Mt. Pleasant Lutheran Church

Leveraging an Annuity with Life Insurance

Do your financial goals include providing for your family and supporting your favorite charities? If you own an annuity that has increased in value, there’s a tax-efficient solution that may help you accomplish these goals. You may be able to use annuity payments to purchase two life insurance contracts—one for your family and one for the Mt Pleasant Lutheran Church Endowment Fund.  Keep in mind that upon death, the value of your annuity could be significantly reduced by taxes. For example, deferred annuities are often subject to additional taxation called “income in respect of a decedent” when transferred to heirs, which can result in as much as a 40% combined erosion of assets. By taking advantage of certain life insurance features, you can achieve your financial goals of providing for family and charities while limiting your exposure to taxes.

IS THIS SOLUTION RIGHT F0R YOU?

The first step is to review your current financial needs and goals to determine the right solution for you. Questions to consider and review with your financial and legal advisors include:

  • Do you want to reduce your future tax burden?
  • Do you have coverage in place to cover your basic financial needs?
  • Do you have assets that will never be needed for income?
  • Do you want to preserve assets for heirs?
  • Do you own an annuity that will generate taxable annual income and exceeds your standard income tax deduction?
  • Do you have charitable goals you want to accomplish?

If you answered yes to these questions, you might benefit from converting your annuity to life insurance.

HOW IT WORKS

This solution takes an annuity that has appreciated in value and leverages it through two new life insurance contracts—one for the benefit of heirs and the other to benefit the Mt Pleasant Lutheran Church Endowment Fund.

Annuitize your annuity over a fixed period of years.

  • Use the tax-free portion of annuity payments to purchase a life insurance contract that provides a tax-free benefit to your heirs.
  • Use the taxable portion of annuity payments to purchase a life insurance contract that supports your favorite charities and is owned by Mt. Pleasant Lutheran Church Endowment Fund. The premium payments provide a charitable tax deduction, which may offset the tax implications related to the annuity payments.

 

PRIMARY BENEFITS OF GIVING LIFE INSURANCE

  • It’s economical. It allows people to give more than many could otherwise afford. If the life insurance is owned by a charity, like the Foundation, premium payments are tax deductible for those who itemize their tax deductions. This makes the gift even more affordable.

 

FOR MORE INFORMATION: Please consult with your financial and legal advisors regarding the viability of using your annuity to purchase life insurance. For more information about the Mt. Pleasant Lutheran Church Endowment Fund, please contact: MPLC member and Endowment Fund Treasurer, Dave Zuelke at 262-210-6299 or email davezuelke@gmail.com ; or MPLC Member and Thrivent Financial Consultant, Ryan VanDeLoo at 414-856-9900 or email Ryan.VanDeLoo@Thrivent.com

 

 

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