Are Your Clients Losing Money Because of Taxes?

March 28, 2019
Are Your Clients Losing Money Because of Taxes?

When allocating funds, think about the tax implications. Clients who have taxable investments may be losing money every year to taxes, which decreases their after-tax returns. For example, if the federal tax rate is 24 percent and they earn 2.5 percent in a taxable investment, then their after-tax earnings would be only 1.9 percent.

Taking Advantage of Tax-Deferred Annuities

One of the benefits of an annuity is tax deferral. This means your clients don’t pay taxes on their earnings until they withdraw funds. Tax-deferred annuities make their money work harder by earning interest on the principal, interest on the interest and interest on the tax savings you would have paid as income taxes. We call this triple-compounding.

A fixed annuity from The Standard offers your clients the advantage of tax-deferred compounded growth, a minimum guaranteed return and flexible access to their money.

Use this chart to determine what taxable investments are really earning when you include the taxes you have to pay on your earnings each year.

And your taxable rate is:10%12%22%24%32%35%37%
If your federal tax rate is:Then your after-tax rate would be:
1.00%0.90%0.88%0.78%0.76%0.68%0.65%0.63%
1.50%1.35%1.32%1.17%1.14%1.02%0.98%0.95%
2.00%1.80%1.76%1.56%1.52%1.36%1.30%1.26%
2.50%2.25%2.20%1.95%1.90%1.70%1.63%1.58%
3.00%2.70%2.64%2.34%2.28%2.04%1.95%1.89%
3.50%3.15%3.08%2.73%2.66%2.38%2.28%2.21%
4.00%3.60%3.52%3.12%3.04%2.72%2.60%2.52%
4.50%4.05%3.96%3.51%3.42%3.06%2.93%2.84%

 

For example purposes only. If you have questions regarding your specific situation, please consult your tax advisor.

 

Sales and Marketing Toolkit

Download and customize these flyers:

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Are Your Losing Interest
In Taxable Investments?
Sales Concept Flyer


Is Uncle Sam Breaking Your Piggy Bank?

(Fillable PDF)

 

Annuities are not (a) insured by the FDIC or any federal government agency, (b) deposits of or guaranteed by any bank or credit union and (c) a provision or condition of any bank or credit union activity. Some annuities are subject to investment risk and may lose value. A surrender charge may apply during the surrender period, and a 10% penalty may apply to withdrawals prior to age 59½.

 

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