"Test the True Power of Tax-Deferral" with Jefferson National's Flat-Insurance Fee VA.
NEW YORK & LOUISVILLE, Ky. -- On a mission to help Americans save more for retirement, Jefferson National invites consumers and advisors to "Test the True Power of Tax-Deferral" at http://www.jeffnat.com. This simple, unbiased, online tool illustrates tax-deferral's true power to help meet the retirement income challenge by comparing the performance of a taxable account versus Jefferson National's Monument Advisor, the first variable annuity with a flat-insurance fee of $20 per month1and the industry's broadest selection of more than 175 underlying tax-deferred funds.2
"As 76 million boomers approach retirement over the next two decades, tax-deferral is vital for helping them confront two urgent needs: how to save more--and how to make it last a lifetime," said Laurence Greenberg, President and CEO of Jefferson National Life Insurance Company. "Monument Advisor's flat-insurance fee preserves the true power of tax-deferral, to outperform taxable accounts and outdo traditional high-cost VAs, helping consumers accumulate more, generate more retirement income, and leave a larger legacy."
The calculator leverages research from a recent white paper, "Increasing Retirement Income through the Power of Tax-Deferral," co-authored by Professor Ira Weiss, Ph.D. of the University of Chicago and Matthew Grove of Jefferson National. It concludes that tax-deferral is crucial for accumulating more savings and generating more retirement income, and that tax-deferral can outperform a taxable account, even when capital gains taxes are at an all time low. The key is using a low-cost, no-load tax-deferred investment platform, such as a flat-insurance fee VA, after maxing-out contributions to vehicles such as IRAs and 401(k)s. The paper further concludes that asset-based fees associated with traditional VAs often negate the benefit of tax-deferral.
"Jefferson National's flat-fee VA is a tax-deferred investing platform with well diversified fund choices that allows me to manage my clients' assets so they can accumulate more and reach their goals faster," said John Ritter, CFP, CFS, founding partner and lead financial advisor of Cincinnati-based Ritter Daniher Financial Advisory, LLC, and Co-Chair of the 2008 NAPFA National Conference. "This product has all the sub-account choices I need--with the industry's lowest cost--on an investment platform that's adapted to the way fee-based and fee-only advisors work."
"The real power of a tax-deferred VA with a flat-insurance fee and 4 times more funds is what it means over the long run--more money for retirement, or for future generations, or to pass on to charity," said Brendan T. Conry, ChFC, CLU, Founder and Principal Conry Asset Management, LLC and Investment Advisor Representative, Commonwealth Financial Network. "With Jefferson National, we've got clients saving tens of thousands more each year."
To "Test the True Power of Tax Deferral," a user simply enters distribution assumptions, time horizon, tax rates and portfolio type--conservative, moderate, aggressive, active or custom--and the calculator instantly demonstrates the difference between investing in a low-cost tax-deferred variable annuity versus a traditional taxable account. The calculator illustrates accumulated value at distribution age, after tax income generated while keeping pace with inflation during retirement years, any accumulated values that can be left to beneficiaries, and rate of return comparing after tax cash flows.
In many cases the power of tax-deferral helps consumers accumulate substantially more. For the average investor, when using a flat-fee VA, a conservative portfolio can break even with a taxable account after four years, a moderate portfolio can break even after ten years, and an aggressive portfolio can break even after thirteen years. An actively managed account typically breaks even after one year.
About Jefferson National Life Insurance Company
Jefferson National Life Insurance Company offers retirement products for fee-based advisors and the clients they serve. Jefferson National believes that simple, low-cost variable annuities should be considered for a part of every American's retirement portfolio, and we've made it our mission to help all Americans save more for retirement by launching Monument Advisor, the first variable annuity with a flat insurance fee. Jefferson National serves more than 60,000 customers nationwide, and is domiciled in Dallas, Texas with authority in 49 states and the District of Columbia. To reach our advisor support desk, please call 1-866-WHY-FLAT (1-866-949-3528). To learn more, please visit www.jeffnat.com.
An investor should carefully consider the investment objectives, risks, charges and expenses of the investment before investing or sending money. For a prospectus containing this and additional information, please contact your financial professional. Read it carefully before investing. The summary of product features is not intended to be all-inclusive. Restrictions may apply. The contracts have exclusions and limitations, and may not be available in all states or at all times.
Variable annuities are investments subject to market fluctuation and risk, including possible loss of principal. Your units, when you make a withdrawal or surrender, may be worth more or less than your original investment.
