Commerce Insurance Services
USING YOUR ANNUITY FOR LONG-TERM CARE No one looks forward to the day when they need long-term care, but the reality is that at least seven out of 10 people over the age of 65 will need long-term care services and support at some point in their lives. 1 The need for long-term care can create a burden on your family and finances, especially if you haven’t planned for the possibility of needing care.
PAYING FOR LONG-TERM CARE When the need for long-term care arises, some investors pay expenses out-of-pocket or use retirement savings. Others draw equity out of their home or tap into a previously purchased long-term care insurance policy. Another option is to convert your non-qualified annuity to pay for long-term care expenses under the Pension Protection Act (PPA). Annuity holders can exchange their current non-qualified annuity for a PPA-compliant annuity to pay for qualified long-term care expenses tax-free. 2
BENEFITS OF CONVERTING AN ANNUITY 2 • Allows tax-free withdrawals when used for qualified long-
term care expenses
ADVANTAGES OF CONVERTING YOUR ANNUITY TO A PPA-COMPLIANT ANNUITY
• Provides the flexibility of
Non-Qualified Annuity Withdrawal
PPA-Compliant Annuity Withdrawal
Convert using a 1035 Exchange
choosing care in-home or nursing home care
$150,000 including: $75,000 initial cost using after-tax dollars $75,000 tax-deferred growth/gain
$150,000 100% usable Long-Term Care
• Potentially avoids paying federal taxes when
Company Size Small vs. Large Companies
Relative Price Value vs. Growth Companies Pay Taxes You must withdraw growth/gain dollars first, which are taxable at your income tax rate.
transferred to a PPA-compliant annuity
100% Tax-Free If used toward Long-Term Care expenses 2
Tax-reduced amount for monthly Long-Term Care expenses
With the passage of the Pension Protection Act (PPA), specially designed annuities allow individuals to make tax-free cash withdrawals, regardless of cost basis, ifused for qualified long-term care (LTC) expenses. Annuity is subject to medical underwriting.
Contact a Commerce Insurance Services Financial Advisor today to explore your long-term care funding options.
1 2015 Medicare & You, Centers for Medicare & Medicaid Services 2 Consult your tax advisor
Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured by Any Federal Government Agency
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