Elsie Carter is an 81 year old widow who had an annuity valued at $274,000. Elsie did not need the income and planned to leave the annuity to her daughter. Elsie was concerned about the tax consequences that her daughter would inherit along with the annuity. She wanted something to go to her church too.
An Annuity Transfer Program also known as a TRN Strategy Plan proved to be a suitable option for Elsie. Here’s how it worked:
1. Elsie transferred ownership of her annuity to TRN Strategy Plan.
2. TRN Strategy Plan based on the full accumulation value was issued.
3. Elsie received an immediate income tax deduction which offset the 1099 gains inside the annuity, helping her settle up with Uncle Sam now.
4. The TRN Strategy Plan will provide a structured inheritance for her daughter, addressing concerns she had about tax issues.
5. Elsie recommended her church to benefit from her transaction.
Current Accumulation Value $ 274,000
Current Cash Surrender Value $ 232,900
Original Cost Basis $ 225,000
Amount of Taxable Gains $ 49,000
Initial Value of TRN Strategy Plan $ 274,000
Tax Deduction with TRN Strategy Plan $ 127,518
Monthly Payments Beginning in 5 Years w/20 Yr Term Certain Payout $ 1,275
A Term Certain Strategy Plan for Elsie was issued that provided an immediate charitable income tax deduction of $127,518. Elsie’s current income is $53,000. She will receive a 1099 this year of $49,000 (on the gains inside the annuity), bringing her total new income to $102,000. The tax deduction reduces her taxable income by up to 50%, thereby bringing her taxable income back to $51,000. This allows her to offset the $49,000 of gain from her annuity AND save money on taxes this year. The remaining deduction of $76,518 can still be carried forward to reduce her taxes next year. Her TRN Strategy Plan is designed to pay out over 20 years beginning when she passes away. She named her daughter to receive payments from the TRN Strategy Plan and recommended her church to receive an immediate grant, while supporting the charitable works of LTF. Her plan is reinsured with a major insurance company.