FOR LIFE The Lincoln National Life Insurance Company, Fort Wayne, IN, Lincoln Life & Annuity Company of New York, Syracuse, NY Not FDIC-insuredNot a deposit Not insured by any federal government agency Not guaranteed by any bank or savings associationMay go down in value ©2012 Lincoln National Corporation LCN Beyond retirement plan limits Protecting a legacy and adding supplementing retirement income with tax-advantaged life insurance

LCN Agenda Add flexibility Enhance control Supplement existing retirement planning

LCN Income vs cash flow Common forms of retirement income Net after-tax Cash Flow IRS form 1040 line 8b M odified A djusted G ross I ncome A djusted G ross I ncome IRS form 1040 line 37 Tax exemptTax deferredTaxableTax free Possible shrinkage from taxation

LCN Income affects Income Tax expense Social Security benefits Medicare premiums 85% of your benefits are taxable with income over 34K Your premiums increase with income over 85K over triple!

LCN IRC Sec.101(a)(1) Death proceeds are received income tax free by the beneficiary Rev. Rul The inside build up of cash surrender values is generally not taxed IRC Sec. 72(e)(s) Policy loans are not includable in income on non-MEC policies IRC Sec. 72(v) There is no penalty for “early” distributions prior to age 59½ IRC Sec. 1035(a) Life Insurance may be exchanged income tax free for an annuity Life insurance taxation

LCN Net after-tax cash flow Income from a 401(k) Cash flow from a life insurance policy $20,000 distribution 28% tax Pre-tax contributionsAfter-tax premiums $14,400net after-tax cash flow $20,000 distribution 0% tax $20,000net after-tax cash flow $20,000 distribution 35% tax $13,000net after-tax cash flow $20,000 distribution 0% tax $20,000net after-tax cash flow

LCN Cash flow affects Cash flow from a life insurance policy Tax expense Social Security benefits Medicare premiums

LCN Needs Wants Dreams Legacy Travel, entertainment, gifts, motorcycle Food, shelter, clothing Grandchild’s education, vacation home, RV Heirs, charities Financial independence Post-retirement expenses Frequency Less More

LCN Asset and expense matching Needs Wants Dreams Legacy Expenses Asset conversions Annuities, dividends, interest Employer pension, 401K, IRA, social security Life insurance living benefits Life insurance death benefits Traditional assets Supplemental assets

LCN Order of depletion Some retirees plan to deplete qualified plans over their lifetime with one of two results at death: Excess in qualified plans Ran out of money Quiz Would your beneficiaries rather have? (A)$1 of qualified money or (B)$1 of life insurance cash value? Loans and withdrawals reduce your policy’s cash surrender value and death benefit, may cause the policy to lapse, and may have tax implications Cash value life insurance Living benefits in the form of policy loans Death benefits transfer income tax-free +

LCN Flexibility Option 1 Retire at A65 Social A65 Draw down assets to LE Option 2 Retire at A65 Social A65 Draw down assets to life expectancy Access life insurance cash values post-LE Option 3 Retire at 63 Access life insurance cash values until A65 Social A65 Draw down assets to life expectancy Access life insurance cash values post-LE Option 4 ?

LCN Add flexibility Enhance control Supplement existing retirement planning Family protection Life insurance retirement planning

LCN Important disclosures. Please read. This material was prepared to support the promotion and marketing of life insurance. Lincoln Financial Group ® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. Lincoln life insurance policies are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Policies sold in New York are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims- paying ability of the issuer. Products and features are subject to state availability. Limitations and exclusions may apply. ©2013 Lincoln National Corporation Visit LincolnFinancial.com Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. 1/13 Z03 Order code: LIF-SRP-PPT111 Not a depositNot FDIC-insuredNot guaranteed by any bank or savings associationMay go down in value Not insured by any federal government agency