Paul Pent & Associates - Retirement Advice Blog

Financial Insight Blog

Estate Taxes and IRA Taxes are Two Separate Things


I just got off the phone with a client I've known for many years. His wife passed away last year and he wanted to discuss the beneficiaries on his accounts. He assured me that he didn't have enough money in his IRA to worry about estate taxes. I said, "Wait, go slow on that. You don't want to confuse estate taxes and taxes on IRA's. It's a different subject."

Currently, and with the new tax code, the estate tax exemption is 11.2 million for an individual and 22.4 million per couple(Not somehting most people have to worry about). However, if one passes on an IRA of any amount to a beneficiary other than their spouse, usually the whole amount will be taxed as regular income the year it is inherited. This is commonly overlooked and can lead to a huge tax bill for the beneficiary. Of course, there is a way to pass, even an IRA to a beneficiary without them having to pay taxes.

Happy New Year

Let's just take a look at reasons 3 and 4...

By Allen Koreis

3. There are no limitations on the amount that may be contributed annually to an IUL. As of the date of this article, the IRS limits the annual contribution to an IRA to $5,000 annually if the account owner is under the age of 50 and $6,000 annually if the participant’s age is 50 or higher. 

4. Policy owners may access their money from an IUL without IRS penalty regardless of age. Qualified plan withdrawals prior to age 59 1/2 are subject to a 10 percent penalty in addition to being taxed as ordinary income for the year the withdrawal is take. 

Commonly, people find themselves in a situation where they need to access their savings. When this means tapping into a qualified plan, the available amount of the account value is typically reduced by 30 percent (10 percent and 20 percent withholding). Then when the tax return is filed for the year in which the withdrawal was taken, additional taxes may be due if the qualified plan owner is in a tax bracket greater than 20 percent. With indexed universal life insurance, the available account value may be accessed at any time for any reason without tax or penalty via policy loans which are not required to be repaid.

You can see the rest of the article here

The IRS is looking forward to taking their portion of your IRA. Even if you plan on using your IRA as little as possible. At age 70.5 all owners of IRA’s have to withdraw what is known as their “Required Minimum Distribution”. If you die and gift your IRA to a spouse, the IRS will continue to tax your money, and if you don’t have a spouse to bequeath it to, the IRS likes that even more. They’ll tax the whole amount all at once as regular income. In a situation like the latter, your IRA will be worth only abut 65% of it’s original value upon your death.

How to order your “Online Financial Second Opinion”


How to order your free online financial second opinion..see an example of our safe and proven way to fund retirement.

See our video by clicking here: "Retiring for Half: Example Financial Second Opinion"

Increase Your Income in Retirement:  Report


From the Wall Street Journal 03/01/2013

by: Kelly Greene

Conventional wisdom says you can take 4% from your savings the first year of retirement, and then that amount plus more to account for inflation each year, without running out of money for at least three decades.

This so-called 4% rule was devised in the 1990s by California financial planner William Bengen and later refined by other retirement-planning academics. Mr. Bengen analyzed historical returns of stocks and bonds and found that portfolios with 60% of their holdings in large-company stocks and 40% in intermediate-term U.S. bonds could sustain withdrawal rates starting at 4.15%, and adjusted each year for inflation, for every 30-year span going back to 1926-55.

Well, it was beautiful while it lasted. In recent years, the 4% rule has been thrown into doubt, thanks to an unexpected hazard: the risk of a prolonged market rout the first two, or even three, years of your retirement. In other words, timing is everything. If your nest egg loses 25% of its value just as you start using it, the 4% may no longer hold, and the danger of running out of money increases.

If you had retired Jan. 1, 2000, with an initial 4% withdrawal rate and a portfolio of 55% stocks and 45% bonds rebalanced each month, with the first year's withdrawal amount increased by 3% a year for inflation, your portfolio would have fallen by a third through 2010, according to investment firm T. Rowe Price Group. And you would be left with only a 29% chance of making it through three decades, the firm estimates.

That sort of scenario has left many baby boomers who are in the midst of retiring riddled with angst. "The mind-blowing aspect of retiring is all these years you're accumulating and accumulating, and then you need to start drawing down, and you have no idea how to do that," says Al Starzyk, a 66-year-old retired printing executive in Williamsburg, Va.

So, if you can't safely withdraw at least 4% a year from a balanced portfolio of equity and bond funds, what do you do? ...

Our Answer: It may be counterintuitive to some but it has been proven time and time again that withdrawal rates can be much higher if there is no risk in your retirement accounts.

To see how you can withdraw 4,5,6,7 and 8% in retirement and continually give yourself a raise to cover inflation, e-mail .(JavaScript must be enabled to view this email address) for a free report. To call and receive your report...1-877-797-7285

It's free, secure, and there is no obligation.

Is Your Broker Playing The Shell Game?

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I was exploring some highly touted and "inexpensive" indexed funds on a top companies website. Over the last ten years it seems that they have some good returns. Unfortunately they ignore one simple math problem. They quote the average return over a time period NOT the actual return.

Most of their customers probably don’t know that any time a negative return or loss is posted, the average can be very mis-leading. Does anybody remember the losses of 2001 or 2008? Look at this simple example and see for yourself...

Assume you have $100,000 and you place it in an account that has a 50% loss in year much do you have?

A: $100,000 X .50 = $50,000

Now assume that your account goes up 50% in year much do you have?

A: $50,000 X 1.5 = $75,000

Here’s where it gets misleading when the average is what companies use to induce their customers into buying or staying with them. The average return over the two year period is 0%. But when there is a negative or loss involved, the average will never be the actual return. In this case your actual return is -25% and an account value of $75,000. This is why companies don’t advertise actual returns.

Give us a call to get an illustration on “ACTUAL” returns and see how you can save for retirement without market losses.

“This is the worst time for investors” John Bogle


This article came out last year but I just stumbled upon it today. Fortunately the grim look on life taken by investors, who roll the dice on the market, doesn't have to be a way of life for our clients. When I read articles like this I wonder when people will wake up and finally see the difference between income and retirment planning vs letting someone else invest your money to try and get a high return.

Click here for the article.

Surviving the Next Market Crash

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Join us for this free one hour workshop and discover how to use annuities with no sales charges to sidestep the next market crash for any savings, retirement plan, or IRA.  
With every brokerage firm offering annuities for retirement, have you ever wondered which ones are the best? Now you can see them compared side by side by an independent and licensed agent. Complimentary lunch provided by Chic-Fil-A 
 Other Topics: 
1. How to get out of low interest or risky retirement accounts. 
2. How to turn your IRA into a tax-free gift to your heirs. 
3. Why a volatile market should work in your favor and not leave you full of anxiety.
4. How to trade your existing annuity for something better.
5. The realities of market risk and why it's never in your favor. 
May 15th at 12 pm
Pinnacle Financial Building 
7792 Belfort Parkway 
Jacksonville, Fl. 32256
Call or e-mail to reserve your seat: 904-460-1100
.(JavaScript must be enabled to view this email address)

How to Survive ObamaCare: Workshop

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Thursday, April 18th at 11am, Paul Pent & Associates will be hosting a 60 minute workshop packed full of great insight and information for those that want to survive the coming tidal wave of Obama Care.


Many people who bought long term care insurance were shocked when they found out their premiums were going up. To make it worse, industry insiders acted like it was okay. See this article from

Fortunately there is a much better alternative...

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