q p d a stretch roth i r a

Bob Smith and Mary Smith

Presented by:Mr. John Q. Smith, Jr., CLU

For Evaluation Purposes Only10735 David Taylor Drive

Suite 350Charlotte, North Carolina 28262

Email: [email protected]

These pages depict certain wealth preservation strategies concerning possible methods for taking distributions from your qualified retirement plan. For purposes ofthis analysis, several of your qualified retirement plans may be aggregated and shown as one single plan. This report provides only broad, general guidelines, whichmay be helpful in shaping your thinking about and discussing your wealth preservation needs with your professional advisors. This report provides estimates basedon our general understanding of current tax laws.

Each scenario shown illustrates your current situation or an alternative strategy and its possible effects on the financial situation you provided. Inclusion of one ormore of these strategies does not constitute a recommendation of that strategy over any other strategy.

Calculations contained in this analysis are estimates only based on the information you provided, such as the value of your assets today, and the rate at which theassets appreciate. The actual values, rates of growth, and tax rates may be significantly different from those illustrated. These assumptions are only a “best guess.”No guarantee can be made regarding values, as all rates are the hypothetical rates you provided. These computations are not a guarantee of future performance of anyasset, including insurance or other financial products.

No legal or accounting advice is being rendered either by this report or through any other oral or written communications. Nothing contained in this report is intendedto be used on any tax form or to support any tax deduction. Unless indicated, the tax aspect of the federal Generation-Skipping Transfer Tax (GSTT) is not reflected.The GSTT is similar to an additional level of estate tax on certain transfers to grandchildren, or individuals two or more generations removed from the transferor.State laws vary regarding the distribution of property, and individual circumstances are unique and subject to change. You should discuss all strategies, transfers, andassumptions with your legal and tax advisors.

To implement a strategy, it may be necessary to restructure the ownership of property, or change designated beneficiaries before specific will or trust provisions,prepared by the client’s counsel, become effective. The transfer of a life insurance policy may not result in its removal from the estate of the prior owner for threeyears.

Strategies may be proposed to support the purchase of various products such as insurance and other financial products. When this occurs, additional informationabout the specific product (including a prospectus, if required, or an insurer provided policy illustration) will be provided for your review.

IMPORTANT: The projections or other information generated by this investment analysis tool (Qualified Plan Distribution Analysis) regarding the likelihood ofvarious investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, this notice is to inform you that any U. S. federal tax advice containedin this presentation is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii)promoting, marketing or recommending to another party any transaction or matter addressed in this presentation.

Important Notes

This presentation is not a financial plan.Version 2.0.0 c. 6.0.0.0

Presented by: Mr. John Q. Smith, Jr., CLUFor Evaluation Purposes Only

August 14, 20092 of 29

"Split Benefit Roth IRA"A Multi-Generational Approach for

Continuing Distributions

for

Bob Smithand

Mary Smith

This presentation is not a financial plan.Presented by: Mr. John Q. Smith, Jr., CLUFor Evaluation Purposes Only

August 14, 20093 of 29

Traditional IRAsContributions are limited to $5,000 for 2009 ($6,000 if 50 or over) and are generally tax deductible.•If you are covered by a retirement plan at work and your modified adjusted gross income (MAGI) is $89,000 - $109,000 in 2009 (married, filing jointly),deductibility phases out and is eliminated thereafter. If your spouse is covered by a retirement plan at work, but you are not, the phase out is $166,000 - $176,000for married, filing joint. (The phase out is $55,000 - $65,000 for single taxpayers.)

•

Funds grow tax-deferred, but are taxed as ordinary income upon distribution.•Minimum distributions are required annually beginning on the Required Beginning Date (RBD1), which is based on your age 70½.•Distributions taken prior to age 59½ are subject to a 10% early distribution penalty tax, with certain exceptions.•Distributions after your death (or your spouse's death) are taxed as ordinary income to the beneficiary as distributions are received.•At your death (or your spouse's death), the entire account value is includible in the gross estate for federal estate tax purposes, and may be subject to estate taxes.•

Roth IRAsContributions are limited to $5,000 for 2009 ($6,000 if 50 or over) and are NOT income tax deductible.•Ability to contribute is phased out if you earn $166,000-$176,000 for married, filing jointly in 2009, andeliminated thereafter. The phase out is $105,000 - $120,000 for single taxpayers.

•

Funds grow tax deferred and are generally not taxable upon withdrawal.•No minimum distributions are required from Roth IRAs, during your (or your spouse's) lifetime.•Withdrawals of contributions to Roth IRAs, prior to age 59½, are not subject to the 10% earlywithdrawal penalty tax. Withdrawals of earnings within 5 years of establishing a Roth IRA are taxed asordinary income. Earnings taken prior to age 59½ are taxed as ordinary income, and may be subject to a10% early withdrawal penalty tax, with certain exceptions.

