Triple Split Annuities
What happens at the end of the term, when your client says ”That Split Annuity program worked out well for me. Let’s do it again.” Their $100,000 now consists of $21,500 of accumulated tax-deferred interest. Because annuity withdrawals must be made on a LIFO (Last In First Out) basis, the $21,500 of interest will be taxable and will no longer be enough to produce the same income stream. For example, if interest rates were to remain the same, the $21,500 would still produce $359.47/mo, however, it would all be considered taxable income. Additional money will have to be withdrawn from the $100,000 to produce the same after-tax income as in the previous example.