For internal and producer information only. Not for use in sales situations. MAXIMIZING GUARANTEED INCOME for your Retirement Years SPIA (Single Premium Immediate) DIA & QLAC (Deferred, Delayed, Longevity Income) Income Riders

For internal and producer information only. Not for use in sales situations. SPIA’s allow people to take “immediate” GUARANTEED Income Payments Minimum Deferral Period: 30 days Maximum Deferral Period: 12 months Payout Choices: Life ONLY, Life & Refund, Life and Period Certain, Period Certain ONLY Example - Life with Cash Refund: Payout Rate: – A55 Male = 6.0% Rate of Return: – A55 Male = Roughly 2.5% - 2.9% SPIA – Single Premium Immediate Annuity? For financial professional use only. Not for distribution to the public. GUARANTEED INCOME PAYMENT! What are Clients purchasing?

For internal and producer information only. Not for use in sales situations. Minimum Deferral Period: – DIA (NQ) = 13 – 24 mos. – QLAC (Q) = 13 – 24 mos. Maximum Deferral Period Nonqualified (DIA) – earlier of 30 years from the contract issue date or age 95 (Qualified (QLAC) – earlier of 30 years from the contract issue date or age 85) Payout Choices: Life ONLY, Life & Refund, Life and Period Certain, Period Certain ONLY Example if delayed 5 yrs (Life with Cash Refund) : Payout Rate: – A55 Male = 7.0% Rate of Return: – A55 Male = 3.9% What is a Deferred Income Annuity (DIA or QLAC)? (Also known as Delayed Income or Longevity Annuity) For financial professional use only. Not for distribution to the public. GUARANTEED FUTURE INCOME PAYMENTS! DIAs & QLAC’s allow people to defer the start of Guaranteed Income Payments What are Clients purchasing?

For internal and producer information only. Not for use in sales situations. Qualified Longevity Income Annuity (QLAC) is a tax-preferred DIA ––––––––––––––––––––––––––––––––––––––– QLAC contracts allow a client with IRA assets to defer the distribution of a portion of their IRA assets beyond age 70½, reducing early RMDs ––––––––––––––––––––––––––––––––––––––– No other qualified investment options offer this opportunity ––––––––––––––––––––––––––––––––––––––– Product features in some cases are more limited than with a traditional qualified annuity contract What is a QLAC? WITH TRADITIONAL IRAs AND QUALIFIED PLANS … Individuals typically must begin taking required minimum distributions (RMDs) no later than age 70½. –––––––––––––––––––––– With a QLAC, you can defer a portion of your RMDs up to age 85. For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. Minimum Deferral Period: 30 days to 13 months Unlike Annuitization the Payouts under an income rider do not cancel the base policy nor are payments gender based. Example of a Payout Rate: — A55 Male waiting 5 yrs = 5.80% — A55 Male waiting 10 yrs = 7.30 % Rate of Return: — Based on Index Return What is an Income Rider? For financial professional use only. Not for distribution to the public. FLEXIBLITY AND GUARANTEED FUTURE INCOME PAYMENTS! Income Riders are attached to a Deferred Annuity (usually Index or Variable) and allow people to accumulate money for Retirement tax deferred and through the Income Rider provide a source of predictable Guaranteed Income for Life What are Clients purchasing?

For internal and producer information only. Not for use in sales situations. Sample Income Rider Payouts For financial professional use only. Not for distribution to the public. Predictable Income Age at Issue Single Payout base Annual Payout Increase Single Payout after 10 yrs 54 or less3.80%0.25%6.30% %0.30%7.30% %0.35%8.30% %0.40%9.30% %0.45%10.30% %0.50%11.30% %0.55%12.30% Allianz Core 7

For internal and producer information only. Not for use in sales situations. Sample Income Rider Payouts For financial professional use only. Not for distribution to the public. Increasing Income Age at Issue Single Payout base Annual Payout Increase Single Payout after 10 yrs 54 or less3.00%0.25%5.50% %0.30%6.50% %0.35%7.50% %0.40%8.50% %0.45%9.50% %0.50%10.50% %0.55%11.50% Allianz Core 7