•

Distributions after your death are received by the beneficiary income-tax free.•At your death (or your spouse's death), the entire account value is includible in the gross estate forfederal estate tax purposes, and may be subject to estate taxes.

•

Conversions (from a Traditional IRA to a Roth IRA)A Conversion is a taxable event. The entire (or partial) amount of the Traditional IRA (less any non-deductible contributions) is taxable as ordinary incomeupon conversion (or distribution). The conversion amount may move you into a higher marginal income tax bracket. Due to a special provision in the tax law, foramounts converted in 2010, half the conversion can be reported as taxable income in 2011 and the other half is reported in 2012.

•

Prior to 2010, if your MAGI exceeds $100,000, you are not eligible to convert a Traditional IRA to a Roth IRA. After 2009, the income limit is eliminated.•If you pay the taxes out of the Traditional IRA, it will reduce the benefits of the conversion to a Roth IRA, and if you are under age 59½, the amount used to payincome taxes will be subject to the 10% early distribution penalty tax.

•

Withdrawals of converted amounts within 5 years of each separate conversion to Roth IRAs may be subject to a 10% early distribution penalty tax andwithdrawals of earnings may be subject to a 10% early distribution penalty tax and/or taxed as ordinary income.

•

Distributions from a Traditional IRA must be deposited into a Roth IRA within 60 days (not applicable for trustee-to-trustee transfers).•You do not have to convert your entire Traditional IRA. A partial conversion is allowed, but you must follow the same rules as any other distribution regardingnondeductible contributions.

•

Understanding IRAs, Roth IRAs, ConversionsKey Concepts & Rules

1The RBD is no later than April 1st following age 70½ for traditional IRAs, SEPs, SIMPLEs. For qualified retirement plans, the later of April 1 of the year following the year inwhich the owner reaches age 70½ or retires, if less than a 5% owner.


August 14, 20094 of 29

Pay Taxes Now or Later?The deciding factor between choosing an IRA or RothIRA is whether you prefer paying taxes on yourcontributions (Roth IRA) or on your distributions(Traditional IRA). So when will your taxes be higher –during your working years or during retirement? Whencomparing, be sure to consider your income level duringeach phase (both income and withdrawals from assets),in addition to potential legislative changes.

The Flexibility of the Roth IRAA major advantage of the Roth IRA is the flexibility ofdistributions before and during retirement:

Early Distributions (pre-59½) — Traditional IRAsmay charge a 10% penalty, with some exceptionswhile there is no penalty on withdrawals ofcontributions from a Roth IRA

•

IRA vs. Roth IRA - Values at Retirement

Roth IRATraditional IRA Roth IRATraditional IRA Roth IRATraditional IRA

Taxes Higher NowTraditional IRA is Better

Taxes Stay SameOptions are Equal

Taxes Higher in RetirementRoth IRA is Better

Roth IRATraditional IRA Income Taxes

Required Distributions (after 70½) — Traditional IRAs require minimumdistributions each year, while a Roth IRA has no required distributions for the RothIRA owner

•

The Case Against "Taxable Accounts" (Savings Accounts)Contributions to taxable accounts are made after-tax (just like a Roth IRA), but unlike aRoth IRA, interest and dividends generated are taxable each year, and capital gainstaxes are due when liquidating an investment held for more than a year. Thiscombination of taxes can significantly reduce your ability to accumulate retirementfunds over the long-term, and may affect or limit your investment options and thefrequency of changes to your investments over the long-term. The upside is that thereare no penalties or restrictions on withdrawals from taxable accounts before retirement,making them perfect for short-term savings.

Use taxable accounts for short-term savings.Use IRAs and Roth IRAs for long-term retirement funding.

Roth IRATaxable

These graphs compare account balances after 30 years of $5,000 annual contributions (after tax) growing at 8%. All growth in the taxable account is taxed each year at 35% while the Roth IRA grows tax free.

