Long Term Care Insurance
Long Term Care Product Seen as a Very Smart Tax Move for Seniors
by Jim Dew
Many retirees are sitting on ticking tax time bomb with their old, low cost basis annuities. Say a 60 year old deposited $100,000 in a tax-deferred
annuity ten years ago and it grew to $150,000. $50,000 is now taxable upon withdrawal.
If that person is unfortunate enough to have to withdraw from that annuity
for long term care, they will have to pay tax on the first $50,000 that they draw out. So, not only do they have to pay exorbitant fees for the long term care, Uncle Sam will also pile on with a tax bill.
"This is such a travesty for families facing this issue," said Jim Dew, President of 300 Financial. "I am so happy that we now have a solution to this looming tax and long term care problem."
Annuity holders with a large tax bill buried in their annuity can now do a tax-free exchange into the Living Care® Annuity. This annuity, underwritten by
United of Omaha Life Insurance Company, gives the annuity holder two effective benefits.
First, your deposit is multiplied 3X if it is utilized for Long Term Care. So a
$100,000 deposit will give the investor $300,000 in Long Term Care Protection.
Even better, if an annuity like the one described above with a $100,000 tax
basis that has grown to $150,000 in value is transferred using the IRS's 1035 exchange rule, the annuity holder could get out of paying taxes altogether.
If the annuity holder needs to tap into the Long Term Care Benefit two years later, they will be able to receive the payments tax-free. Effectively,
avoiding taxation altogether. If they had left it in the "old" annuity, they would have faced a tax bill on the first $50,000 withdrawn, on top of the already crippling Long Term Care costs.
Interest in this new product has been overwhelming to say the least.
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