For internal and producer information only. Not for use in sales situations. Why Sequester Funds in a SPIA? ? Peace of mind — income reliability No market risk, so can be more aggressive with other assets in portfolio Flexibility of annuity income options Optional inflation protection riders Side advantage: reduce taxes (Exclusion Ratio reflects a portion of payment is return of Principal) Weakness – No additional money can be added. Not Flexible. This can be an advantage for some clients or situations. 1. Last dollars 2. Unable to handle money 3. Divorce situation where a guaranteed payout is needed

For internal and producer information only. Not for use in sales situations. Why Sequester Funds Today in a DIA or QLAC? ? To maximize future income Peace of mind — income reliability No market risk, so can be more aggressive with other assets in portfolio Flexibility of annuity income options Additional Money is allowed Optional inflation protection riders Side advantage: reduce taxes (Exclusion Ratio reflects a portion of payment is return of Principal) Weakness – Not Flexible. You have to preselect a start date and payout option.

For internal and producer information only. Not for use in sales situations. Why Sequester Funds Today in an Income Rider? ? To maximize future income Peace of mind — income reliability No market risk, so can be more aggressive with other assets in portfolio VERY Flexible as to income start date Starting income does not end the base policy Weakness – Lack of Income Options. Income is considered a “withdrawal” thus first dollars are taxable as interest.

For internal and producer information only. Not for use in sales situations. Is between the ages of Is concerned about outliving assets Is willing to use of assets today to guarantee a lifetime income starting today or at some point in the future Prefers guaranteed income to relying on the stock market A typical income annuity client …

For internal and producer information only. Not for use in sales situations. Issue age ranges SPIA: 0-95 DIA: 0-93 (i.e. NA if already age 94) QLAC: 0-82 Minimum contribution SPIA: $5,000 (DIA & QDIA): $10,000 Maximum contribution SPIA & DIA: up to insurer’s issue limits QLAC: Lessor of $125,000 or 25% of total prior year-end IRA balance. III ISSUE INFORMATION FEATURES

For internal and producer information only. Not for use in sales situations. DIA & SPIA- During the deferral period, the death benefit is return of premium (or none) Income Rider – Account Value DIA & SPIA- After the Income Start Date, the death benefit is determined by the Annuity Income Option selected at issue Income Rider – Account Value FEATURES DEATH BENEFIT

For internal and producer information only. Not for use in sales situations. You’re a Golfer with a Mission: To break 90 The Nat'l Golf Foundation calls the "avid" golfer a person who plays 21 times a year: Typical Costs for an avid golfer: 8 indiv. $585 total One day long group clinic: $125 Subscrip to golf magazine & Books: $150 8 dozen golf balls: $170 Tees, markers, shoes: $260 2 new clubs (putter, wedge): $ small buckets of balls: $110 7 rounds of 9 holes: $ rounds of 18 holes: $730 Regional golf trip with buddies: $420 19th hole: $315 TOTAL: $3,310 (“What it Really Cost to Play Golf? Washington Post. 13 April 2004) SPIA - “The Golf Pension.”

For internal and producer information only. Not for use in sales situations. Buy a Life Annuity (with cash refund to keep the spouse happy if you die on the course), and fund this $3,310/year habit, costs about $55,000 So - there's your golf pension. Concerned costs will rise? Add an inflation protection option, say 3% per year increase and the cost becomes $79, “Golf” does not have to be Golf. Maybe you prefer fishing, taking cruises, or going to the theater. The point is to build a personal pension for what is important in retirement. SPIA - “The Golf Pension.”

For internal and producer information only. Not for use in sales situations. Client with an old Annuity or money just sitting because “they want to leave it to their kids or grandkid(s)”. They personally don’t need income. Strategy: –Client buys a Joint SPIA with a Cost of Living increase on themselves and a Grandchild –Starting income immediately at a low amount which increases each year –When she passes away her grand child will start to receive the payout Ultimately what do we want after we pass away. TO BE REMEMBERED! Every year for the rest of the grandchild's life they will get a check from “grandmother/grandfather ” Grandchild as Joint Annuitant - SPIA

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity EXAMPLE #1 Glenn and Joy, each Age 60 Each has a $100,000 lump sum to invest. Considering deferring income to A65, A75 & A85

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity SCENARIO #1 AgePremium Monthly Income starting A65 (exclusion ratio) Monthly Income starting A75 (exclusion ratio) Monthly Income starting A85 (exclusion ratio) Life ONLY Male A60$100,000$625 (66.6%)$1,283 (51.8%)$3,144 (35.8%) Female A60$100,000$585 (71.2%)$1,160 (57.5%)$2,652 (42.5%) Life with Cash Refund Male A60$100,000$586 (63.8%)$1,234 (48.1%)$3,025 (32.7%) Female A60$100,000$555 (65.7%)$1,124 (53.1%)$2,558 (39.0%) Payouts presume a Return of Premium Death Benefit prior to the start of income

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity EXAMPLE #2 Stephen, Age 53 Stephen is a small business owner and will use a DIA to create his own Retirement type plan to supplement his Social Security income. Stephen invests $25,000 each year for 10 years The annuity will start at age 67, coincident with his Social Security benefits.

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity This is a hypothetical example for illustrative purposes only. Payout is based on single life with return of premium for death prior to annuitization and cash refund payout option. Rates are subject to change and payout will vary with premium amount, age, gender and annuity income option selected. EXAMPLE #2 YearPremiumPayout Rate Annual Income for life 1 $25, %$2,627 2 $25, %$2,464 3 $25, %$2,282 4 $25, %$2,147 5 $25, %$2,023 6 $25, %$1,908 7 $25, %$1,787 8 $25, %$1,689 9 $25, %$1, $25, %$1,414 Income starts at age 67 $250, %$19,939

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity EXAMPLE #3 Lori Age 60 Lori has assets of $1,000,000 with $573,000 in a Mutual Fund where she is currently receiving $5,000/month ($60,000 per yr) earning approximately a 5% return. She is worried because at this rate she will be out of money in her Mutual Fund in 15 yrs (A75) She would like to “guarantee” this steady stream of income for the rest of her life after age 75.

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity EXAMPLE #3 This is a hypothetical example for illustrative purposes only. The income from the mutual fund for ages is based on systematic withdrawals from a $573,000 portfolio earning approximately 5% rate of return for 15 years.. Hypothetical income at age 75 from the deferred income annuity is based on a single life, return of premium for death prior to annuitization, and a cash refund payout option. Rates are subject to change and payout will vary with premium amount, age, gender and annuity income option selected. $1,000,000 IN ASSETS Defers income for 15 years Mutual Funds* $573,000 DIA $427,000 Draws down to $0 after 15 years Age 75 begins receiving $5,000/month guaranteed for the rest of her life Receives $5,000/month until age 75

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity & Income Rider EXAMPLE #4 David Age 55 David is still working and is looking to invest his money to replace his income when he retires at age 65. He has $1,000,000 to invest. David likes the idea of a guaranteed income in 10 years. He is considering an Index or Variable Annuity with an income rider or a DIA or even a split of his investment between the two.

For internal and producer information only. Not for use in sales situations. Deferred Income Annuity & Income Rider EXAMPLE #4 $1,000,000 split between a DIA and an EIA or VA with a GMWB rider DIA $500,000 EIA or VA with GMWB $500,000 Total combined income $95,547/yr Guaranteed for Life 9.55% payout rate! Provides $43,047/year guaranteed for life! (8.0% Payout) Provides $52,500/year guaranteed for life! (10.5% payout) 10 year deferral The DIA includes an Exclusion ratio of 52.1% which means only 47.9% of the payment or $20,6120 is considered taxable. Income withdrawals from EIA or VA is considered 100% interest and taxable until there is no more interest.

For internal and producer information only. Not for use in sales situations. EXAMPLE #4 Observations about Example 4: In today’s market, David would likely put all his money in the Index or Variable annuity, despite the higher taxation. In addition to the income advantages shown on the previous slide, an Index or Variable annuity: can provide upside market potential provides cash surrender flexibility Where the payout for the Income Rider is fixed, in a higher interest rate environment, the Deferred Income annuity (DIA) might be more attractive. Deferred Income Annuity & Income Rider