$361,711

$611,729$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

Retirement Savings OptionsIRA vs. Roth vs. Taxable Accounts


August 14, 20095 of 29

Example:Currently age 55•Considering conversion to Roth IRA at age 60•Believes that income tax rates will be higher duringretirement

•

$1,000,000 IRA growing at an assumed 6%•$500,000 Other Assets earning 6% before taxes•

Roth IRAOther AssetsTraditional IRA

9,000,000

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

55 60 65 70 75 80 85 55 60 65 70 75 80 8555 60 65 70 75 80 85

Traditional IRANo Conversion Taxes

Roth IRAUsing Other Assets for Taxes1

Roth IRAUsing IRA for Taxes1

Total Funds at Age 902

$7,273,841Total Funds at Age 90

$9,149,932Total Funds at Age 90

$8,205,030

Age

5560657585

IRA2

1,000,0001,418,5191,898,2992,700,2822,825,207

Total

1,500,0002,069,6492,709,7254,293,7926,185,852

OtherAssets

500,000651,130811,427

1,593,5103,360,645

Roth IRA

1,000,0001,418,5191,898,2993,399,5646,088,101

Total

1,500,0001,735,0932,294,3333,985,0826,926,101

OtherAssets

500,000316,574396,035585,518838,001

Roth IRA

1,000,0001,063,8891,423,7242,549,6734,566,075

Total

1,500,0001,730,0742,255,4383,777,5696,319,007

OtherAssets

500,000666,185831,714

1,227,8971,752,932

Major Difference-Distributions

Traditional IRAs

Must take required minimumdistributions starting at age 70½. (Nodistributions required in 2009.)

•

Distributions are taxable as ordinaryincome.

•

Roth IRAs

No required distributions•

Distributions are income tax-free.•

The Roth IRA provides a sourceof tax-free income to use orleave to heirs.

Comparing IRA with Roth IRA ConversionHypothetical Sample Conversion of Traditional IRA to Roth IRA

1For this illustration, income tax rates are assumed to be 25% for 15 years, and 40% thereafter. Example assumes the net distributions after taxes are deposited into the OtherAssets.

2IRA balance would be subject to income taxation upon distribution or at death.


August 14, 20096 of 29

Beneficiary Designation—determines who will benefitfrom your retirement account and for how long.It involves:

Naming the beneficiary(ies)•

Giving a spouse the ability to roll the account over to a Roth IRA•

Deciding if and when to split the account into multiple Roth IRAs•

Your choice of beneficiary determines the life expectancyover which distributions can be taken after your death.

The longer the life expectancy, the longer the distribution period

Proper beneficiary designations "stretch" distributions for a longer period of time

Account Distributions—determine when and how much totake from your retirement account.

You may take distributions penalty free starting the later of five years after yourfirst contribution, or attaining age 59½, subject to a few exceptions.

•

You are not required to take distributions during your lifetime.•

Your beneficiaries are required to take distributions from the Roth IRAaccording to the same rules as Inherited Traditional IRAs.

•

Your beneficiaries' life expectancies are determined annually using the SingleLife Table.

•

Decisions Regarding Your AccountDetermining How Long Distributions Can Be Taken


August 14, 20097 of 29

Beginning Account Balance December 31, 2008: $500,000

Converted Roth IRARollover Approach

Owner'sConvertedRoth IRA

Distributions to Bob: $63,347

Spouse'sRolloverRoth IRA

Distributions to Mary: $0

Decedent'sRoth IRA

Distributions to Beneficiaries: $6,277,618

Total Distributions:$6,340,966

Converted Split Benefit Roth IRARollover and Split Approach



Spouse'sRollover Roth IRA

Distributions to Mary: $0

Decedent'sRoth IRA

Decedent'sRoth IRA

Decedent'sRoth IRA



Converted Split Benefit Roth IRANon-Spouse Split Approach



Roth IRA Continues toNon-Spouse Beneficiaries

(No Distributions to Spouse)

Decedent'sRoth IRA

Decedent'sRoth IRA

Decedent'sRoth IRA



Illustration of Multi-Generational ApproachesTotal Distributions Compared

NOTE: See Comparing Multi-Generational Approaches for details.This presentation is not a financial plan.Presented by: Mr. John Q. Smith, Jr., CLUFor Evaluation Purposes Only

August 14, 20098 of 29

Converted Roth IRARollover Approach

You convert your Traditional IRA to a RothIRA and name Mary as your primarybeneficiary for this Roth IRA. You takedistributions of $63,347 during your lifetimeand, at your death, Mary rolls over the RothIRA.

•

Mary names beneficiaries for the Roth IRA.Mary's lifetime distributions are $0.

•

At Mary's death, if the Roth IRA does not splitinto separate shares, distributions continue toeach beneficiary based on the oldestbeneficiary's life expectancy. The distributions1

to the beneficiaries are $6,277,618.

•

Converted Split Benefit Roth IRARollover and Split Approach

You convert your Traditional IRA to a RothIRA and name Mary as your primarybeneficiary for this Roth IRA. You takedistributions of $63,347 during your lifetimeand, at your death, Mary rolls over the RothIRA.

•

At your death, Mary rolls over the Roth IRA.Mary's lifetime distributions are $0.

•

At Mary's death, the Roth IRA is split intoseparate Roth IRAs with named beneficiaries.Distributions continue to each beneficiarybased on his or her life expectancy. Thedistributions1 to the beneficiaries are$12,076,168.

