Client Just Doesn't Want to Deal with IRS Distribution Rules Techniques to Solve Client's Problems Let's face it, some clients just don't want to deal with the government. When they start hearing of all the rules associated with taking distributions from their IRA, they pose the question, “Can I just take my money, pay my taxes, and forget about the rules? Wouldn’t I come out about the same in the long run?” What do you tell them? QPDA provides a technique that illustrates the cost of such a decision. <Click>

Take My Money, Pay My Taxes, & Forget the Rules Retirees who did not feel the necessity to take distributions from their IRA accounts, are particularly concerned about distribution rules. Why should they have to worry about when they take the money, or whether they take enough money each year, or whether there's penalties because they didn't take enough? For the retiree who doesn't need the money, worrying about distributions from their IRA is not their idea of the ideal retirement. <Click> "I just don't like all the distribution rules - how much I have to take, when I have to take it, penalties if I don't take enough - I'd rather just take my money, pay any taxes, and not worry about the IRS or minimum distribution rules!"

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket In this example, Lou Drexler is a male age 70 who really doesn't need his retirement distributions <Click> He has $470,000 in his 401(k) plan earning approximately 6%. <Click> He really doesn't need the money in his retirement plan and only plans to take distributions if he absolutely needs them. <Click> His other assets are earning roughly 4% and <Click> he's in a 30% income tax bracket.<Click>

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Eliminate worries about distribution rules Control my money Fair comparison to determine cost, if any Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou’s goals and objectives are very simple: <Click> first, he wants to eliminate any worries about distribution rules; <Click> next, he wants to control his own money; and <Click> thirdly, he wants to see a fair comparison to determine the cost of this decision. <Click>.

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Eliminate worries about distribution rules Control my money Fair comparison to determine cost, if any Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket The tool we will use is QPDA and the technique will be Lump Sum versus Rollover. <Click> QPDA -- Lump Sum vs. Rollover

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Eliminate worries about distribution rules Control my money Fair comparison to determine cost, if any Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket This technique will, year-by-year, compare the values if you were to take the distributions and pay the taxes, compared to a rollover IRA. If he wanted to illustrate using this money for expenses, gifts, or insurance premiums, that would be compared with and without the rollover, so that everything stays an apple-to-apple comparison. <Click> QPDA -- Lump Sum vs. Rollover Year-by-Year Comparison if Living

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Eliminate worries about distribution rules Control my money Fair comparison to determine cost, if any Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket This technique will also do a year-by-year comparison of the values if Lou dies. The previous ledger showed the values if living, while this ledger shows the values if death were to occur in any of these years. <Click> QPDA -- Lump Sum vs. Rollover Year-by-Year Comparison if Living Year-by-Year Comparison at Death

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Eliminate worries about distribution rules Control my money Fair comparison to determine cost, if any Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket The best way to illustrate the cost of this comparison is to look at the graphs provided. We see that the net effect on values if living greatly favor the rollover IRA and we see that the values at death are greater with each additional year. The graphs make it simple to see that the benefits are just too great with the IRA rollover. <Click> QPDA -- Lump Sum vs. Rollover Year-by-Year Comparison if Living Year-by-Year Comparison at Death Graphs of the Comparisons

Take My Money, Pay My Taxes, & Forget the Rules Case Study Case Study Take My Money, Pay My Taxes, & Forget the Rules Take My Money, Pay My Taxes, & Forget the Rules Eliminate worries about distribution rules Control my money Fair comparison to determine cost, if any Lou Dexter Age 70 Male $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket Rollover: 42% - 73% Better if Living 2% - 40% Better at Death If monthly distributions of $2,000 taken starting at age 70: - Lump Sum without Rollover runs out of money at age 86 - With IRA Rollover runs out of money age 98 Lou Dexter Male Age 70 $470,000 in 401(k) Plan @ 6% Does not want to take distributions Other Assets @ 4% 30% Income Tax Bracket The rollover provides between 42% to 73% greater values while living. <Click>. His benefits at death start at 2% and in just a few years have reached 40% and would continue to grow. <Click>. Making one additional calculation with QPDA, we see that if Lou took the monthly distribution of $2000 starting at age 70, the lump sum and paying the taxes would cause him to run out of money at age 86, but by using the IRA rollover and taking the $2000 distributions, he would not run out of money until age 98. <Click> QPDA -- Lump Sum vs. Rollover Year-by-Year Comparison if Living Year-by-Year Comparison at Death Graphs of the Comparisons

Using an IRA Rollover instead of a Lump Sum is worth the trouble! Yes, it does appear that the IRA rollover is well worth the trouble. More funds are available for his retirement. You have almost a half-million dollar account to manage. By using an annuity or similar investment, you can make most of his worries about distribution rules a thing of the past. <Click> "I can rollover my funds, take just what I need, or the minimum required, and I will have more money during my retirement, and my heirs will get more of it when I die! I'm glad you made this comparison for me."