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Old 03-12-2017, 07:52 AM
 
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^ Could work for some people some of the time, but for many, you then increase the taxable component of SS income, since it will be substantially higher.

We've seen some good thoughts for retirement and inheritance planning here. Problem with all of them is the complexity, both for the plans, and for deciding if they're a good choice. Calls for some good financial modeling skills, as well as a good knowledge of tax code. How many of us can do that alone? How many of us have an estate big enough that it can take the hit (the cost) without pain?
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Old 03-12-2017, 07:58 AM
 
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no one ever said utilizing the tools and laws left in place for us was easy and something the unskilled can do . it is no different than our tax system . your fair share of taxes is the lowest amount you can figure out using the laws and tools left at your disposal.

long term care planning is the same situation .

but that is why we have pro's who are specialists in all this stuff .
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Old 03-12-2017, 08:02 AM
 
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Bot the pros are not cheap, so we should, but often don't, consider the cost of the advice for getting savings.
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Old 03-12-2017, 08:30 AM
 
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as they say "if you think the price of good advice is expensive , then you can't afford free "
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Old 03-12-2017, 12:08 PM
 
Location: Florida -
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Quote:
Originally Posted by mathjak107 View Post
one of the best ways is single premium life insurance .

permanent life insurance is actually a good tool for taking forever taxed money and turning it in to never taxed money .

the fact that permanent life insurance policy's are generally cashed in rather than used makes the pricing screwy .

you can generally buy policy's at any age that payout more than they cost so they are actually leveraged in a way .

so lets say you have a million dollars in ira's with taxes due on it . so you pay taxes on a lot less ira money buying the policy .

for less than a million you can buy a million dollar policy that goes to your spouse tax free . no rmd's , no taxes , ever .

whatever is left in the ira's you can leave to your kids who get to pay the taxes over their lifetimes .

that tax free money can out do investing on your own because so much is linked to retirement income too . imagine your spouse not getting ss taxed , or getting Medicare premium increases once rmd's kicked in , perhaps they can stay in the 15% bracket and make use of the zero capital gains brackets .

the life insurance swap is guaranteed too unlike your investing which can have a whole lot of uncertain out comes .

so combining your own investing with the permanent life insurance can be very powerful .

in fact integrating that strategy with a single premium immediate annuity can really build an effective package coupled with your own investing and the permanent life insurance .

you don't take a joint annuity though . you take a single annuity and you use the life insurance instead for the spouse .

the annuity is taxable to the spouse , the life insurance is not . so the single annuity provides a higher income than a joint one too .

thanks to the work of ed slot and dr pfau , they have looked in to the integrated strategy and found it to be far more effective over a wider range of investment outcomes than trying to do this via just investing and dealing with the taxes
Are you suggesting buying the SPL PRIOR to putting the money into a deferred income account? Otherwise, one would have to pay taxes on the funds pulled-out of an IRA/401K in order to buy the insurance policy. Also, it seems that if one waits until RMD time approaches, the premium per insurance value ratio is highly skewed. What am I missing here?
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Old 03-12-2017, 01:11 PM
 
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yes , you will pay taxes on the money to buy the policy however depending on age that policy is more and more leveraged . if you could pay tax on 600k and get 1 million tax free i would say that is a score .
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Old 03-12-2017, 07:15 PM
 
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I thought you had to die to get a "1 million" payout. Maybe a score for my kids but not for me....
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Old 03-12-2017, 08:25 PM
 
Location: Close to an earthquake
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I'll offer some non-conventional thinking. Look at your current marginal tax rate and what it'll be when you're required to take RMD. The only thing you can do not knowing what lies ahead is to assume future rates will be as they currently are. The only exception might be to anticipate what tax rates will be once probable 2017 tax legislation starts being known.

Make sure you don't leave any lower tax rate bracket on the table now, particularly if your future marginal tax rates due to SS benefits and RMD will push you to a higher tax bracket. I see this happening way to often.

To guard against wasting unusued lower tax rate brackets now, consider taking distributions now rather than at RMD but only up to the maximum amount of lower tax rate bracket available. If what I'm saying isn't clear, talk to your trusted tax guy and have him/her do a projection for you.

Paying now goes against conventional thinking but your goal should be taking a long-term approach of paying the least amount of taxes over your lifetime. Sometimes you do this by paying now rather than later.

Hope this helps.
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Old 03-13-2017, 02:26 AM
 
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Quote:
Originally Posted by bigbear99 View Post
I thought you had to die to get a "1 million" payout. Maybe a score for my kids but not for me....
the score is supposed to be for your wife , not your kids . if you are single that strategy may not be for you if you do not have a good use for tax free money .

that strategy is so your spouse is not thrown in to a nasty situation .

not only having rmd's but the loss of a social security check and filing single . tack that on to all the nasty's that come with an unknown amount of rmd's .

there is a chance your spouse can avoid getting their social security taxed with the tax free money too . the benefits to a surviving spouse are pretty big .
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Old 03-13-2017, 10:46 AM
Status: "Re-edit status" (set 20 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,181 posts, read 1,903,923 times
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Quote:
Originally Posted by jghorton View Post
It looks like the GLWB RMD is about 5% annual on the entire death benefit amount - Is that your understanding? -- I've also been doing a non-annuitized rollover for a couple of years, but, that falls under RMD's for another account.
It's 5% of the "final" Income Acct.
GWLB are not a perfect method to avoid or postpone RMD since the Account Value (liquidation, cashvalue, real) is counted for total RMD ending Dec31.
Best solutions that I know of are ROTHs and taking IRAs to taxable.
I am still working on the problem.
YMMV
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