Los Angeles, CA, February 22, 2018 --(PR.com
)-- Taking advantage of a little-known IRS provision can enable a couple to convert an existing annuity into another that provides lifetime long-term care insurance benefits for both explains the director of the American Association for Long-Term Care Insurance.
"The little known planning technique is called a Section 1035 exchange and it's one of the best-kept secrets in long-term care planning today," shares Jesse Slome, executive director of the American Association for Long-Term Care Insurance, a national organization that advocates for the importance of long-term care planning.
The Association recently made available a free guide for consumers detailing how Section 1035 exchanges work and how they can benefit consumers. "One of the examples shared involves a couple ages 62 and 66 who own an annuity but have not really planned for the risk of needing care as they age," Slome notes.
The couple's current annuity is worth $200,000 and is growing annually at a very modest rate. "If either of the couple should need long-term care they could tap the annuity but withdrawals might be taxable and would be limited," Slome adds. He noted that monthly withdrawals of $5,000 would more or less wipe out the entire annuity at the end of 40 months.
"By repurposing their current annuity into one that combines the annuity's tax deferred growth benefit with IRS-approved tax free withdrawals for long-term care, the couple achieves enormous leverage and benefits," the national LTC expert points out. According the Slome, the couple could each now receive a $5,000 a month for long-term care. "But the payments could be for an unlimited number of months and would be 100 percent income tax free," Slome adds.
"For millions of Americans who have annuities designated as their what-if funds, taking advantage of the 1035 exchange provisions approved by the IRS could be enormously valuable," Slome concludes.
To read the Association's Guide To Long-Term Care Planning Using 1035 Exchanges visit the organization's website at www.aaltci.org/1035-exchanges. The online guide can be read without having to provide any personal information.
Established in 1998, the American Association for Long-Term Care Insurance advocates for the importance of LTC planning. To learn more call the organization at 818-597-3227.