How To Turn Tax-Deferred Money Into Tax-Free Distribution

How To Turn Tax-Deferred Money Into Tax-Free Distribution

One of the greatest threats to any client’s income or accumulation plan is an extended health care event.

With the cost of care ranging from $54K to $100K annually, a client could be forced to liquidate equities at depreciated values, tap into annuities that were earmarked for lifetime income, or destroy their legacy values.

One way we can safeguard against this potential threat, is to convert tax-deferred assets into tax-free distributions to help pay for the cost of care.

Let’s say your 60 year old client has a $100K annuity ($50K cost basis, $50K taxable gain). If they 1035 the current Annuity to a PPA approved solution, day 1 they can access a $365k tax-free pool of money that can be used for care. Even better still – if they have a Long-Term Care event down the road, that $365k pool of money grows to a guaranteed pool of $920k by average claim time of age 84.