Phase 1 Income to match your lifestyle and preserve your wealth Phase 2 Continuing income for spousal security and independence Phase 3 A legacy that passes to the next generation Prepared For : Thomas & Mary Stretch IRA Prepared By : Financial Advisor
Table Of Contents This illustration must contain the following: Cover Page Table of Contents & Important Disclosure Initial Account Data, Assumptions & Options Impact of Lump Sum vs Inherited Annuity/IRA Inherited Annuity/IRA Flow Chart Summary Of Inherited Annuity Distribution Detail Ledger Beneficiary Distribution Ledger & Graphs Important Disclosure This report contains very specific computations concerning the value of retirement assets today, the value of retirement assets in the future, and the taxes, which may be assessed against these assets at any given point in time. These computations are based upon assumptions concerning the value of assets today, the rate at which assets may appreciate, life expectancies, and the rates for income and estate taxation. These assumptions are only a "best guess" and must be carefully reviewed to determine if they are reasonable. The actual values, life expectancies, rates of growth and tax rates may be significantly different from those illustrated. The actual taxes due may be significantly greater or smaller than those illustrated. This report demonstrates a planning strategy for retirement assets that are potentially subject to income and estate taxes. There are a number of techniques, which are beyond the scope of this report. One or more of these techniques if appropriate, and if used in conjunction with the techniques explored herein, might reduce taxes below those illustrated by this program. The software used to produce this report has been designed to assist the financial services professional in educating clients on important decisions that may affect their retirement assets. The role of the financial services professional is to help the client meet current and future financial needs. In order to determine the amount of these needs, the financial services professional must discuss with the client certain legal and tax planning concepts. Estate planning for retirement assets involves an in-depth analysis of financial, legal, and tax issues, which should be coordinated with the client's attorney and tax advisors. By using the software that produces this report, financial service professionals can illustrate various planning scenarios to assist the client and their attorney and tax advisors in establishing the most appropriate retirement distribution plan. Since this type of planning involves the application of technical tax laws to a client's unique situation, the client should consult with their tax advisors in determining the suitability of any particular planning technique. The client should also consult an attorney because this type of planning may involve the preparation of legal documents that only an attorney can implement. IAI.2.12
