Exhibit 4: Results incorporating annuitized
percentages Anticipated Computed Trust Corpus Actual Wealth Annuitized
Wealth Inclusion Value Transfer Percentage Transfer Amount Rounded) (Rounded) 5% 295,829 432,537 2,199,000; 1,766,000 10% 290,895 865,074: 2,166,000 1,301,000 25% 276,093 2,162,684 2,067,000 0 Since the entire trust corpus value is includible in the gross estate of the decedent, no value is transferred as a result of the trust that is free of wealth transfer tax.
Other than housing, these households hold few assets that could be drawn down or annuitized
to supplement other sources of income.
In a bind, he decided to try to sell off his final two annuitized
payments for a lump sum of cash equal to his debt.
For example, withdrawals from an annuity are first taxed at ordinary income tax rates on any growth within the annuity (first-in last-out), whereas when a contract is annuitized
, use of an exclusion ratio allows a portion of each payment to escape taxation as a return of principal.
Should the owner, or under some circumstances the annuitant, die after premiums are paid but before the contract is annuitized
(i.e., begins paying out benefits), a death benefit allows for recovery of the amount invested in the contract.
The dark bars show the amount of the fund not annuitized
and therefore available to provide the required death benefit on early death.
"Another factor limiting the flow of bequests across generations is the remarkable postwar increase in the degree to which the resources of the elderly are annuitized
," that is, composed of income that will cease to flow once the recipient dies.
A deferred annuity provides for an initial waiting period before the contract can be annuitized
(usually between one and five years), and during that period the contract's cash value generally remains liquid and available.
John Olsen, President of Olsen Financial Group said, " the substantial restrictions upon liquidity that the MasterDex imposes might be considered excessive or unwarranted by the benefits provided (including the 10% interest bonus that is only realizable if the contract is annuitized
In addition, ideally the value of these annuitized
payments should be protected--at least partially--against erosion by inflation.
It can be annuitized
, but also offers optional riders for guaranteed lifetime withdrawals at annual rates that range from 3% to 7%, depending on age at first withdrawal.
In addition to annuitized
payments to a beneficiary for life, annuities can also provide either annuitized
payments for a limited number of years, or a lump-sum payment to the beneficiary.
This trap applies to annuities that have been annuitized
(i.e., when the stream of distributions under the contract begin).
But when John Amann, chief operating officer of Allianz Income Management Services, the U.S.-based unit of Germany's Allianz, was asked why most people haven't annuitized
, he said, "Could the answer ...
Accordingly, a lottery winner is not taxable on the value of an annuitized
prize in the year it is won under the doctrine of constructive receipt."