Qualified Funds Put Directly into a Combo Product
- Thread starter Mr_Ed
- Start date
- 8,707
Well first 1035 is a term used only with Non-Qualified money. Qualified money would be transfered or rolled over.
- Thread starter
- #3
good point.
I will re-phrase the question:
It is my understanding that qualified money cannot be deposited into an Annuity/LTC combo product or a Life/LTC combo product.
Only non-qualified money can be used for these products.
Am I mistaken?
- 8,707
I am unaware of a carrier that would accept the qualified money...I am also unaware of any IRS regulation that would preclude it...I'm sure we are all aware of Life policies being held inside of qualified plans and the same with funding qualified accounts with annuities, I would imagine the issue would be that the LTC benefits would need to be taxed.
Arthur Rudnick
Guru
- 1,652
"It is my understanding that qualified money cannot be deposited into an Annuity/LTC combo product or a Life/LTC combo product.
Only non-qualified money can be used for these products.
Am I mistaken?"
You are not mistaken, you are correct sir..........
Only non-qualified money can be used for these products.
Am I mistaken?"
You are not mistaken, you are correct sir..........
You should look at One America, and they will show you their AssetCare offerings that do in fact allow either qualified or non-qualified money. They use, as I recall, a 20-pay whole life plan to make it work with non-qualified funds. They are the only one that offers a way to do this....so maybe there is more to the story after all.
Arthur Rudnick
Guru
- 1,652
Herman,
This is not a carrier call........
The ability to allow the use of non-Qualified funds and not Qualified funds for the purchase of a combination policy is the IRS' call, not an insurance company's.
Now, with that being said, I'd guess if someone cashed in their IRA, paid taxes and used the remaining money (which is now non-Qualified) and figure out a way to purchase a hydrid product and somehow re-coup the tax payment, maybe that possibility exists. And, I'd guess that's what One America is offering.
Keep in mind that if funds are qualified, taxes haven't been paid and somewhere down the road the IRS wants and will get their share.
You said: "They use, as I recall, a 20-pay whole life plan to make it work with non-qualified funds.
I think we agree that non-qualified funds are ok for a 1035 exchange, it's qualified funds that NADM was asking about.
This is not a carrier call........
The ability to allow the use of non-Qualified funds and not Qualified funds for the purchase of a combination policy is the IRS' call, not an insurance company's.
Now, with that being said, I'd guess if someone cashed in their IRA, paid taxes and used the remaining money (which is now non-Qualified) and figure out a way to purchase a hydrid product and somehow re-coup the tax payment, maybe that possibility exists. And, I'd guess that's what One America is offering.
Keep in mind that if funds are qualified, taxes haven't been paid and somewhere down the road the IRS wants and will get their share.
You said: "They use, as I recall, a 20-pay whole life plan to make it work with non-qualified funds.
I think we agree that non-qualified funds are ok for a 1035 exchange, it's qualified funds that NADM was asking about.
I only said to call One America to ask them how they do it. I am not an expert on their products. The have Asset Care II, which is a single premium product funded with existing non-qualified annuities, and Asset Care III which is a single premium product funded with qualified money. The ACIII product provides "the ability to use IRAs and other qualified funds, providing flexible RMD Management, wealth transfer, and long term care protection" (I just copied it from their flyer)
Now, will there be any annual taxable withdrawals? Dunno, but people are buying this product.
By the way, my statements are "Not for Public Distribution...these are for Company and Recruitment purposes only".
Arthur Rudnick
Guru
- 1,652
"By the way, my statements are "Not for Public Distribution...these are for Company and Recruitment purposes only"
I hear you, but unfortunately, your statements have already been forwarded to Hustler Magazine and will be in their April issue.
Sorry about that............
I hear you, but unfortunately, your statements have already been forwarded to Hustler Magazine and will be in their April issue.
Sorry about that............
- Thread starter
- #10
I only said to call One America to ask them how they do it. I am not an expert on their products. The have Asset Care II, which is a single premium product funded with existing non-qualified annuities, and Asset Care III which is a single premium product funded with qualified money. The ACIII product provides "the ability to use IRAs and other qualified funds, providing flexible RMD Management, wealth transfer, and long term care protection" (I just copied it from their flyer)
Now, will there be any annual taxable withdrawals? Dunno, but people are buying this product.
By the way, my statements are "Not for Public Distribution...these are for Company and Recruitment purposes only".
Herman,
They turn the "qualified money" into "non qualified money" by making the withdrawals over a 20-year period to pay the 20-year pay Life/LTC combo product premium.
The insured has to pay tax on the withdrawals.
They are not depositing the qualified money into the Life/LTC combo product. They are depositing the qualified money into a 20-year period certain annuity. The 20 payments pay the Life/LTC combo premium.
The money that comes from the 20-year period certain annuity is fully taxed and the insured will receive a 1099 for every penny of that money.
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