Variable annuities are long-term investments to help you meet retirement and other long-range goals. Withdrawal of tax-deferred accumulations are subject to ordinary income tax. Withdrawals made prior to age 59 u may incur a 10% IRS tax penalty. Jefferson National does not offer tax advice. Annuities are not deposits or obligations of, or guaranteed by any bank, nor are they FDIC insured.
Monument Advisor is issued by Jefferson National Life Insurance Company (Dallas, TX) and distributed by Jefferson National Securities Corporation, FINRA member. Policy series JNL-2300-1, JNL-2300-2.
Calculator Explanation and Limitations
The results of the comparison between a taxable account and a tax-deferred account are designed to be hypothetical comparisons and not actual predictions or projections of future results in the value of your portfolio. You should use it in conjunction with advice from your financial or tax planning advisor and not as the primary basis for your investment decisions. The calculator is based on an analysis of the historical performance of asset classes. Past performance does not guarantee future results. Your actual performance, asset allocation or trading patterns may differ from the values assumed by the calculator, resulting in a different outcome from that calculated. Certain asset classes are riskier than others, please consult your financial advisor for more information. If your tax rate changes you should update your choices in the calculator to reflect those changes. The results provided by the calculator are based on the data as of the date you enter it. Jefferson National Life Insurance Company does not predict or guarantee future results.
For both the taxable and the tax-deferred account, after-tax dollars are contributed at the beginning of the period. In the taxable account, all distributions are reinvested after-tax and basis grows as reinvestments are made. When shares are sold, basis is reduced according to the average-cost method.
In the tax-deferred account, account value grows at the rate of the underlying investment's total return, but basis remains static at the initial investment level. When withdrawals are made, all gains are returned, taxed at the investors' ordinary income rate, before any principal is withdrawn. The tax-deferred account has a flat $240/yr insurance fee.
If the user chooses the "Active trader" option, all returns are assumed to be in the form of short-term capital gains and basis grows with account value. For non-Active Traders, the portfolio is rebalanced annually for both the taxable and the tax-deferred account.
In the taxable account, withdrawal income is generated in the middle of the year by retaining after-tax distributions and then selling additional shares as necessary. In the tax-deferred account, withdrawal income is generated in the middle of the year by withdrawing the necessary amount. Although not represented by the calculator, withdrawals from the tax-deferred account made prior to age 59u may produce a tax penalty. All dollar values in the calculator are expressed as nominal values.
For both the accumulation period and the withdrawal period, tax rates on dividend income, long-term capital gains and short-term capital gains are set by the user's choice of an ordinary income rate. The calculator assumes that the tax rates currently scheduled to expire December 31, 2010, under the Jobs and Growth Tax Relief Reconciliation Act of 2003, will in fact expire. Lower maximum tax rates on capital gains and dividends would make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the accounts shown. In addition to federal taxes, the calculator assumes a state tax rate of 5.4%, which is the average across all states. Local taxes are not included.
The allocation of asset class returns between NAV return, interest income yield, dividend yield, realized long-term capital gains yield and realized short-term capital gains yield was gathered using data from the CRSP US Mutual Fund Database (MF)[c] 2007 Center for Research in Security Prices (CRSP[R]) at Chicago GSB, The University of Chicago. For each asset class, distribution data reflects the average of all mutual funds available during the 35 year period ending in 2006, adjusted for splits. Annualized asset class total returns are based on the average total return described in Ibbotson's "Stocks, Bonds, Bills, and Inflation" for the eighty year period 1926-2006, less the cost of the mutual funds in the CRSP sample. Although there may be differences between the underlying expenses of the funds in the taxable account and the tax-deferred account, fund expenses are assumed to be identical and returns are net of expenses. These returns are purely hypothetical and do not represent the actual growth rate of any specific portfolio or annuity.
1Jefferson National's Monument Advisor has a $20 flat insurance fee on more than 97% of our underlying funds. Certain funds also have a transaction fee ranging from $19.99 to $49.99 per transaction, depending on the number of transactions per year. See the prospectus for details. Like other variable annuities, the customer pays fees of the underlying funds selected (currently ranging from 0.23% - 2.72%; except for Rydex VT Inverse Gov't Long Bond Fund which is currently 5.12%) plus the fees of any advisor hired. The range of underlying fund fees reflect the minimum and maximum charges after contractual waivers that have been committed to through at least May 1, 2008.
2The average variable annuity has 38 underlying fund options according to Morningstar data as of 12/31/07.
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|Date:||Mar 31, 2008|
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