Notes & Disclosures

  1. The maximum contribution for 2012 is $17,000. However, if you will attain age 50 before the close of the plan year, you will also be eligible to defer an additional $5,500 as a catch-up contribution. In order to take advantage of the catch-up contribution election, you must first defer and contribute the full $17,000 of your pay during the plan year. Chart does not reflect the use of the catch-up provision. The maximum annual contribution may differ for other types of qualified plans. 
  2. Benefits from the 401(k) assume: (1) An individual age 45; (2) Contributions made for 22 yrs.; (3) Annual contribution increases at a rate of 2%; (4) 401(k) assets accumulate at 8% and payout is based on a single life annuity purchased at age 67.
  3. Social Security benefits are based on the 2008 Quick Benefit Calculator at ssa.gov. Calculations assume: (1) An individual age 45 in 2008 will receive full Social Security benefits at age 67; (2) A worker’s past earnings are based on the national average wage indexing series with a relative growth factor of 2%; (3) Current earnings stay the same until age 67 and are limited to the 2008 taxable maximum of 102,000.
  4. Mutual funds may be subject to income tax and/or capital gains taxation. Consult your tax advisor for more information.
  5. Generally, interest paid on municipal bonds is tax-free, but not all municipal bonds are exempt from federal and/or state income tax. Some bonds may be subject to capital gains tax at sale. Consult your tax advisor for more information.
  6. Upon distribution, when a contract annuitizes a portion of principal is included in the annuity payout.
  7. There is not a specific limit on dollars allocated to purchase life insurance, however there are maximum premium limits determined by a specified policy face amount. A policy will qualify as life insurance if it meets the requirements of IRC Sec. 7702, which includes limits on the amount of premium that may be paid into a specific face amount and still qualify as life insurance.
  8. Tax-free income assumes: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC  7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits.
  9. For federal income tax purposes, life insurance death benefits generally are paid income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2) (i.e. the “transfer-for-value rule”); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j).

 

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