•

Converted Split Benefit Roth IRANon-Spouse Split Approach

You convert your Traditional IRA to a RothIRA and take distributions of $63,347 duringyour lifetime.

•

At your death, the Roth IRA is split intoseparate Roth IRAs with named beneficiaries.Distributions continue to each beneficiarybased on his or her life expectancy. Thedistributions1 to the beneficiaries are$10,931,235.

•




Comparing Multi-Generational ApproachesAn Explanation of Different Techniques

1Although the intent is to show the beneficiaries stretching the distributions over as many years as possible, each beneficiary could elect to take his or her share in a lump sum.The estimated lump sum available at the spouse's death in the Converted Roth IRA Rollover Approach would be $1,826,832 to be split among all named beneficiaries. Theestimated lump sum available at the spouse's death in the Converted Split Benefit Roth IRA Rollover and Split Approach would be $1,826,832 to be split among all namedbeneficiaries. The estimated lump sum available at the owner's death in the Converted Split Benefit Roth IRA Non-Spouse Split Approach would be $1,302,506 to be splitamong all named beneficiaries.


August 14, 20099 of 29

Bob's IRA

IRA Value Now (2008): $500,000

Death Assumed (age 75): $1,302,506

Bob's death assumed in 2024. Noincome or estate tax due on RothIRA at death.

$63,347Distributions duringBob's lifetime

Mary rolls over the value at Bob's death.

The estate must haveliquidity of $801,369 forfederal estate taxesattributable to the RothIRA to provide the totaldistributions shown onthis page.

Value of Mary's Rollover Roth IRA in 2025: $1,302,506

Mary dies in 2029. Valuesincluded in estate.

$0Distributions duringMary's lifetime

At Mary's death, minimum distributions continue to each beneficiarybased on the life expectancy of the oldest designated beneficiary.

Total Distributions to:All Non-Spouse Beneficiaries

$6,277,618

Total distributions during lives of Bob, Mary and beneficiaries: $6,340,966

Converted Roth IRA—Roth IRA Rollover ApproachA Multi-Generational Approach for Continuing Distributions


August 14, 200910 of 29


2009 60 59 25.2 33,730 19,841 0 0 0 19,841 3,083,394 513,8892010 61 60 24.4 34,625 21,061 6,118 0 0 14,943 3,163,504 527,4532011 62 61 23.5 35,486 22,445 6,443 0 0 16,002 3,246,385 540,494

Allocation of Distributions

YearClientAge

SpouseAge

LifeExp.

1Earnings &

Contributions2

ActualDistributions

3

IncomeTaxes

Paid4

Prem. &Non-Prem.

Gifts SpendingReinvested

Distributions5

Total ofAll Other

Assets6

AccountBalance

Bob converts the Traditional IRA to a Roth IRA in 2012. Taxes of $162,148 are due on the conversion and are paid from Other Assets.

2012 63 62 578,328 0 6,867 0 0 -6,867 3,331,974 578,3282013 64 63 40,483 0 162,290 0 0 -162,290 3,236,534 618,8112014 65 64 43,317 0 0 0 0 0 3,304,502 662,1282015 66 65 46,349 0 0 0 0 0 3,373,896 708,4772016 67 66 49,593 0 0 0 0 0 3,444,748 758,070

2017 68 67 53,065 0 0 0 0 0 3,517,088 811,1352018 69 68 56,779 0 0 0 0 0 3,590,947 867,9152019 70 69 60,754 0 0 0 0 0 3,666,356 928,6692020 71 70 65,007 0 0 0 0 0 3,743,350 993,6752021 72 71 69,557 0 0 0 0 0 3,821,960 1,063,233

2022 73 72 74,426 0 0 0 0 0 3,902,221 1,137,6592023 74 73 79,636 0 0 0 0 0 3,984,168 1,217,2952024 75 74 85,211 0 0 0 0 0 4,067,836 1,302,506


YearClientAge

SpouseAge

LifeExp.

1Earnings &

Contributions2

ActualDistributions

3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

RothAccountBalance

Bob dies and Mary rolls over the Roth IRA. Total distributions during Bob's lifetime are $63,347.

Converted Roth IRA—Roth IRA Rollover ApproachA Multi-Generational Approach for Continuing Distributions

1Bob's death is assumed to occur in 2024. Mary is named beneficiary. For Traditional IRA, 403(b) or other Qualified Plans, Bob takes required minimum distributions (RMDs) atage 70½ and calculates life expectancy annually based on the Single Life Expectancy Table. After conversion to Roth IRA, Bob no longer takes RMDs.

2Assumes qualified plan earns 7.00% interest. Also includes contributions, if any.

