of earnings are taxable as ordinary income and, if taken prior to age 59½, may be subject to an additional 10% federal tax. Withdrawals will reduce the death benefit and cash surrender value.
Investors are advised to consider the investment objectives, risks, and charges and expenses of the variable annuity and its underlying investment options carefully before investing. The applicable prospectuses for the variable annuity and its underlying investment options contain this and other important information. Please call 888-868- 2583 for free prospectuses. Read them carefully before investing or sending money. Products and features are subject to state availability.
Lincoln variable annuities are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker-dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so.
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