If you are in the process of estate planning, you may be interested in the new rules about longevity insurance. In this article, we explain what longevity insurance is and how the new rules make it more available.
Longevity insurance or longevity annuity is a new buzz-word for a type of deferred-income annuity that will pay you income until you die. This kind of insurance was created to protect people from using up all of their savings as they age, and ensures retirees that they will have a guaranteed and regular stream of income.
The U.S. Department of the Treasury and the Internal Revenue Service recently issued new rules for longevity insurance. Until now, these annuities could not be widely used in 401(k) retirement plans and individual retirement accounts. This is because most of these plans require account holders to begin withdrawals at age 70 and a half. The new rules make it possible for people with 401(k) plans to purchase longevity insurance as a part of their investments by allowing 401(k) or IRA plan participants to use up to 25% of their account balance or up to $125,000 to purchase a qualifying longevity annuity
These new rules will make it possible for more individuals to purchase longevity annuities, supporting retirement security and saving by allowing retirees to purchase guaranteed income for life while still having some savings in more liquid investments.
The new rules also eliminate penalties for accidental overpayment, and gives longevity annuity owners the option to have premium payments returned if they were not yet received as annuity payments.
A good financial planner should be consulted before deciding that one of these annuities is the best thing for you.
The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about how longevity insurance may fit in with your estate plan, contact The Astill Law Office at 801-438-8698.