22:48
Faizan
Here's the good news: on average men and women in the US can now expect to live 2 years longer. The Society of Actuaries, the organization responsible for tracking American life expectancies, recently reported that women now live an average 88.8 years and men now live an average 86.6 years. Here's the bad news: you'll need 2 additional years of retirement income.
Fortunately, there's a new 401(k) investment option that can help to make this possible. It's known as the 401(k) Plan Backstop.
Essentially, it's a deferred retirement option called a longevity annuity. It can be added to target date funds and executed once an individual reaches a predefined advanced age. These optional retirement vehicles are meant to supplement traditional 401(k) plans and provide an ongoing monthly income stream upon the depletion of other retirement savings.
Until recently, individuals securing these safety nets would have encountered minimum distribution upon reaching the age of age 70-½, effectively nullifying the original purpose of the longevity annuity itself.
Fortunately, in July 2014, the IRS exempted the value of "qualifying longevity annuity contracts" and moved minimum distribution requirement from 70-½ to 85. As part of the exemption, longevity annuities:
cannot exceed 25% of the total value of retirement assets
cannot exceed a $125,000 in total value
must be indexed for inflation
must be a fixed annuity (no variable payouts)
What this ultimately means to employers and employees is that they can use a portion of their savings to expand retirement savings, and guarantee a sufficient income amount and distribution duration so that they not only don't run out of money, but have more to enjoy during their golden years.
If you or someone at your company are considering purchasing a longevity annuity, here's what you need to know. First, the price that you pay for them will vary according to the age at which the annuity is purchased. Second, to qualify as a longevity annuity, said investment must be designated as such at the time of purchase. Finally, all premiums paid by an individual toward their longevity annuity can go their heirs in the case that they die before or after the age at which the annuity begins.
In addition, in order to meet as anti-discriminatory rules, longevity annuities must serve as a single integrated investment program "under which the same investment manager manages each date fund and applies the same generally accepted investment theories across the series of target date funds" not feature a guaranteed minimum withdrawal benefit (an arrangement available to annuity buyers outside retirement plans) not invest in company stock be "treated in the same manner with respect to rights or features other than the mix of assets" with consistent fees and administrative expenses for each target date fund.
We are well-versed in the acquisition and application of the latest retirement options and can help you design a plan, whether corporate or personal, to ensure sufficient funds for a long and fruitful retirement.
Fortunately, there's a new 401(k) investment option that can help to make this possible. It's known as the 401(k) Plan Backstop.
Essentially, it's a deferred retirement option called a longevity annuity. It can be added to target date funds and executed once an individual reaches a predefined advanced age. These optional retirement vehicles are meant to supplement traditional 401(k) plans and provide an ongoing monthly income stream upon the depletion of other retirement savings.
Until recently, individuals securing these safety nets would have encountered minimum distribution upon reaching the age of age 70-½, effectively nullifying the original purpose of the longevity annuity itself.
Fortunately, in July 2014, the IRS exempted the value of "qualifying longevity annuity contracts" and moved minimum distribution requirement from 70-½ to 85. As part of the exemption, longevity annuities:
cannot exceed 25% of the total value of retirement assets
cannot exceed a $125,000 in total value
must be indexed for inflation
must be a fixed annuity (no variable payouts)
What this ultimately means to employers and employees is that they can use a portion of their savings to expand retirement savings, and guarantee a sufficient income amount and distribution duration so that they not only don't run out of money, but have more to enjoy during their golden years.
If you or someone at your company are considering purchasing a longevity annuity, here's what you need to know. First, the price that you pay for them will vary according to the age at which the annuity is purchased. Second, to qualify as a longevity annuity, said investment must be designated as such at the time of purchase. Finally, all premiums paid by an individual toward their longevity annuity can go their heirs in the case that they die before or after the age at which the annuity begins.
In addition, in order to meet as anti-discriminatory rules, longevity annuities must serve as a single integrated investment program "under which the same investment manager manages each date fund and applies the same generally accepted investment theories across the series of target date funds" not feature a guaranteed minimum withdrawal benefit (an arrangement available to annuity buyers outside retirement plans) not invest in company stock be "treated in the same manner with respect to rights or features other than the mix of assets" with consistent fees and administrative expenses for each target date fund.
We are well-versed in the acquisition and application of the latest retirement options and can help you design a plan, whether corporate or personal, to ensure sufficient funds for a long and fruitful retirement.
