IRA’s for Financial Growth
Why IRAs. Why now.
Because IRAs can be a powerful tool for small business owners and individuals to meet their long-term financial goals.
Retirement Goals
Powerful tool for long-term financial goals.
Compound Interest
Interest compounds year-over-year, making a significant difference in overall retirement savings.
Tax Deferred
Depending on the IRA, clients can defer taxes on the money going in now or have tax free withdrawal of the money coming out later if Roth rules are met.
Lower Adjusted Gross Income
A tax-deductible IRA contribution lowers adjusted gross income (AGI), which is used to calculate certain itemized tax deductions, as well as your client’s tax rate.
Consolidation of Retirement Accounts
Explain the benefits of consolidating their qualified accounts into an IRA to protect their retirement, and of continuing to contribute to their retirement.
Who Do You Know That Fits the Following Profiles?
For Small Business Owners - SEP & SIMPLE IRAs
SEP-IRA (Simplified Employee Pension)
For Small business owners seeking retirement benefits, tax credits/deductions and to meet State Mandates’ requirements.
The basics
- Plan is solely funded by business owner
- Contributions are not required every year but must be the same percentage of pay for all employees, including the owner(s)
- Policies are owned by the employees; contributions are immediately vested
- Withdrawals are taxed as ordinary income
- Distribution prior to 59½ subject to 10% IRS Early distribution penalty
May work well for a client who…
- Is self employed
- Owns a business with few (or no) employees
- Owns a business in a State with retirement plan mandates
- Wants to attract and retain employees
- Needs a significant tax deduction
SIMPLE IRA (Savings Incentive Match Plan for Employees)
For employers with less than 100 employees, seeking retirement benefits, tax credits/deductions, and to meet State Mandate requirements.
The basics
- Plan is primarily funded by elected pre-tax employee contributions
- Employers are required to make contributions:
- Flat 2% for all eligible employees, or
- Dollar-for-dollar match of up to 3% for contributing employees
- Policies are owned by the employees; contributions are immediately vested
- Distributions made to participants under the age of 59½ within 2 years of their entrance into the plan may be subject to a 25% early distribution penalty
May work well for a client who…
- Is looking for more tax savings opportunities for their business
- Does not currently offer any other employer sponsored retirement plan
- Owns a business in a State with retirement plan mandates
- Wants to offer a pre-tax retirement savings plan for employees
- Wants to attract and retain employees
Marketing Material and Forms
State Mandated Retirement Plans
For Small Business Owners - Payroll Deduction IRA
Payroll Deduction IRA
The Payroll Deduction IRA is probably the simplest retirement arrangement that a business can have. No plan document needs to be adopted under this arrangement.
The basics
- Employees make all the contributions. There are no employer matching contributions
- Contributions are made with a payroll deduction each pay period by the employer
- Employees are always 100 percent vested, the IRA belongs to the employee, not the employer
- Low administrative costs
- No filings with the government to establish the program or any annual reports
- No minimum number of employees required
- Employees choose to participate and choose how much they want deducted from their paychecks and deposited into the IRA
- Choice of before tax contributions (Traditional IRA) or post tax contributions (ROTH IRA)
- Traditional IRA may offer tax advantages on the money contributed and the earnings on the contributions are tax-deferred
- ROTH IRA contributions are after-tax, and earnings are tax-free
May work well for a client who…
- Wants to offer employees a retirement plan, without an employer match
- Needs a low administrative cost plan without government filing or annual reporting requirements
- Lives in a state that will be mandating auto-enroll IRAs for all private sector employees
Marketing Material and Forms
For Individuals - Traditional & Roth IRAs
Traditional IRA: Pre-Tax Contribution
For clients seeking tax-deferral on contributions and a tax deduction.
The basics
- Contributions may be made regardless of income – deductibility may be limited based on AGI
- 10% IRS tax penalty applies to withdrawals of both contributions and earnings if made prior to age 59 ½, with certain exceptions
- Withdrawals are taxed as ordinary income
- Required Minimum Distributions (RMDs) generally must start at age 72 (73 if age 72 after Dec. 31, 2022)
May work well for a client who…
- Needs a tax deduction
- Wants to save in a tax-deferred vehicle but is okay with paying taxes on withdrawals in retirement
- Anticipates their income tax bracket at retirement to be lower than their current bracket
- Has maxed out contribution to their employer-sponsored plan, has income below the deductibility limits, and would like to save more
- Does not have access to an employer-sponsored retirement plan
Roth IRA: Post-Tax Contribution
For clients seeking tax-free withdrawals in retirement.
The basics
- Withdrawals are tax free if Roth has been in place for five years and one of the following:
- Age 59 ½
- Disability
- First time home purchase up to $10,000
- Client may contribute at any age
- Contributions may be made if income limits are not exceeded
- There are no Required Minimum Distributions (RMDs)
- 10% IRS tax penalty applies to withdrawals of earnings only if made prior to age 59 ½, with certain exceptions
May work well for a client who…
- Wants tax-free withdrawals at retirement
- Anticipates their income tax bracket at retirement to be higher than their current bracket
- Has maxed out contribution to their employer-sponsored plan and would like to save more
- Does not have access to an employer-sponsored retirement plan
Marketing Material and Forms
Legacy IRA - Using Life Insurance Sales Strategy
For clients who want to optimize IRA assets beyond their own retirement to leave a lasting legacy.
Marketing Material and Forms
Types of IRA Rollovers
Direct Rollover
- Payment made directly to another retirement plan or to an IRA.
- The administration may issue the distribution in the form of a check made payable to the client’s new account.
- No taxes will be withheld from the transfer account.
Trustee-to-Trustee
- Payment directly from the IRA to another IRA or to a retirement plan.
- No taxes will be withheld from the transfer amount.
60-Day Rollover
- Distribution is paid directly to the participant.
- Participant can deposit all or a portion of it in an IRA or retirement plan.
- Taxes will be withheld from a retirement plan distribution; client will need to use other funds to roll over the full amount of the distribution.
Get in Front of Prospective
Employers and Employees
Presentation Kits
In each of the following plug-and-play presentation kits, you will find a ready-to-use presentation, call prompts, social media posts, and registration emails.
ABC’s of Financial Fitness Series | Financial Fitness Series for Educators | Pension Gap | Easy Way to Start Saving | The Retirement Gap | Achieving Retirement Success
Consumer Emails
Emails can be found on the Agent Portal » Marketing » Prospecting Materials.
Social Media Posts
Affiliated Agents: Find these posts in Hearsay Social.
Independent Agents: Follow our Do Good. Be Good. Make Good. social media accounts on LinkedIn, Facebook, Twitter, and Instagram for posts.
IRS Guidance
Questions?
Contact the National Life Group Sales Desk at 800-906-3310, option 1
FOR AGENT USE ONLY – NOT FOR USE WITH THE GENERAL PUBLIC
National Life Group® is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest (LSW), Addison, TX and their affiliates. Each company of the National Life Group is solely responsible for its own financial condition and contractual obligations. LSW is not an authorized insurer in NY and does not conduct insurance business in NY.
Advice regarding securities, especially advice to liquidate securities to fund an insurance or annuity product, can be offered solely by representatives registered to offer such products or services through a broker/dealer or registered investment adviser.
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TC 130631(0623)3
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