How the stretch feature on inherited non-qualified annuities works for your clients
When planning a client's legacy, what if you could…
Help avoid a large taxable event for your client's beneficiary, and even a successor beneficiary?
Continue growing your client's money, compounded by tax deferral?
Offer your client's beneficiary complete access to funds as needed?
The “stretch” option on our non-qualified annuities provides a number of advantages to your clients' beneficiaries (including non-spousal beneficiaries).
Beneficiary only pays taxes each year on the amount of taxable gains distributed, instead of on a lump sum distribution. This could lower the total amount of income tax paid.
The account remains invested, allowing for potential growth based on the allocations, underlying investment choices, or guaranteed rates the account offers.
Continue benefiting from the tax-deferred status of the account — meaning the remaining account value benefits from compounded accumulation.
*Fixed and Fixed Index Annuities not available in the state of New York. The stretch features is available on inherited annuities not held in an IRA or other qualified retirement accounts, and where a guaranteed lifetime income rider has not been elected.
Hypothetical Scenario Linda and her daughter, Toni
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When Linda passes away, her daughter Toni has three options with her death benefit of $300,000. The snapshot below shows how the stretch option could increase Toni’s after-tax distributions by more than $370,000 compared to a lump sum withdrawal. | ||
LUMP SUM | 5-YEAR DISTRIBUTION | STRETCH OPTION |
Before Taxes: $300,000 | Before Taxes: $338,226 | Before Taxes: $779,299 |
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