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1 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company “Insuring What You Love” Corporate Insurance Group  David Strickland  423-282-8719.

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Presentation on theme: "1 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company “Insuring What You Love” Corporate Insurance Group  David Strickland  423-282-8719."— Presentation transcript:

1 1 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company “Insuring What You Love” Corporate Insurance Group  David Strickland  

2 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Wealth Protection Strategies Individual Retirement Accounts Wealth Protection Strategies Maintain the Value of Your Account for Your Heirs

3 3 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Disclosures All specific legal and tax questions should be referred to your legal and tax advisers. Insurance products issued by the Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Guarantees re based upon the claims-paying ability of the issuer. Product, product features and rider availability vary by state. Issuers not licensed to conduct business and products not distributed in AK, HI or NY. Survivor Life LP is issued as policy form 96-QL-1/-1U and any state variations.

4 4 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Congratulations! You saved wisely with individual retirement accounts (IRAs) and tax-qualified plans.  Tax-deductible contributions  Tax-deferred growth

5 5 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Do You Have Multiple Sources of Retirement Income? IRAs Investments 401(k) Social Security Pension

6 6 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Do You Have More Income Than You Need?

7 7 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company You Can’t Take It With You (IRAs are taxed at death) Federal and state income taxes = 35% or more. Federal and state estate taxes = 55% or more.

8 8 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company The “Disappearing” IRA *Our example assumes that an IRA is passed to a non-spouse beneficiary and is subjected to state and federal estate taxes totaling 45%. It also assumes that the IRA’s beneficiaries take the remaining IRA in a lump-sum (the option most beneficiaries select) and are subjected to state and federal income taxes totaling 35%. (Post-death taxes on a $500,000 IRA*) Estate Taxes $225,000 Net To Heirs $178,750 Income Taxes $96,250 64% Shrinkage 64% Shrinkage

9 9 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Your Wealth Protection Strategy Pass the value of your IRA, qualified retirement plan, or other savings accounts to your heirs. If structured properly, the value of your IRA can be repositioned as tax-free life insurance proceeds.

10 10 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company How This Wealth Protection Strategy Works Five Planning Steps

11 11 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company How This Wealth Protection Strategy Works Step One: Take distributions from your IRA. Distributions are taxable. Age Subject to specific rules, penalty-free distributions prior to age 59½* Distributions must begin after age 70½*** 59 ½70 ½ *Early penalty tax of 10% waived for distributions in case of death or disability, or if taken as a series of substantially equal periodic payments. Other restrictions and exceptions may apply. See a tax specialist for details. **In some limited cases, distributions after age 59½ may still trigger an early withdrawal penalty. See a tax specialist for details. ***Subject to certain restrictions, individuals who remain employed after age 70 ½ may delay distributions until April 1 of the year following the year in which they retire. See a tax specialist for details. Penalty-free distributions after age 59½**

12 12 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company How This Wealth Protection Strategy Works Step Two: Create an irrevocable life insurance trust and fund it with gifts from your after-tax IRA distributions.  With assistance from an attorney, you establish a trust.  You name a trustee.  You select the trust’s beneficiaries. You can choose to use part, or all, of your after-tax distribution to fund the trust.

13 13 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company How This Wealth Protection Strategy Works Step Three: The trustee purchases a life insurance policy covering you and/or your spouse.*  The policy is owned by the trust.  The trustee manages the policy according to your instructions. *Assuming you and/or your spouse qualify for life insurance based on your age and health. Depending on your age and health, your policy amount may exceed the value of your IRA.

14 14 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company How This Wealth Protection Strategy Works Step Four: At death, the trust receives tax-free life insurance benefits.  Death benefits are income tax-free.  Death benefits are estate tax-free.

15 15 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company How This Wealth Protection Strategy Works Step Five: The trustee distributes the policy proceeds to your heirs according to your instructions, estate and income tax free. Your specific instructions are contained in the life insurance trust and the trustee must adhere to the trust provisions.

