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Gainesville Florida Estate Planning & Elder Law Blog

Sunday, August 10, 2014

New regulations make longevity insurance more attractive

Longevity insurance guarantees income in senior citizens’ later years.  New IRS regulations effective July 1 have made it even more sensible to consider this kind of insurance in order to provide peace of mind for aging adults.

The new regulations allow a deferred income annuity to be purchased with funds from an IRA, 401K or other qualified plan while excluding the funds in the annuity for the purpose of determining Required Minimum Distributions.  Purchasers must begin drawing on the annuity before age 85; up to 25% of the funds in the qualified plan or $125,000 (whichever is less) may be placed in the annuity.

This form of longevity insurance can be helpful to both singles and married couples since when a spouse passes away the survivor loses the deceased’s Social Security check and oftentimes their pension. It’s also beneficial from an estate planning perspective since the annuity comes with a return of premium feature.  Initial investment can be passed on to heirs if there are premiums paid but not yet received when a purchaser passes away.

Because the regulations are new, insurance companies are working to provide the opportunity for customers to invest in this deferred income annuity. 


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