Annuities

RMD, QLAC, IRA, DIA – What does it all mean? Action!


Annuities

If your practice is anything like mine, activity is a critical component in driving revenue-generating opportunities. The IRS and U.S. Treasury put new required minimum distribution (RMD) regulations into place effective July 1, 2014, and in doing so, gave us an opportunity to increase activity that will drive sales in the fourth quarter of 2014 and into 2015.

These new regulations implement suggestions made in 2010, in response to the Obama administration’s request for information on lifetime income options. The new regulations allow an individual retirement account (IRA) owner to use a portion of their qualified money to purchase a qualified longevity annuity contract (QLAC), and have that portion exempt from RMD calculations.

A QLAC in our language is a deferred immediate annuity (DIA). It’s very important to note that a QLAC must be a DIA fixed contract issued from a carrier – no private annuities are allowed. In addition, fixed indexed annuities and variable annuities don’t meet the regulations.

Now you have a great reason to contact clients who aren’t using their RMDs and show them a way to continue to defer taxes on a portion of their qualified assets. These recent changes to IRS rules have many benefits: 

  • Your clients may defer 25% of their qualified assets, up to a maximum of $125,000
  • DIAs are the least expensive way to purchase a guaranteed future income stream, and purchasing today allows your clients to take advantage of today’s mortality credits. For example: a 70-year-old male  purchasing a $100,000 DIA from an A++ carrier today could guarantee themselves a $30,698.76 annual income beginning at age 85 (life with cash refund)
  • Income can be deferred up to age 85, and as a result, taxes are too
  • A number of death benefit options are now eligible, including return of premium

 

While DIAs are available today, the first QLAC-friendly contract is expected to be released at the beginning of November, with more expected to follow. Now is a great time to reach out to your clients who don’t enjoy taking RMDs – schedule a meeting to discuss this new opportunity. Activity will lead to sales, even if it doesn’t involve utilizing this concept.

Our Ash Brokerage annuity team is stacked with industry experts who are very much up to speed with these new regulations. According to LIMRA, DIAs were the fastest growing annuity segment in 2013, and they are expected to capture significantly more market share in the years ahead. We’d love to hear from you to discuss this new opportunity and be the trusted partner who helps you incorporate QLACs into your practice. Call us today – your clients are depending on you, and you can depend on us. 

QLAC Annuities DIA Deferred Immediate Annuity

Create a secure income during retirement


Annuities

What is a DIA?

A Delayed or Deferred-Income Annuity is designed to provide a stream of income beginning at a future date. It can help your clients pre-fund their retirement by creating a customized stream of income payments. Clients choose when payments begin, and they may also have the ability to change the date should the need arise.  

Who is best suited for this product?

  • Individuals who are still working and want to create their own “pension-like” retirement income
  • Individuals with money in 401(k) accounts sitting at former employers
  • Retirees looking to protect their retirement plans should they live beyond their life expectancy

How do DIAs work?

DIAs are financial products that help make sure your clients cannot outlive their assets. Your clients can purchase a DIA annuity before or after they retire, and as soon as they reach a pre-determined date, they can receive a guaranteed monthly income for the rest of their life – no matter how long they live.

Your dedicated team at Ash Brokerage is here to assist you, so you should call us today for a DIA illustration! 

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