3For Traditional IRA, 403(b) or other Qualified Plans, Actual Distributions is the greater of pretax distribution required to generate the Desired Distribution (see Assumptionspage) or RMD. After conversion to Roth IRA, distributions are assumed to be made from Other Assets during the 5 year holding period after Roth conversion.

4Taxes and any applicable penalties are paid at the start of the calendar year following the tax liability. After Roth conversion, includes the estimated income taxes on theTraditional IRA amount converted to Roth IRA. Conversions in year 2010 only will be reported as taxable income

5Actual Distributions less Taxes and Penalties, Non-Premium Gifts and Spending. After Roth conversion, Other Assets are used to the extent possible to pay the income taxeson Traditional IRA amounts converted to Roth IRA.

6All Other Assets and Cumulative Reinvested Distributions are assumed to earn 3.00% interest and are taxed at a 30.00% income tax rate. Does not include the death benefit oflife insurance.


August 14, 200911 of 29

2025 75 91,175 0 0 0 0 0 4,153,260 1,393,6812026 76 97,558 0 0 0 0 0 4,240,479 1,491,2392027 77 104,387 0 0 0 0 0 4,329,529 1,595,6262028 78 111,694 0 0 0 0 0 4,420,449 1,707,3202029 79 119,512 0 0 0 0 0 4,505,468 1,826,832


YearSpouse

AgeLife

Exp.1

Earnings &Contributions

2Actual

Distributions3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

RothAccountBalance

Total distributions during Mary's lifetime are $0. At Mary's death, the Roth IRA is distributed to the named beneficiaries. Estate taxes of $801,369 will bedue on these amounts.

Converted Roth IRA—Roth IRA Rollover Approach (Continued)A Multi-Generational Approach for Continuing Distributions

1Bob's death is assumed to occur in 2024. Mary is named beneficiary.







August 14, 200912 of 29

Account Balance: $1,826,832

2030 55 29.6 61,717 1,892,9932031 56 28.6 66,189 1,959,3142032 57 27.6 70,990 2,025,4762033 58 26.6 76,146 2,091,1142034 59 25.6 81,684 2,155,808

2035 60 24.6 87,634 2,219,0802036 61 23.6 94,029 2,280,3862037 62 22.6 100,902 2,339,1112038 63 21.6 108,292 2,394,5572039 64 20.6 116,241 2,445,935

2040 65 19.6 124,793 2,492,3582041 66 18.6 133,998 2,532,8262042 67 17.6 143,911 2,566,2132043 68 16.6 154,591 2,591,2572044 69 15.6 166,106 2,606,538

2045 70 14.6 178,530 2,610,4662046 71 13.6 191,946 2,601,2532047 72 12.6 206,449 2,576,8922048 73 11.6 222,146 2,535,1282049 74 10.6 239,163 2,473,424

2050 75 9.6 257,648 2,388,9152051 76 8.6 277,781 2,278,3592052 77 7.6 299,784 2,138,0602053 78 6.6 323,948 1,963,7752054 79 5.6 350,674 1,750,566

2055 80 4.6 380,558 1,492,5472056 81 3.6 414,597 1,182,4292057 82 2.6 454,780 810,4192058 83 1.6 506,512 360,6362059 84 0.6 385,881 0

Year AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $6,277,618

Converted Roth IRA—Roth IRA Rollover ApproachNext Generation after Mary's Death

1Calculated on December 31 of the year following death and reduced by one each year thereafter.

2Distributions from Roth IRA are assumed to be income tax free.

3Assumes qualified plan earns 7.00% interest.


August 14, 200913 of 29

Bob's IRA

IRA Value Now (2008): $500,000


Bob's death assumed in 2024. Noincome or estate tax due on RothIRA at death.


Mary rolls over the value at Bob's death.


Value of Mary's Roth IRA in 2025: $1,302,506

Mary dies in 2029. Valuesincluded in estate.

$0Distributions duringMary's lifetime

Roth IRA splits into separate shares at Mary's death. Distributions arebased on the life expectancy of each named beneficiary.

Total Distributions to:Johnny

$2,071,614

Total Distributions to:Sally

$2,457,732

Total Distributions to:Sarah

$7,546,822

Total distributions during lives of Bob, Mary and beneficiaries: $12,139,515

The Split Benefit Roth IRA—Rollover to Spouse and SplitA Multi-Generational Approach for Continuing Distributions


August 14, 200914 of 29


2009 60 59 25.2 33,730 19,841 0 0 0 19,841 3,083,394 513,8892010 61 60 24.4 34,625 21,061 6,118 0 0 14,943 3,163,504 527,4532011 62 61 23.5 35,486 22,445 6,443 0 0 16,002 3,246,385 540,494


YearClientAge

SpouseAge

LifeExp.

