1. IRA Rollovers December 26, 2014 By: Roberto H. Bruce, MS, CLU, ChFC, LUTCF Cavaliers Insurance Marketing Cavaliers Insurance Marketing www.aalliance.com Rights Reserved

2. Year 2011 10,000 baby boomers, born 1946-1964, retiring everyday and increasing thereafter for the next 19 years

3. IRA Rollover Example $5,000/month Target Income = $60,000/year @3% rate = $2,000,000 @5% rate = $1,200,000 @7.5% rate = $800,000

4. Annuity 1 or more premiums (accumulation) 1 or more payments (distribution) Tax-Deferred 59 ½ 10% Penalty 1 – Single premium Immediate – SPIA Deferred - SPDA 1 or more - Flexible premium FPA/FPDA Ordinary incomeCapital gains FIX – General AccountVARIABLE – Separate Account QUALIFIED IRA (Front)-70 1/2 DEDUCTIBLE NON-DEDUCTIBLE ROTH-IRA (Back) NON - QUALIFIED TRADITIONAL IRA / ROTH-IRA / SEP-IRA / SIMPLE IRA DIRECT TRANSFER / ROLLOVER / CONVERSION INDEX / TREASURY LINKED / MYG/MVA 1035 Exchange Rights Reserved

5. Annuity Ideal Cases As (SPDA $2,000) A (SPDA $4,000Q; $5,000NQ) Rights Reserved

6. Plan Distributions – When to? Die, Disabled, or severance from employment Plan terminates, no successor plan 59 ½ Financial hardship* *Cannot rollover to IRA Rights Reserved

7. Early Distribution Penalty (Plan, IRA, Annuity) 10% tax on distributions under age 59 ½ In addition to any regular income tax on the amount Rights Reserved

8. Penalty Free Plan Early Distributions Death or Disability Distributions over life expectancy on termination of employment Service separation after age 55 Qualified domestic relations order Medical expenses over 7 ½ % of AGI Distribution election by March 1, 1986 Dividends on employer securities IRS levy of plan Qualified reservist distributions Rights Reserved

9. IRA Rollover Distribution from one qualified plan Contribution to IRA within 60 days Rights Reserved

10. Types of IRA Rollover Direct - qualified plan to IRA, no 20% tax withholding Indirect - qualified plan to individual to IRA, with 20% tax withholding Rights Reserved

11. IRA Rollover Exceptions Series of substantial equal payments based on life expectancy, or 10 or more years period certain Required minimum distribution (RMD) Corrective distribution Loan treated as distribution Hardship distribution Dividends on employer securities Cost of life insurance coverage Distribution to beneficiaries Rights Reserved

12. Penalty Free IRA Early Distributions Unreimbursed medical expenses over 7 ½ % of AGI Not more than cost of medical insurance Disabled Beneficiary of deceased IRA owner Distribution in form of annuity Not more than qualified higher education expenses Used to build, rebuild first home $10,000 or less IRS levy of qualified plan Qualified reservist distributions Rights Reserved

13. Required Minimum Distributions (RMDs) Minimum amount to withdraw annually starting with year at age 70 ½, or if later, year retires (except 5% business owners) Amount not withdrawn taxed at 50% Rights Reserved

14. IRA Rollover/Direct Transfer Trigger Ages 55 - A person separating from service after age 55 normally will not be subject to 10% tax penalty for early distribution from pension plan before age 59-1/2. 59-1/2 - There will be 10% tax on pension plan, IRA, and annuity taxable distributions under age 59-1/2 in addition to any regular income tax on the amount. 62 - Early retirement age for social security benefits. 65 - Full retirement age for social security benefits for those born in 1937 and earlier; retirement age increases by two (2) months for every year over 1937; time to apply for Medicare. 66 - Full retirement age for social security benefits for those born in 1943 to 1954; retirement age increases by two (2) months for every year over 1954. 67 - Full retirement age for social security benefits for those born in 1960 and later. 70-1/2 - There will be a Required Minimum Distribution (RMD) from pension plan or IRA starting with year at age 70-1/2, or year of retirement, if later, for pension plan. Five (5) % business owner requirement remains at age 70-1/2. Amount not withdrawn is taxed at 50%. Rights Reserved