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| SPLIT ANNUITIES: A simplified version of the bucket method, this involves simply splitting an asset in two. The first part is used to generate income, the 2nd to grow back the asset. Generally fixed interest annuities are used to grow back the asset. EXAMPLE: Initial Asset: $200,000 Income received over 10 years = $94,440 Ending Asset: $200,000 Total Value: $294,440. Variations of this can include starting the income as a smaller amount and increasing it by 4% compounded each year. Rates change often. Please have a new quote run for accurate numbers. Q&A: What happens to the income if I do not live 10 years? The income goes to whatever beneficiary you have named on the application. Q&A: Am I gaining any tax advantages by doing this? Yes. Though not a tax advisor, I can say that with an immediate annuity you only pay taxes on the portion of the income that is interest, not the principal that is being received by you. Also, with the 10 year tax deferred annuity, no tax is paid on a yearly basis, the money is growing tax deferred, therefore compounding at a higher rate than if you were paying taxes on the interest it is earning each year. |
Vital Plan, Inc.
| Split Annuities |
The above is not intended as legal, tax or financial advice. Please contact an advisor for guidance for your personal situation.
Contents subject to change. Every attempt has been made for accuracy, however, we are not responsible for errors in text.
Contents subject to change. Every attempt has been made for accuracy, however, we are not responsible for errors in text.
Shelly Ballard, CSA
Tarkenton Financial Representative
St. Petersburg, FL
Cell: 727-417-6107
shelly@vitalplan.com
Tarkenton Financial Representative
St. Petersburg, FL
Cell: 727-417-6107
shelly@vitalplan.com
Copyright 2008, Vital Plan, Inc. All Rights Reserved
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