1Earnings &

Contributions2

ActualDistributions

3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

AccountBalance


2012 63 62 578,328 0 6,867 0 0 -6,867 3,331,974 578,3282013 64 63 40,483 0 162,290 0 0 -162,290 3,236,534 618,8112014 65 64 43,317 0 0 0 0 0 3,304,502 662,1282015 66 65 46,349 0 0 0 0 0 3,373,896 708,4772016 67 66 49,593 0 0 0 0 0 3,444,748 758,070

2017 68 67 53,065 0 0 0 0 0 3,517,088 811,1352018 69 68 56,779 0 0 0 0 0 3,590,947 867,9152019 70 69 60,754 0 0 0 0 0 3,666,356 928,6692020 71 70 65,007 0 0 0 0 0 3,743,350 993,6752021 72 71 69,557 0 0 0 0 0 3,821,960 1,063,233

2022 73 72 74,426 0 0 0 0 0 3,902,221 1,137,6592023 74 73 79,636 0 0 0 0 0 3,984,168 1,217,2952024 75 74 85,211 0 0 0 0 0 4,067,836 1,302,506


YearClientAge

SpouseAge

LifeExp.

1Earnings &

Contributions2

ActualDistributions

3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

RothAccountBalance

Bob dies and Mary rolls over the Roth IRA. Total distributions during Bob's lifetime are $63,347.


1Bob's death is assumed to occur in 2024. Mary is named beneficiary. For Traditional IRA, 403(b) or other Qualified Plans, Bob takes required minimum distributions (RMDs) atage 70½ and calculates life expectancy annually based on the Single Life Expectancy Table. After conversion to Roth IRA, Bob no longer takes RMDs.







August 14, 200915 of 29

2025 75 91,175 0 0 0 0 0 4,153,260 1,393,6812026 76 97,558 0 0 0 0 0 4,240,479 1,491,2392027 77 104,387 0 0 0 0 0 4,329,529 1,595,6262028 78 111,694 0 0 0 0 0 4,420,449 1,707,3202029 79 119,512 0 0 0 0 0 4,505,468 1,826,832


YearSpouse

AgeLife

Exp.1

Earnings &Contributions

2Actual

Distributions3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

RothAccountBalance

Total distributions during Mary's lifetime are $0. At Mary's death, the Roth IRA is distributed to the named beneficiaries. Estate taxes of $801,369 will bedue on these amounts.


1Bob's death is assumed to occur in 2024. Mary is named beneficiary.







August 14, 200916 of 29

Account Balance: $602,855

2030 55 29.6 20,367 624,6882031 56 28.6 21,842 646,5742032 57 27.6 23,427 668,4072033 58 26.6 25,128 690,0682034 59 25.6 26,956 711,416

2035 60 24.6 28,919 732,2962036 61 23.6 31,030 752,5282037 62 22.6 33,298 771,9072038 63 21.6 35,736 790,2042039 64 20.6 38,359 807,159

2040 65 19.6 41,182 822,4782041 66 18.6 44,219 835,8322042 67 17.6 47,490 846,8502043 68 16.6 51,015 855,1152044 69 15.6 54,815 860,158

2045 70 14.6 58,915 861,4542046 71 13.6 63,342 858,4132047 72 12.6 68,128 850,3742048 73 11.6 73,308 836,5922049 74 10.6 78,924 816,230

2050 75 9.6 85,024 788,3422051 76 8.6 91,668 751,8582052 77 7.6 98,929 705,5602053 78 6.6 106,903 648,0462054 79 5.6 115,722 577,687

2055 80 4.6 125,584 492,5412056 81 3.6 136,817 390,2022057 82 2.6 150,078 267,4382058 83 1.6 167,149 119,0102059 84 0.6 127,341 0

Johnny

Year AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $2,071,614


51 33.3 18,104 626,95152 32.3 19,410 651,42753 31.3 20,812 676,21454 30.3 22,317 701,23255 29.3 23,933 726,386

56 28.3 25,667 751,56557 27.3 27,530 776,64558 26.3 29,530 801,48059 25.3 31,679 825,90460 24.3 33,988 849,730

61 23.3 36,469 872,74262 22.3 39,136 894,69763 21.3 42,005 915,32264 20.3 45,090 934,30465 19.3 48,410 951,296

66 18.3 51,983 965,90367 17.3 55,833 977,68468 16.3 59,981 986,14169 15.3 64,454 990,71870 14.3 69,281 990,787

71 13.3 74,495 985,64772 12.3 80,134 974,50873 11.3 86,240 956,48474 10.3 92,863 930,57575 9.3 100,062 895,654

