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    Stretch IRA

    Uploaded by

    Bill Black
    A stretch IRA, supplemented with life insurance, can help transfer wealth. The IRA could have less than half its value transferred to heirs after taxes. An ILIT can offset estate and income taxes due on the IRA at the owner's death. With additional planning, the IRA can provide an income stream to succeeding generations.

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    Stretch IRA

    Uploaded by

    Bill Black
    32 views2 pages
    A stretch IRA, supplemented with life insurance, can help transfer wealth. The IRA could have less than half its value transferred to heirs after taxes. An ILIT can offset estate and income taxes due on the IRA at the owner's death. With additional planning, the IRA can provide an income stream to succeeding generations.

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    A stretch IRA, supplemented with life insurance, can help transfer wealth. The IRA could have less than half its value transferred to heirs after taxes. An ILIT can offset estate and income taxes due on the IRA at the owner's death. With additional planning, the IRA can provide an income stream to succeeding generations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    32 views2 pages

    Stretch IRA

    Uploaded by

    Bill Black
    A stretch IRA, supplemented with life insurance, can help transfer wealth. The IRA could have less than half its value transferred to heirs after taxes. An ILIT can offset estate and income taxes due on the IRA at the owner's death. With additional planning, the IRA can provide an income stream to succeeding generations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Advanced Markets Group | W E A L T H

    Advanced Markets Group


    W E A LT H T R A N S F E R

    SunSolutions For Life SM

    Stretch IRA
    Financial Situation
    Having worked hard and planned well for retirement, the accumulated funds of an IRA may not be
    needed to fund retirement, and the focus can be shifted to transferring wealth to heirs. When someone
    reaches the age of 70½, required minimum distributions must be taken even if not needed or wanted.
    Since an IRA is subject to estate and income taxes, the IRA could have less than half its value transferred
    to heirs after taxes. Here is an alternative plan to help transfer wealth.

    Possible Solution
    Consider a Stretch IRA, supplemented with life insurance, to transfer wealth, and offset tax consequences
    due on the IRA at the owner’s death.

    TRANSFER
    Strategy

    Establish Irrevocable Life Transfer IRA Net Required Minimum


    Insurance Trust (ILIT) Gifts, annual
    Distribution (RMD) to ILIT
    exclusions,
    Prior to distributions, establish an unified credit1 At the time that RMD is taken, the net after
    ILIT. The trustee of the ILIT is the income tax distribution is gifted to an irrevocable
    applicant, owner, and beneficiary life insurance trust (ILIT) which may be subject to
    of the life insurance policy on the gift tax if the annual exclusion and/or the unified
    life of the owner and/or spouse. credit is exceeded.
    Upon the death of the insured, the
    life insurance proceeds will pass Upon the death of the IRA owner, the spouse
    through the ILIT to heirs, free of continues to receive RMD and continues to gift
    federal income and estate taxes. the after income tax proceeds to the ILIT.
    When the spouse passes away, the children
    can continue to receive RMD, and the IRA can
    continue to grow (assuming the growth rate
    Insurance Proceeds exceeds the amount of RMD based on the
    beneficiary’s life expectancy).
    ILIT funds could be used to offset
    estate and income taxes due on the IRA.

    Results
    The transfer of wealth to heirs is maximized and the IRA can continue to grow. With additional
    planning, the IRA can provide an income stream to heirs for succeeding generations.

    In order for gifts to the ILIT to qualify for the annual exclusion, the trust beneficiaries should be given “Crummey” rights of
    1

    withdrawal over the gift. In 2008, the annual exclusion gift amount is $12,000 and the estate exclusion equivalent amount is
    $2,000,000 at death; $1,000,000 lifetime gift.
    XMSD 44/261
    SLPC 19201 08/08
    Exp. Date 08/09
    PAGE 1 OF 2
    Benefits of the Stretch IRA Plan
    Maximize Transfer of Wealth
    Upon death, the life insurance proceeds will pass through the ILIT to the heirs free of income
    and estate taxes assuming no transfer for value has been made or that the insured has no incidents
    of ownership in the policy.
    Maintain IRA Value
    The life insurance coverage enables the IRA to maintain its value because the death benefit can
    be used to offset income and estate taxes due on the IRA.
    Greater Lifetime Income to Heirs
    The heirs will then be entitled to a lifetime of greater income without depleting the IRA. With
    proper planning succeeding generations may also benefit from the IRA.

    Strength and Security of Sun Life Financial


    To help individuals, small businesses, and corporations plan for and achieve financial security,
    Sun Life Financial provides a diverse range of wealth accumulation and protection products and
    services. Chartered in 1865, Sun Life Financial and its partners today have operations in key
    markets worldwide.

    Notes:

    This information is for general education of producers and contains references to concepts that have significant legal, accounting and tax
    implications. It is not intended as legal, accounting or tax advice. Clients should consult with their own tax advisor regarding the application
    of these concepts to any particular situation.
    Not FDIC/NCUA insured. May lose value. No bank/credit union guarantee. Not a deposit. Not insured by any federal government
    entity.
    Universal Life Insurance products are issued by Sun Life Assurance Company of Canada (Wellesley Hills, MA). Variable Universal Life Insurance
    products are issued by Sun Life Assurance Company of Canada (U.S.) (Welesley Hils, MA), and distributed through our affiliated broker-dealer,
    Sun Life Financial Distributors, Inc. In New York, Universal Life Insurance and Variable Uiversal Life Insurance products are issued by Sun Life
    Insurance and Annuity Company of New York (New York, NY).
    All guarantees are based on the claims-paying ability of the issuing company, Sun Life Assurance Company of Canada (U.S.) (Wellesley Hills,
    MA), Sun Life Assurance Company of Canada (Wellesley Hills, MA) or in New York, Sun Life Insurance and Annuity Company of New York
    (New York, NY). All are members of the Sun Life Financial group of companies.
    ©2008 Sun Life Assurance Company of Canada. All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun
    Life Assurance Company of Canada.

    XMSD 44/261
    SLPC 19201 08/08
    Exp. Date 08/09
    Page 2 of 2

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