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- #11
At his tax rate, you would think tax free bonds & corporate bonds or Drips would get him to same rate as a NQ annuity. NQ annuity is just deferring the tax for you guys to pay at your ordinary tax rates. Capital assets would get a step up in cost basis at death
It's for his grandkids . There tax rates low .
Great points. I forgot the OP that these were for Grandkids too.
Plus, grandkids can spread tax out over 5 year deferral or by electing payout annuity at death.
Very real chance though that dad lives to maturity at age 99 or 100 & all of that deferred interest will be taxable to dad in a lump sum at maturity. Seeing this happen more & more today as some hit age 100. For most tax payers at those ages, they are in low or 0% tax bracket & should be taking some taxable gains out each year to spread it out & utilize their standard deductions & lower tax rates than leaving it for taxation at death or maturity
The one thing you hit head on . He could easily live to 100 . His grandfather lived to 107 . He's in incredible health . We call him " the freak " . Never been in hospital , zero rx and here's the freakish part . Never a cavity and straight as an arrow teeth . Goes to dentist 3 times a yr . He's wealthy . If he lives to 96 he'll just have to put in cd payable at death