Analysis - Initial Data, Assumptions & Options Analysis Info Stretch IRA Analysis Analysis Date : 01/13/2005 Client Info Spouse Info Client : Thomas Stretch Spouse : Mary Stretch DOB/Age : 01/13/1940 / 65 DOB/Age : 08/09/1946 / 59 Illustrate To Age/Yr. : 86 / 2026 Illustrate To Age/Yr. : 85 / 2031 Account Info (Balance(s) as of 12/31/2004), Other Values - First Year Annuity/IRA : Retirement Account Premium Deposit / Bonus : $100,000 + $10,000 (10.00% Premium Bonus) ==> $110,000 Assumed Interest Rate : 6.00% Deposits : $0 First Year Distribution : $0 RMD Methods - Phase 1: Client Distributions Uniform Lifetime Table Based On Client's Age RMD Methods - Phase 2: Spouse Distributions Uniform Lifetime Table Based On Spouse's Age RMD Methods - Inherited Annuity/IRA Phase: Beneficiary Distributions Term Certain Method Based On Beneficiary Age Year after Inheritance Estimate Tax Rates Estate 0.00 Income 0.00 Beneficiary Data Relationship Name Date Of Birth Age Child Thomas 08/09/1973 32 Grandchild Karen 08/09/2000 3 Grandchild Laura 08/09/2002 1 Child Mary 08/09/1983 22 Child Sally 08/09/1993 12 IAI.3.12
Impact Of Lump Sum vs Inherited Annuity/IRA Without Inherited Annuity/IRA With Inherited Annuity/IRA $170,300 $697,013 Lump Sum Benefits of Tax Deferral Lost Estate Taxes Due Income Taxes Due Inherited Annuity/IRA Benefits of Tax Deferral Continue Income Taxes On Distributions Only Lifetime Income Provided to Children *Estimated Distributions Subject To Income Tax at the Beneficiary's Tax Rate. Taxes may be reduced by a credit for Estate Taxes attributable to the Annuity. IAI.4.12
Summary of Annuity/IRA Activity: Thomas Stretch, Mary, & Beneficiaries Thomas Stretch Starting Balance (12/31/2004) $110,000 Projected Annuity/IRA Income Over The Years 2005 to 2026 $145,587 Mary Starting Balance (12/31/2026) $171,639 Projected Annuity/IRA Income Over The Years 2027 to 2031 $52,973 Beneficiaries Inherit Annuity/IRA Balance of $170,300 Projected Inherited Annuity/IRA Income Starting In Year - 2032 % Starting Income To IRA Share Balance Age -- Year Income Thomas 25.00 42,575 85 -- 2058 105,616 Karen 4.17 7,096 83 -- 2083 48,511 Laura 4.17 7,096 83 -- 2085 52,625 Mary 33.33 56,767 84 -- 2067 198,681 Sally 33.33 56,767 83 -- 2076 291,580 Totals 100.00 $170,300 $697,013 Total Projected Inherited Annuity/IRA Distributions - $895,573 IAI.5.12
Summary Of Inherited Annuity/IRA Maximize the Benefits of Tax Deferral with the Impact of Compounding Annual Growth 900,000 895,573 800,000 700,000 697,013 600,000 500,000 400,000 300,000 200,000 110,000 198,560 170,300 100,000 0 IAI.6.12
Annuity/IRA Distribution Detail For Thomas Stretch & Mary Starting Balances (12/31/2004): 110,000 Account Activity Ending Age Interest Distribution Annuity/IRA Client Spouse Earned Lx /RMD Balance 65 59 6,600 0 116,600 66 60 6,996 0 123,596 67 61 7,416 0 131,012 68 62 7,861 0 138,872 69 63 8,332 0 147,205 70 64 8,832 27.4 5,372 150,665 71 65 9,040 26.5 5,685 154,019 72 66 9,241 25.6 6,016 157,244 73 67 9,435 24.7 6,366 160,312 74 68 9,619 23.8 6,736 163,195 75 69 9,792 22.9 7,126 165,861 76 70 9,952 22.0 7,539 168,273 77 71 10,096 21.2 7,937 170,432 78 72 10,226 20.3 8,396 172,262 79 73 10,336 19.5 8,834 173,764 80 74 10,426 18.7 9,292 174,898 81 75 10,494 17.9 9,771 175,621 82 76 10,537 17.1 10,270 175,888 83 77 10,553 16.3 10,791 175,650 84 78 10,539 15.5 11,332 174,857 85 79 10,491 14.8 11,815 173,534 86 80 10,412 14.1 12,307 171,639 81 10,298 17.9 9,589 172,348 82 10,341 17.1 10,079 172,610 83 10,357 16.3 10,590 172,377 84 10,343 15.5 11,121 171,599 85 10,296 14.8 11,595 170,300 258,860 198,560 IAI.7.12
