by Tom Felich, Annuity Sales Consultant


American radio broadcaster Paul Harvey was known across the country for the famous catch phrases he used throughout his programs. “Hello Americans, I’m Paul Harvey. You know what the news is. In a minute you’re going to hear ... the rest of the story.” These stories often developed as you would anticipate and seemed straightforward enough, but they always included that fateful twist or surprise ending. As you work to prepare clients for the retirement they deserve, it’s all too common to find that these hard-working individuals have some curveball thrown at them when they’re least expecting it. From the market declines that impacted millions to the demise of traditional pensions and forced early retirement, uncertainty is all too common and requires us to re-envision “the rest of the story.”

the facts

• Male age 52
• Planning to take early retirement for fear of getting laid off
• $400,000 traditional pension and a balance of $240,000 in a 401(k)
• Unpaid mortgage debt

the goal

Develop a plan that would allow the client to take early retirement while maximizing the value of assets left available to him in retirement. Additionally, it was important to him to eliminate his outstanding debt as part of the overall plan.

the course of action

After spending years with a large telecommunications firm, the client knew that early retirement might be the best option considering the down market and trending layoffs in the industry. He proceeded to inform his CPA that he planned to use his company pension to live on for retirement income. If he were to pass, his wife would receive 50% of the benefit. He then wanted to use the money he’d accumulated in his 401(k) to pay off his mortgage. With no mortgage, no additional debt and a lifetime income of $1,800 per month, he thought he had the story all figured out.

Concerned about this plan, the CPA informed the client that the 401(k) withdrawal would be assessed a 10% penalty and would then be taxed at a rate of 30%. He quickly referred the client to an agent to identify more beneficial alternatives. After taking the time to ask questions and complete a fact-finder, the agent called Creative Marketing for help developing a plan that would satisfy the client’s concerns and address multiple financial issues that were uncovered during the fact- finding process. We recognized the opportunity to explore a 72(t) distribution given the client’s desire to access his 401(k) account before age 59 1⁄2 without paying the 10% penalty the IRS requires.

the solution

By rolling the 401(k) and pension money into a fixed indexed annuity with an income rider and setting up a 72(t) distribution, the client could begin receiving payouts without incurring the 10% penalty while growing the asset simultaneously. The annuity would now provide the client with $2,416 per month until age 65, a 34% increase from the $1,800 a month in pension money he had originally planned to live on. This money could adequately cover his living expenses in addition to covering his mortgage payments.

Additionally, when the client turned 65, he could enjoy a guaranteed lifetime income of $46,000 annually along with a guaranteed death benefit rider to ensure his wife would be protected in the event that he were to pass away before she did.

the result

For the client: Using a unique strategy and a well-crafted plan, the client could enjoy more control, better returns and a legacy to protect his beneficiaries all in one. Now that he knows the rest of the story, he can be confident that he is leveraging the value of the assets he worked so hard to accumulate.
For the agent:


Now that you know “the rest of the story,” call your Annuity Sales Consultant to find out how you can use this type of strategy to better achieve your clients’ goals and objectives.



FOR AGENT USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. 11754 - 2011/6/16
Agents may not give tax, legal, accounting or investment advice. Individuals should consult with a professional specializing in these areas regarding the applicability of this information to his/her situation. Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged.