Getting the most from the retirement you deserve Enjoying your retirement: Wealth-management solutions tailored to your needs Income generation Estate planning Charitable giving [FA’s name, address, date]

Preparation Will your investments grow to protect you, your family and your estate?

It’s all connected. Retirement strategies affect investment, income and estate planning: Generate income. Increase wealth. Manage taxes. Protect estate assets. Transfer assets efficiently to beneficiaries.

What are your financial concerns? Achieving asset growth and safety of principal Ensuring a reliable income stream Reducing taxes Managing retirement-plan distributions Preserving estate assets Charitable giving Providing for grandchildren’s education Meeting long-term health-care costs

Portfolio diversification Diversify your retirement portfolio to: Reduce risk (useful for equities). Buffer market volatility. Ensure balance and flexibility.

Merrill Lynch has identified five typical investor profiles: Capital Preservation Income Income and Growth Growth Aggressive Growth

Each profile works as a plan: Re-allocating assets inside retirement and nonretirement accounts may be important. Investor ConservativeAggressiveModerate Capital Preservation 15% 60% 25% Aggressive Growth 80% 15% 5% Income and Growth 45% 10% Income 30% 50% 20% Growth 65% 30% 5% Asset-Allocation Mix Stocks Bonds Cash

Investing for income Government bonds Corporate bonds Municipal bonds Defined asset funds Convertible bonds High-yielding stock REITs Fixed and variable annuities

Managing your taxes during retirement Tax-deferred versus taxable investments Managing capital gains Tax-free investments

Concentrated company stock positions Consider the following strategies: Portfolio diversification. Volatility management. Wealth transfer.

Strategies for managing retirement-plan assets Roll over to traditional IRA. Roll over to traditional IRA, then convert to Roth IRA.

Net unrealized appreciation (NUA) After distribution from an employer’s retirement plan After the security is passed on $150/share $50/share growth after distribution $80/share NUA $20 cost basis $100/share at distribution $50/share growth after distribution $80/share NUA $20 cost basis Long- or short- term capital gains LTCG when sold Ordinary income tax Step-up in basis LTCG when sold Tax was paid at distribution Remember: Distributions from an IRA are subject to ordinary income tax.

Withdrawing assets from your retirement accounts Should I sell portfolio assets or make withdrawals from my IRA to meet expenses? When should I start withdrawals? How much should I take out? Whom should I name as beneficiary of my IRA?

Simpler rules for required minimum distributions Easier calculations Smaller required withdrawals Extended tax-deferral period More flexibility in naming or changing beneficiaries Enhanced stretch-out capabilities for beneficiaries Note: The new regulations become effective for distributions in 2002, but IRA owners (and sponsors of qualified plans) can choose to apply the new regulations for RMDs in 2001.

Estate-planning concerns Transferring wealth Reducing estate shrinkage Providing liquidity

Giving that grows A trust can meet a specific planning goal: Unified credit shelter trust. Qualified terminable interest property (QTIP) trust. Qualified domestic trust. Charitable remainder trust.

Will your beneficiaries need a fire sale? Provide liquid assets for estate/income taxes and settlement costs: Life insurance proceeds. Life insurance trusts.

529 plans: Qualified tuition programs Receive tax-deferred earnings growth. Get tax-favored withdrawals. Pay for the college of your choice. Contribute up to $100,000 in a single year with no gift-tax consequences. Remove assets from your taxable estate. Retain control of the use of the assets.

Other concerns: Long-term care How to meet the costs: Out-of-pocket, savings plan, insurance In 1999, the average cost of a nursing home exceeded $50,000* per year. Nursing Care Costs * National Average Source: AARP 2000

The foundations of financial and investment planning Create a plan that can: Maximize growth potential, provide income and protect wealth. Maximize tax advantages. Minimize effects of inflation. Maximize the value of your estate.

Merrill Lynch can help. Investing your money, protecting your assets and meeting your needs: Model portfolios. Managed money relationships. Financial Advisor relationship.

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