76 8.3 107,910 850,43977 7.3 116,499 793,47278 6.3 125,948 723,06779 5.3 136,428 637,25480 4.3 148,199 533,663

Sally

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3


28 55.3 11,232 653,37029 54.3 12,033 687,07330 53.3 12,891 722,27731 52.3 13,810 759,02632 51.3 14,796 797,362

33 50.3 15,852 837,32634 49.3 16,984 878,95435 48.3 18,198 922,28336 47.3 19,499 967,34437 46.3 20,893 1,014,166

38 45.3 22,388 1,062,76939 44.3 23,990 1,113,17340 43.3 25,708 1,165,38741 42.3 27,551 1,219,41342 41.3 29,526 1,275,246

43 40.3 31,644 1,332,87044 39.3 33,915 1,392,25545 38.3 36,351 1,453,36246 37.3 38,964 1,516,13347 36.3 41,767 1,580,496

48 35.3 44,773 1,646,35749 34.3 47,999 1,713,60350 33.3 51,460 1,782,09651 32.3 55,173 1,851,67052 31.3 59,159 1,922,128

53 30.3 63,437 1,993,24054 29.3 68,029 2,064,73855 28.3 72,959 2,136,31156 27.3 78,253 2,207,60057 26.3 83,939 2,278,192

Sarah

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

The Split Benefit Roth IRA—Rollover to Spouse and SplitNext Generation after Mary's Death





August 14, 200917 of 29

81 3.3 161,716 409,30382 2.3 177,958 259,99783 1.3 199,997 78,19984 0.3 83,673 0

Sally

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $2,457,732

58 25.3 90,047 2,347,61959 24.3 96,610 2,415,34260 23.3 103,663 2,480,75361 22.3 111,245 2,543,16262 21.3 119,397 2,601,786

63 20.3 128,167 2,655,74464 19.3 137,603 2,704,04365 18.3 147,762 2,745,56466 17.3 158,703 2,779,05067 16.3 170,494 2,803,090

68 15.3 183,208 2,816,09769 14.3 196,930 2,816,29470 13.3 211,751 2,801,68471 12.3 227,779 2,770,02272 11.3 245,135 2,718,789

73 10.3 263,960 2,645,14474 9.3 284,424 2,545,88075 8.3 306,733 2,417,35976 7.3 331,145 2,255,42977 6.3 358,005 2,055,305

78 5.3 387,793 1,811,38379 4.3 421,252 1,516,92880 3.3 459,675 1,163,43881 2.3 505,842 739,03682 1.3 568,489 222,279

83 0.3 237,839 0

Sarah

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $7,546,822

The Split Benefit Roth IRA—Rollover to Spouse and SplitNext Generation after Mary's Death





August 14, 200918 of 29


2009 60 59 513,889 3,083,3942010 61 60 527,453 3,163,5042011 62 61 540,494 3,246,385

YearClient

AgeSpouse

AgeAccountBalance

OtherAssets1

Bob converts the Traditional IRA to a Roth IRA in 2012. Taxes of$162,148 are due on the conversion and are paid from OtherAssets.

2012 63 62 578,328 3,331,9742013 64 63 618,811 3,236,5342014 65 64 662,128 3,304,5022015 66 65 708,477 3,373,8962016 67 66 758,070 3,444,748

2017 68 67 811,135 3,517,0882018 69 68 867,915 3,590,9472019 70 69 928,669 3,666,3562020 71 70 993,675 3,743,3502021 72 71 1,063,233 3,821,960

2022 73 72 1,137,659 3,902,2212023 74 73 1,217,295 3,984,1682024 75 74 1,302,506 4,067,836

YearClient

AgeSpouse

Age

RothAccountBalance

OtherAssets1

Mary rolls over the Roth IRA at Bob's death in 2024. Totaldistributions during Bob's lifetime are $63,347.

Continuation of this analysis assumes that Mary's estate hassufficient cash liquidity for all transfer costs without using this RothIRA.Bob's Death Occurs in Year 2024

Total of Other Assets1 $4,067,836Life insurance on Bob inside of estate2 $0Estimated Account Balance $1,302,506Estimated share of estate taxes3 $0

Liquidity needed to continue this approach $0Existing life insurance on Bob outside of estate4 $0Proposed new life insurance outside of estate4 $0

Mary's Death Occurs in Year 2029Total of Other Assets1 $4,505,468Life insurance on Mary inside of estate2 $0Estimated Account Balance $1,826,832Estimated share of estate taxes3 $801,369

Liquidity needed to continue this approach $801,369Existing life insurance on Mary outside of estate4 $0

The Split Benefit Roth IRA—Rollover to Spouse and SplitWealth Transfer Costs

1Other Assets are assumed to be inherited by the surviving spouse and to qualify for the marital deduction. Other Assets are assumed to earn 3.00% interest and are taxed at a30.00% income tax rate.

