A NEW WAY TO PAY LTCI PREMIUMS – TAX FREE!
Long Term Care Insurance in San Diego CA
As of January 1st, 2010 there is a new way to pay your long term care premiums with tax-free withdrawals from Non-Qualified Annuities. The Pension Protection Act goes into effect 1/1/2010 and provides yet, another incentive from the government to encourage citizens to protect themselves against the devastating effects of a long term care situation.
Typical funding strategies for LTCI
I have many clients who have used funds from a dedicated investment to fund their ltci premiums. The logic is certainly there in using this strategy. We work our whole lives to accumulate our nest egg which serves two primary purposes. First and foremost we save our whole lives so that we can have money to support our lifestyle. For many this means we use the money to supplement our income and for such things as home improvements, travel, and spoiling grandkids. In other words, we save money so that some day we have the money to use for whatever we would LIKE to use it for. But, secondly, we save for things we don’t want to spend money on but, we have to because of an unexpected emergency. So our nest egg also represents “Security”. Water heaters blow up, dental bills appear out of nowhere and cars need repairs. But, the greatest threat to our security is a long term care situation. Suddenly, the emergency changes from thousands of dollars to Hundreds of Thousands of dollars. So instead of using the entire nest egg to protect ourselves why not take a small amount of the interest or dividends that the investments generate to fund long term care insurance. But, up until now the use of this money is typically subject to taxation. But, for some there is a new Tax-free option available.
Pension Protection Act and Tax-Free Withdrawals
Starting January 1st, 2010 you can take withdrawals from non-qualified annuities tax-free to pay ltci premiums. Keep in mind that non-qualified means that it is an annuity that is not in a retirement fund like a 401k, 403B, IRA, or 457 plan. These retirement plans are what is referred to as “Qualified Money”. Non-Qualified would be anything outside of these types of traditional retirement plans. This does open up some new funding options for many. Deferred Non-qualified annuities would allow you to put an amount of money in at a guaranteed interest rate which will grow tax-deferred. You can then use a partial 1035 exchange to pay your ltci premiums from the account values TAX-FREE. For most that would be the equivalent of saving 30% off your premiums if you’re in a 30% tax bracket.
For more information please call 858-350-3161 or email LTCCapstone@Gmail.com
I work with all the major insurance companies and my objective is to help my clients determine if long term care protection makes sense for them and if so, to help them shop the market to find the best company at the best rate
I specialize in Traditional Long Term Care Insurance as well as Hybrid Long Term Care Plans which are either a combination of Life Insurance and Long Term Care or an Annuity Plan with Long Term Care
I’ve been specializing exclusively in Long-Term Care Insurance Planning for over 21 years.
Steve was recognized as a 2003 Long Term Care Expert of the Year at The National Long Term Care Producers Summit
2006 was awarded Senior Market Advisor of the Year Finalist by Senior Market Advisor Magazine
National Speaker for Numerous Industry Meetings
Awarded Nations Top 10 Agent 8 times by the American Association of Long Term Care Insurance
Author of numerous published articles on long term care planning
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