16 16 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Summary Planning Steps 1. IRA owner takes IRA distributions. 2. IRA owner creates a life insurance trust and funds the trust with gifts. 3. Trust purchases an insurance policy covering the IRA owner’s life. 4. At IRA owner’s death, the trust receives insurance death benefits – estate and income tax free. 5. The trust distributes tax-free proceeds to IRA owner’s heirs. 4 2 IRA Owner 3 Life Insurance Trust Life Insurance Policy 5Heirs 1IRA

17 17 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Walter & Carmina Couple Profile:  Both are age 65  Combined, they have a pension plan, Social Security benefits and investments for retirement  They have a $250,000 rollover IRA  Together, they have a son and a daughter

18 18 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company What They Have... and What They Want  Both are healthy and are insurable  They have sufficient retirement income  They want to pass the value of their IRA to their children  They want to minimize taxes paid on their estates

19 19 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Option One: Keep The IRA Death of Second Spouse at Age 75 Estate TaxIncome Tax Amount To Heirs IRA Balance: $444,217 Side Fund: $72,481 Total: $516,698 ($199,898) ($32,616) ($232,514) ($73,296) ($0) ($73,296) $210,888 Death of Second Spouse at Age 85 Estate TaxIncome Tax Amount To Heirs IRA Balance: $563,748 Side Fund: $419,075 Total $982,823 ($253,687) ($188,584) ($442,271) ($93,018) ($0) ($93,018) $447,534 $250,000 IRA held until death of second spouse with required mini- mum distributions starting at age 70½ and reinvested in a side fund growing at 6%, after tax. IRA value is then passed to heirs at death. The IRA value consists of the IRA balance at the death of the second spouse, plus the IRA required minimum distributions taxed to the parents at 30% and reinvested at 6%, after tax. Example assumes a 8% annual rate of return on the IRA. Example applies a 45% estate tax on IRA value and side fund. Example also assumes heirs elect to take a lump-sum distribution of the IRA with income taxes of 30%.

20 20 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Option Two: Use an IRA Wealth Protection Strategy Insurance Benefits at Age 75 and 85 Estate Tax Income Tax Amount To Heirs $625,000($0) $625,000 The $250,000 IRA is distributed with after-tax amounts used to fund a life insurance contract owned by an irrevocable life insurance trust. *Example depicts Ohio National’s Lifetime G, a guaranteed death benefit universal life insurance policy, on a 65-year-old female, preferred nonsmoker with a single premium of $162,500 (assuming an income tax rate of 35% on the IRA distribution). Product availability varies by state.

21 21 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Comparison: Net To Heirs (At Age 85) A difference of $177,466 Keep Your IRA Use an IRA Protection Strategy Net to Heirs $625,000

22 22 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Planning Questions

23 23 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Is This Strategy Right for You?  Examine your retirement income needs and resources  Analyze your estate tax exposure  Consider your insurability and the possibility of additional premiums

24 24 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company When Is the Best Time to Start?  The earlier, the better.  Insurance is usually more affordable at younger ages.  “Health is a temporary condition.” Be aware of penalties for withdrawals from qualified plans prior to age 59 ½. With proper planning, withdrawals are penalty free.

25 25 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Do You Need A Trust? A trust ensures:  estate tax-free death benefits.  control of distributions. If you do not want to use a trust, you can name someone outside your estate (i.e., your child, or children) as owner(s) of the insurance policy to preserve estate tax-free benefits.

26 26 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Is This Strategy Limited To IRAs? Virtually all qualified and non-qualified savings may be appropriate Traditional IRA457 Plan 401(k) PlanMoney Purchase Plan 403(b) PlanProfit Sharing Plan SEP IRASIMPLE IRA Tax Sheltered AnnuitySavings & Thrift Plan Roth IRANon-qualified Annuity

27 27 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company About Ohio National  When you purchase a policy through Ohio National, you can feel good about your choice. Since 1909, Ohio National has been marketing a variety of insurance and financial products in 47 states (all except Alaska, Hawaii and New York), the District of Columbia and Puerto Rico, with subsidiary operations in Santiago, Chile. We are committed to building long-term relationships with our customers and to providing them with solutions as their needs change over time.

28 28 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Ohio National's Financial Ratings  The financial strength of our company is backed by the reaffirmation of our ratings. These ratings include:  "A+ (Superior)" from A.M. Best Company (based on balance sheet strength, operating performance and business profile), its second- highest ranking out of 16 categories.  "AA" (Very Strong) from Standard & Poor’s (for financial security characteristics), its third- highest ranking on a 21-part scale.  "A1" from Moody's (for insurance financial strength), its fifth-highest ranking on a 21-part scale.

29 29 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company Benefits Of Permanent Insurance  Tax Deferred  Tax Free  Comp Rate Of Return  Interest Guaranteed  Judgment Proof  Unlimited Contributions  Unlimited Investment Options  Collateral  Estate Tax Free  Liquidity  Disability Protection  Tax Deductable

30 30 D-4776_1-08 Copyright 2008, The Ohio National Life Insurance Company “Insuring What You Love”  Corporate Insurance Group  For More Info Schedule An  Appointment with  David Strickland  


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