Potentially Receive Retirement Income Tax-free

You’ve worked hard to build a successful business.

How can you continue to receive the benefits of your success during your retirement?

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What if you could: • move money from your business to yourself tax favorably, • defer taxes on your savings, • provide an income tax-free death benefit for your loved ones and • potentially receive retirement benefits income tax-free?1

Would you be interested?

Utilizing your business for retirement planning

Do you have a Qualified Plan?

Does your plan have the most up-to-date formula that seeks the maximum benefit for you?

As a business owner you have the opportunity to use your practice to gain additional tax leveraging as part of your retirement planning strategy.

A Qualified Plan, such as a Profit Sharing Plan or Defined Benefit Plan, provides a current tax deduction for your business and contributions are not taxable to participants until withdrawn from the plan. With a Qualified Plan you can transfer money from your business to your retirement account without any current tax consequences.2 If you have a need for additional life insurance protection, you may also want to consider a strategy that provides the potential for tax-free benefits at retirement.

A Section 79 Plan is a benefit plan for group life insurance. The plan allows the use of permanent life insurance which, in addition to providing an income-tax free death benefit,3 permits tax-deferred growth of policy cash value and the potential for tax-free retirement income.1 Premiums are deductible to your business and are only partially income taxable to you as current income – as much as 35% - 40% can be excluded from your income.

1 Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrawals up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon contract lapse or surrender. Surrender charges may reduce the policy’s cash value in the early years.

2 Distributions from qualified plans are taxed as ordinary income in the year the money is received and, if taken prior to reaching age 59 ½ may be subject to an additional 10% federal income tax penalty.

3 Internal Revenue Code Section 101(a)(1). There are some exceptions to this rule. Please consult a qualified tax professional for advice concerning your individual situation.

What will be the impact of future tax rates?

Your outlook on future tax rates may drive some of your retirement strategy.

70% 60% 50% 40% 30% 20%

2000 –

1990 –

1980 –

1970 –

1960 –

1950 –

1940 –

10% 1930 –

• If your retirement is still 20 years away, how can you determine with any certainty what tax rates will be?

80%

1920 –

• Tax rates may go up in the immediate future, but what about 5, 10, or 20 years from now?

90%

1910 –

One of the major components to any retirement strategy is taxes, both current and anticipated.

History of Federal Individual Income Top Marginal Tax Rates

Blue: Top marginal rate Green: Top marginal rate on earned income, if different.

Source: truthandpolitics.org, referencing IRS Statistics of Income Bulletin Pub 1136

What direction do you think tax rates are going to go?

• If you think future tax rates will be lower, then saving today with a Qualified Plan makes a lot of sense.

20%

40%

Future Tax Bracket

Future Tax Bracket

• If you think future tax rates will be higher, then you may want to consider using a Section 79 Plan to provide needed life insurance protection and the potential for tax-free income.1

Q: Which plan is the right plan?

Next Steps

A: It depends on your goals – it may be a combination of plans.

• Review your existing Qualified Plan to determ determine if your plan has the correct formula to maximize your benefit.

Diversify, Diversify, Diversify

• Review Qualified Plan design options if you don’t currently have one.

• Fundamental principle for retirement planning.

• Don’t put all your retirement dollars in one basket.

• Determine if a Section 79 Plan makes sense, either in addition to a Qualified Plan or in lieu of one.

• Consider hedging your future tax rate “bet” and diversify with pre-tax and after tax accumulation by adopting a combination of plans.

This information is not intended as tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor.

National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest, Dallas, TX and their aďŹƒliates. Each company of the National Life Group is solely responsible for its own ďŹ nancial condition and contractual obligations. Life Insurance Company of the Southwest is not an authorized insurer in NY and does not do an insurance business in NY.