For internal and producer information only. Not for use in sales situations. A Qualified Deferred Income Annuity (QLAC) For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. You can reduce a client’s RMDs today by: The Opportunity Do you have clients who don’t want to take RMDs? ➤ Deferring a portion of the RMD withdrawals to a later date ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ➤ Delaying paying taxes on money not needed in early retirement ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ➤ Providing potential to leave more assets for surviving spouse or other heirs ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ➤ Helping ensure they have the income needed in later retirement For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. Applying the Premium Limits A client with a total eligible 12/31 IRA value of $400,000 $400,000 IRA value X 25% A client with a total IRA value of $800,000 $800,000 IRA value X 25% Since premium limit rules are the lesser of $125k or 25%, this client would have $125,000 eligible to be used to purchase a QLAC. $100,000$200,000 In this scenario, the client has $100,00eligible to be used to purchase a QDIA. For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. Can a Client directly roll over from a Qualified Plan to a QLAC? *Roth and Inherited IRAs cannot be included when calculating eligibility. Yes, but the transfer cannot exceed the lesser of $125,000 or 25% of the individual’s eligible prior year-end (12/31) aggregate IRA values* If the individual does not have an IRA with a prior year-end balance, they are unable to directly roll over to a QLAC If no IRA balance exists and the client wants to move from a qualified retirement plan to a QLAC, they would need to: 1. First roll over to an IRA 2. Establish a year-end (12/31) value 3. Use the 12/31 IRA value to determine QLAC eligibility in the following year 4. Purchase the QLAC For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. Hypothetical Client Example An individual has the following qualified assets as of end of yr 1 401(k): $550,000 IRA: $200,000 She could fund a QLAC with $50,000 ($200,000 x 25%) The funds for the QLAC could come from either the IRA or an eligible rollover distribution from the 401(k) Assume she decides to roll $50,000 from the 401(k) directly into our QDIA She now has the following balances: 401(k): $500,000 IRA: $200,000 QLAC/IRA: $50,000 At the end of the next year can take another $50,000 from the 401k ($200,000 x 25%) For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. QLAC Features Available income options Structuring joint life payouts Income start date requirements ➤ Life Only ––––––––––––––––––– ➤ Life with Cash Refund ––––––––––––––––––– ➤ Available in single and joint life payouts ➤ Joint annuitants must be spouses ––––––––––––––––––– ➤ The surviving joint annuitant will be treated as the primary beneficiary; any other beneficiary designation on record will be treated as a contingent beneficiary ➤ Payments must start no later than the first day of the month following the owner reaching age 85 For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. QLAC Features ➤ A QLAC cannot be purchased with Roth or Inherited IRA dollars ➤ It is the client’s responsibility to ensure that any premiums paid into a QLAC meet applicable Treasury Department regulations OTHER IMPORTANT INFORMATION For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. Frequently Asked Questions Can a Deferred Income Annuity contract previously issued as a non-QLAC now be treated as a QLAC? No. In order to be treated as a QLAC, it must be issued as a QLAC. Can money in an IRA from which an individual has already started taking RMDs be moved to a QLAC? Yes, as long as QLAC premium limit guidelines are met. Note: The person may be required to take his/her RMD from the existing IRA prior to rolling money to the QDIA. Can a married couple pool their IRA savings to fund one Joint Life QLAC? No. Either spouse can purchase a Joint Life payout, but the premium can only come from the owner’s own IRA. Can the QLAC premium limits change over time? Yes, the IRS is authorized to adjust premium limits. For financial professional use only. Not for distribution to the public.

For internal and producer information only. Not for use in sales situations. RMD Reduction Example ➤ By moving 25% of their IRA assets to a QLAC, he or she decreases the initial required distribution by approximately $4,562. ($18,250 - $13,688) If in the 20% tax bracket, their annual income tax would drop by more than $900. ➤ Because the money in the IRA grows tax-deferred, they would also leave more money for a surviving spouse. An individual with $500,000 in IRA savings $18,250 For financial professional use only. Not for distribution to the public. Using $125,000 (25% of their $500k) to purchase a QDIA, the original RMD drops to approximately $13,688 ($500,000 - $125,000) x 3.65% RMD = 3.65%

For internal and producer information only. Not for use in sales situations. Deferred Income & QLAC Annuities are Gaining Popularity American General* Lincoln Financial* Guardian New York Life Principal* Symetra United Of Omaha* Companies With DIAs * QLAC confirmed

For internal and producer information only. Not for use in sales situations. THANK YOU Questions? For financial professional use only. Not for distribution to the public.