Distributions For Thomas - Allocation of 25.00% Account Activity Account Activity Required Ending Required Ending Interest Life Minimum Annuity/IRA Interest Life Minimum Annuity/IRA Age Earned Exp. Distribution Balance Age Earned Exp. Distribution Balance 59 2,555 26.1 1,631 43,498 79 2,086 6.1 5,700 31,156 60 2,610 25.1 1,733 44,375 80 1,869 5.1 6,109 26,916 61 2,663 24.1 1,841 45,196 81 1,615 4.1 6,565 21,966 62 2,712 23.1 1,957 45,952 82 1,318 3.1 7,086 16,198 63 2,757 22.1 2,079 46,629 83 972 2.1 7,713 9,457 64 2,798 21.1 2,210 47,217 84 567 1.1 8,597 1,427 65 2,833 20.1 2,349 47,701 85 86 0.1 1,513 0 66 2,862 19.1 2,497 48,066 63,041 105,616 67 2,884 18.1 2,656 48,294 68 2,898 17.1 2,824 48,368 69 2,902 16.1 3,004 48,266 70 2,896 15.1 3,196 47,965 71 2,878 14.1 3,402 47,441 72 2,846 13.1 3,621 46,666 73 2,800 12.1 3,857 45,609 74 2,737 11.1 4,109 44,237 75 2,654 10.1 4,380 42,511 76 2,551 9.1 4,672 40,391 77 2,423 8.1 4,986 37,827 78 2,270 7.1 5,328 34,769 Cumulative Distributions & Account Balance ` IAI.8.12
Distributions For Karen - Allocation of 4.17% Account Activity Account Activity Account Activity Required Ending Required Ending Required Ending Life Minimum Annuity Life Minimum Annuity Life Minimum Annuity Age Exp. Distribution Balance Age Exp. Distribution Balance Age Exp. Distribution Balance 32 51.4 138 7,384 52 31.4 455 14,703 72 11.4 1,549 17,171 33 50.4 146 7,680 53 30.4 484 15,102 73 10.4 1,651 16,550 34 49.4 155 7,985 54 29.4 514 15,494 74 9.4 1,761 15,783 35 48.4 165 8,300 55 28.4 546 15,878 75 8.4 1,879 14,851 36 47.4 175 8,622 56 27.4 579 16,251 76 7.4 2,007 13,735 37 46.4 186 8,954 57 26.4 616 16,611 77 6.4 2,146 12,413 38 45.4 197 9,294 58 25.4 654 16,953 78 5.4 2,299 10,859 39 44.4 209 9,642 59 24.4 695 17,276 79 4.4 2,468 9,043 40 43.4 222 9,999 60 23.4 738 17,574 80 3.4 2,660 6,926 41 42.4 236 10,363 61 22.4 785 17,844 81 2.4 2,886 4,455 42 41.4 250 10,734 62 21.4 834 18,081 82 1.4 3,182 1,540 43 40.4 266 11,113 63 20.4 886 18,279 83 0.4 1,633 0 44 39.4 282 11,497 64 19.4 942 18,434 48,511 45 38.4 299 11,888 65 18.4 1,002 18,538 46 37.4 318 12,283 66 17.4 1,065 18,585 47 36.4 337 12,683 67 16.4 1,133 18,567 48 35.4 358 13,085 68 15.4 1,206 18,475 49 34.4 380 13,490 69 14.4 1,283 18,301 50 33.4 404 13,896 70 13.4 1,366 18,033 51 32.4 429 14,300 71 12.4 1,454 17,661 Cumulative Distributions & Account Balance ` IAI.9.12
Distributions For Laura - Allocation of 4.17% Account Activity Account Activity Account Activity Required Ending Required Ending Required Ending Life Minimum Annuity Life Minimum Annuity Life Minimum Annuity Age Exp. Distribution Balance Age Exp. Distribution Balance Age Exp. Distribution Balance 30 53.3 133 7,388 50 33.3 439 15,044 70 13.3 1,484 19,431 31 52.3 141 7,690 51 32.3 466 15,481 71 12.3 1,580 19,018 32 51.3 150 8,002 52 31.3 495 15,915 72 11.3 1,683 18,476 33 50.3 159 8,323 53 30.3 525 16,345 73 10.3 1,794 17,790 34 49.3 169 8,654 54 29.3 558 16,767 74 9.3 1,913 16,945 35 48.3 179 8,994 55 28.3 592 17,181 75 8.3 2,042 15,920 36 47.3 190 9,343 56 27.3 629 17,582 76 7.3 2,181 14,694 37 46.3 202 9,702 57 26.3 669 17,969 77 6.3 2,332 