The Wealth Assault on Boomers
RMD Overview for Insurance
Professionals
(For agent use only)
The Wealth Assault on Boomers
Baby Boomers, those born between 1946 and 1964, are the fastest
growing population in America. Boomers control the majority of
wealth in America and average among the highest income levels.
There are currently 42 Million Baby Boomers in the Unites States
Boomers account for 35% of the U.S. Population
18% of all millionaires in the U.S. are over the age of 65
38% of all Boomers have household income over $75,000 annually
12 Million Baby Boomers own their own business, many with no
plans to retire
Not all roses for Baby Boomers
Waiting for all Baby Boomers are taxes and distribution requirements
that cause considerable damage to estate values, retirement accounts,
and investment incomes. All Boomers are subject to the damaging
effects of these taxes and requirements and all Boomer estates are
impacted by the results.
The damage comes in two forms
Required Minimum Distributions (RMDs)
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Designed to force liquidation of tax favored retirement accounts
Forces an increase in unearned income and marginal tax rates
Immediately destroys up to 50% of an account value
Estate Taxes
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Forces heirs to liquidate assets
Destroys the value of an estate
Can cause unrecoverable damage to family business
The RMD Gotcha!
 Many Baby Boomers will continue to work their business or career
after age 70.
 A large number of Boomer millionaires have sufficient assets and
investment income to sustain them through their non-working
years. These Boomers are not dependent on Social Security and do
not want or need income from their retirement accounts.
 Unfortunately, government mandated distributions do not care
whether or not the funds are needed. Just the opposite, the
government wants distributions to be taken in order to create a
large tax revenue base.
Two account types requiring
distributions
Social Security

Requires distribution by age 70
Qualified Retirement Accounts

IRA, 401(k), 403(b), Profit Sharing, SIMPLE, SEP
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Requires distribution by April 1 following age 70 ½.
Negative Impact of RMDs
Increases taxable income
Can cause an increase in the marginal income tax rate
Can subject Boomer to the new 3.8% investment surtax for
Individual Incomes of $200K, $250K Married Filing Jointly
Forces liquidation of retirement accounts, and subjects
accounts to income tax
Forces heirs to liquidate retirement accounts
Social Security creates unneeded income, the value of which is
lost to heirs at death
Example of impact from RMD
Bob’s Earned Salary: $175,000
Unearned Investment Income: $45,000
IRA Value: $385,000
401(k) Value: $520,000
Current Age
68
After RMD at
Age 70
Earned Income
$175,000
$175,000
Unearned Income (Dividends,
Interest, Rent)
$45,000
$45,000
IRA/401(k) Required
Distribution (Asset value
divided by 27.4)
n/a
$33,000
Social Security Benefits
n/a
$38,000
$220,000
$291,000
28%
33%
0%
3.8%
Investment Accounts: $525,000
Total Adjusted Gross Income
Real Estate Assets: $1,150,000
Marginal Tax Bracket
Investment Income Surtax
Total Tax on Investment
Income
36.8%
Calculating the RMD
Bob’s RMD Calculation
Distribution period from Uniform Lifetime Table: 27.4
Account
Value
Distribution
Period
RMD
IRA balance on December 31 of prior year: $385,000
IRA Balance
$385,000
27.4
$14,051
IRA balance divided by distribution period = $14,051
401(k)
Balance
$520,000
27.4
$18,978
401(k) balance on December 31 of prior year: $520,000
401(k) balance divided by distribution period = $18,978
Effect RMD has on the Estate
Bob’s estate assets are greatly destroyed with the loss of Social Security at death and
the application of RMD taxes.
Current value of Social Security benefits
and retirement accounts are $1,425,000
After RMD taxes at his marginal tax rate of
36.8% and the end of Social Security
benefits at death, his heirs will only
receive $571,960
401(k)
IRA
Social Security
(x 10 Years)
Total
Current Value
of Assets
$520,000
$385,000
$380,000
Post RMD
Value of
Assets to
Heirs
$328,640
$243,320
$0
Loss
-$191,360
-$141,680
-$380,000
$1,425,000
$571,960
-853,040
Bob’s heirs will lose almost two-thirds of the value of assets passed on after Bob’s
death, not taking into consideration any potential federal or state estate taxes.
Taking back what was lost
An RMD Life Insurance Strategy allows the Boomer to recover
losses from RMD taxes, ending Social Security payments and
potential estate taxes.
Recovers all money lost from RMDs
Makes up for the loss due to ending Social Security benefits
Guarantees heirs money to pay any remaining RMD taxes due
on inherited accounts
Only cost effective solution available to the RMD problem
A cost effective solution for Bob
Looking back at our example, Bob can recover all the lost value
of ending Social Security benefits and RMD taxes with an
$850,000 RMD life insurance strategy.
Small amount of premium guarantees large return for heirs
Premium is funded by unneeded RMD/Social Security Income
Heirs enjoy benefits tax free
How much does it cost Bob?
 If Bob at age 70 is a Preferred Non-Smoker
$850,000 Guaranteed Death Benefit to age 110
Average annual premium $25,000
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Tax-free benefit to heirs is
32x the annual premium!
If Bob at age 70 is a Standard Non-Smoker
$850,000 Guaranteed Death Benefit to age 110
Average annual premium $32,000
Tax-free benefit to heirs is
25x the annual premium!
If Bob at age 70 is a smoker
$850,000 Guaranteed Death Benefit to age 110
Average annual premium $58,000
Tax-free benefit to heirs is
14x the annual premium!
An amazing sales opportunity
Largest growing demographic in the U.S. presents an opportunity to
provide a value-added solution to an increasing problem. All Baby
Boomers face this problem, and an RMD Life Insurance Strategy is the
only solution.
High net-worth customers
Growing population
Unneeded distributions fund the insurance strategy
Average premium is $15,000 annually
Fantastic sales material (the book) outlines the problem and strategy
to customer
Prospecting for the right customer
The Wealth Assault on Boomers was written for the following customer…
Age 65 and above; and
Existing income of $150,000 or greater; and
Professional-business owner that plans to work past age 70; or
Individual with sufficient asset producing income past age 70; or
Individuals not needing additional income from Social Security/401(k)/IRA;
and
Individuals wanting to leave full value of existing assets to heirs.
The best prospecting tool
The Wealth Assault on Boomers book is
a great tool to help you prospect to
affluent seniors.
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Easy to read (Only 60 pages)
Effectively illustrates effects of RMDs and taxes
Helps clients calculate their own RMDs
Motivates client to create an RMD life insurance strategy
This is a great way to break into a new market, increase sales in an
existing market and deliver true value to your affluent customers.
This is the opportunity of 2014!
Call us today for your copies!
Steve Clemens, Vice President Life Markets
URL Insurance Group
800.926.8875 x132
www.urlinsgroup.com