Category: Accumulation

Comparing Taxes: Cats and Mice

Comparison of Accounts – After Tax Contribution with Annually Taxable Growth (Savings Account, Money Market, etc.) vs After Tax Contribution With Tax Deferred Growth (After Tax-Tax Deferred IRA, Permanent Life Insurance, etc.) vs After Tax Contribution with Tax Free Growth (Roth, Municipal Bond, etc.) vs. Tax Deductible (Pre-Tax) Contributions with Tax deferred Growth (401K, Tax Deductible IRA, etc.). This can be a difficult topic to understand and, unfortunately, this confusion has led to incorrect information being spread to the consumer by the media and the financial industry. The ultimate result

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How-To: Monte Carlo Simulations in Accumulation

The Accumulation calculator has always been particularly useful in depicting how the stock market can affect your assets, but now it’s even better. A few updates ago, Todd introduced a feature that can reverse or randomize the S&P rates, so that you can more effectively show “Monte Carlo” scenarios.  If you haven’t tried it yet, I’ll show you how.  The benefits? Not only can you back up your knowledge with how the market has performed in the past—you can demonstrate how slippery it can be to rely on chance. Because

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The Staggering Impact of Taxes On Investment Returns

The purpose of this post is not to make any kind of political statement.  We are not trying to say one side is right or one side is wrong.  The purpose of this post is to simply show mathematically something that politicians should understand.  More importantly, you as a financial professional should understand this because the impact of taxation on our wealth is significant – significant enough that positioning our money in a tax-advantaged situation is one of the most competitive advantages possessed by whole life insurance. To illustrate the

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How do you include the state income tax for capital gains tax?

Increase your capital gains rate box by the state income tax rate. Increase your state income tax rate is 7% and your clients’ federal capital gains tax rate is 15%, then you’ll put 22% in your capital gains rate box. Please note: there is not a federal capital gains tax deduction for the state income tax paid as there is for federal income tax.  See the calculation below: This first part the software handles automatically. INCOME TAX [ezcol_1half]Federal Income Tax Rate  Federal Capital Gains Tax Rate State Income Tax Rate [/ezcol_1half]15%  15%  7% [ezcol_1half_end][/ezcol_1half_end]

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Truth Tip: Comparing Taxable vs. Tax-Deferred Accounts

We received this excellent question from a Truth Concepts user this week: Q. I am trying to do a comparison between using a qualified plan and a non-qualified plan.  I understand pretty well how to use the Qualified Plan calculator, however I want to show an “apples to apples comparison” assuming everything else is equal i.e. ROR, management fee, etc., but with the client paying taxes each year on their investment gains, so that at retirement the money they have to spend is tax free. A. That will be easiest

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Accumulation

When filling in the tax box on the right for Mutual Funds, the following guidance and definitions will be helpful.  Remember to get this tax box, the “MF?” box on the left must be checked.  This means the existing money plus any new payments will be taxed like a mutual fund.  To fill in the box, you’ll use 3 percentages that must equal 100%, for example, 20% + 30% + 50%.  Unrealized Long Term Capital Gains means the percent of the funds’ growth that “fell off the fund managers desk”

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