13,244 38 45.3 214 10,070 58 25.3 710 18,337 78 5.3 2,499 11,539 39 44.3 227 10,447 59 24.3 755 18,682 79 4.3 2,684 9,548 40 43.3 241 10,832 60 23.3 802 19,002 80 3.3 2,893 7,228 41 42.3 256 11,226 61 22.3 852 19,290 81 2.3 3,142 4,519 42 41.3 272 11,628 62 21.3 906 19,541 82 1.3 3,476 1,314 43 40.3 289 12,037 63 20.3 963 19,751 83 0.3 1,393 0 44 39.3 306 12,453 64 19.3 1,023 19,913 52,625 45 38.3 325 12,875 65 18.3 1,088 20,019 46 37.3 345 13,302 66 17.3 1,157 20,063 47 36.3 366 13,734 67 16.3 1,231 20,036 48 35.3 389 14,169 68 15.3 1,310 19,929 49 34.3 413 14,606 69 14.3 1,394 19,731 Cumulative Distributions & Account Balance ` IAI.10.12
Distributions For Mary - Allocation of 33.33% Account Activity Account Activity Required Ending Required Ending Interest Life Minimum Annuity/IRA Interest Life Minimum Annuity/IRA Age Earned Exp. Distribution Balance Age Earned Exp. Distribution Balance 49 3,406 35.1 1,617 58,555 69 4,934 15.1 5,446 81,724 50 3,513 34.1 1,717 60,352 70 4,903 14.1 5,796 80,831 51 3,621 33.1 1,823 62,149 71 4,850 13.1 6,170 79,511 52 3,729 32.1 1,936 63,942 72 4,771 12.1 6,571 77,710 53 3,837 31.1 2,056 65,723 73 4,663 11.1 7,001 75,372 54 3,943 30.1 2,183 67,483 74 4,522 10.1 7,463 72,432 55 4,049 29.1 2,319 69,213 75 4,346 9.1 7,960 68,818 56 4,153 28.1 2,463 70,902 76 4,129 8.1 8,496 64,451 57 4,254 27.1 2,616 72,540 77 3,867 7.1 9,078 59,241 58 4,352 26.1 2,779 74,113 78 3,554 6.1 9,712 53,083 59 4,447 25.1 2,953 75,607 79 3,185 5.1 10,409 45,860 60 4,536 24.1 3,137 77,006 80 2,752 4.1 11,185 37,426 61 4,620 23.1 3,334 78,293 81 2,246 3.1 12,073 27,599 62 4,698 22.1 3,543 79,448 82 1,656 2.1 13,142 16,112 63 4,767 21.1 3,765 80,450 83 967 1.1 14,648 2,432 64 4,827 20.1 4,002 81,274 84 146 0.1 2,577 0 65 4,876 19.1 4,255 81,895 141,915 198,681 66 4,914 18.1 4,525 82,285 67 4,937 17.1 4,812 82,410 68 4,945 16.1 5,119 82,236 Cumulative Distributions & Account Balance ` IAI.11.12
Distributions For Sally - Allocation of 33.33% Account Activity Account Activity Account Activity Required Ending Required Ending Required Ending Life Minimum Annuity Life Minimum Annuity Life Minimum Annuity Age Exp. Distribution Balance Age Exp. Distribution Balance Age Exp. Distribution Balance 39 44.6 1,273 58,900 59 24.6 4,224 105,919 79 4.6 14,968 58,018 40 43.6 1,351 61,083 60 23.6 4,488 107,786 80 3.6 16,116 45,383 41 42.6 1,434 63,314 61 22.6 4,769 109,484 81 2.6 17,455 30,651 42 41.6 1,522 65,591 62 21.6 5,069 110,984 82 1.6 19,157 13,333 43 40.6 1,616 67,911 63 20.6 5,388 112,256 83 0.6 14,133 0 44 39.6 1,715 70,271 64 19.6 5,727 113,264 291,580 45 38.6 1,820 72,666 65 18.6 6,089 113,970 46 37.6 1,933 75,094 66 17.6 6,476 114,333 47 36.6 2,052 77,548 67 16.6 6,888 114,305 48 35.6 2,178 80,022 68 15.6 7,327 113,836 49 34.6 2,313 82,511 69 14.6 7,797 112,870 50 33.6 2,456 85,006 70 13.6 8,299 111,342 51 32.6 2,608 87,499 71 12.6 8,837 109,186 52 31.6 2,769 89,979 72 11.6 9,413 106,325 53 30.6 2,941 92,438 73 10.6 10,031 102,674 54 29.6 3,123 94,861 74 9.6 10,695 98,139 55 28.6 3,317 97,236 75 8.6 11,412 92,616 56 27.6 3,523 99,547 76 7.6 12,186 85,986 57 26.6 3,742 101,778 77 6.6 13,028 78,117 58 25.6 3,976 103,908 78 5.6 13,950 68,855 Cumulative Distributions & Account Balance ` IAI.12.12