2Life insurance included in the deceased's estate is assumed to be added to Other Assets.

3Estate tax calculations are based on the total of the Account Balance, the Other Assets, and any Life Insurance included in the estate. No probate fees or expenses areconsidered. Mary's Applicable Credit Amount is considered in estimating taxes. Estimated Share of Estate Taxes is the ratio that the Account Balance bears to the Total Estate.

4Life insurance outside the deceased's estate is assumed to be paid directly to heirs and will not be in the estate of the surviving spouse.


August 14, 200919 of 29

2025 75 1,393,681 4,153,2602026 76 1,491,239 4,240,4792027 77 1,595,626 4,329,5292028 78 1,707,320 4,420,4492029 79 1,826,832 4,505,468

YearSpouse

Age

RothAccountBalance

OtherAssets1

At Mary's death, the Roth IRA is distributed to the namedbeneficiaries. Estate taxes of $801,369 will be due on theseamounts. 3

The Split Benefit Roth IRA—Rollover to Spouse and SplitWealth Transfer Costs



3Estate tax calculations are based on the total of the Account Balance, the Other Assets, and any Life Insurance included in the estate. No probate fees or expenses areconsidered. Spouse's Applicable Credit Amount is considered in estimating taxes. Estimated Share of Estate Taxes is the ratio that the Account Balance bears to the TotalEstate.



August 14, 200920 of 29

Bob's IRA

IRA Value Now (2008): $500,000



Value of Bob's Roth IRA in 2025: $1,302,506

Bob dies in 2024. Valuesincluded in estate.


Roth IRA splits into separate shares at Bob's death. Distributions arebased on the life expectancy of each named beneficiary.

Total Distributions to:Johnny

$1,827,301

Total Distributions to:Sally

$2,177,520

Total Distributions to:Sarah

$6,926,414

Total distributions during lives of Bob and beneficiaries: $10,994,582

The Split Benefit Roth IRA—Non-Spouse Beneficiary ApproachA Multi-Generational Approach for Continuing Distributions (With A Non-Spouse Beneficiary)


August 14, 200921 of 29


2009 60 25.2 33,730 19,841 0 0 0 19,841 3,083,394 513,8892010 61 24.4 34,625 21,061 6,118 0 0 14,943 3,163,504 527,4532011 62 23.5 35,486 22,445 6,443 0 0 16,002 3,246,385 540,494


YearClientAge

LifeExp.

1Earnings &

Contributions2

ActualDistributions

3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

AccountBalance


2012 63 578,328 0 6,867 0 0 -6,867 3,331,974 578,3282013 64 40,483 0 162,290 0 0 -162,290 3,236,534 618,8112014 65 43,317 0 0 0 0 0 3,304,502 662,1282015 66 46,349 0 0 0 0 0 3,373,896 708,4772016 67 49,593 0 0 0 0 0 3,444,748 758,070

2017 68 53,065 0 0 0 0 0 3,517,088 811,1352018 69 56,779 0 0 0 0 0 3,590,947 867,9152019 70 60,754 0 0 0 0 0 3,666,356 928,6692020 71 65,007 0 0 0 0 0 3,743,350 993,6752021 72 69,557 0 0 0 0 0 3,821,960 1,063,233

2022 73 74,426 0 0 0 0 0 3,902,221 1,137,6592023 74 79,636 0 0 0 0 0 3,984,168 1,217,2952024 75 77,888 0 0 0 0 0 4,067,836 1,302,506


YearClientAge

LifeExp.

1Earnings &

Contributions2

ActualDistributions

3

IncomeTaxes

Paid4

Prem. &Non-Prem.


Distributions5

Total ofAll Other

Assets6

RothAccountBalance

At Bob's death, the Roth IRA is distributed to the named beneficiaries. Estate taxes of $125,078 attributable to the account balance will be due at Bob's death.

The Split Benefit Roth IRA—Non-Spouse Beneficiary ApproachA Multi-Generational Approach for Continuing Distributions

1Bob's death is assumed to occur in 2024. Each beneficiary continues to receive a distribution based on his or her life expectancy. For Traditional IRA, 403(b) or other QualifiedPlans, Bob takes required minimum distributions (RMDs) at age 70½ and calculates life expectancy annually based on the Single Life Expectancy Table. After conversion toRoth IRA, Bob no longer takes RMDs.







August 14, 200922 of 29


2025 50 34.2 12,568 447,3472026 51 33.2 13,474 465,1872027 52 32.2 14,447 483,3032028 53 31.2 15,490 501,6442029 54 30.2 16,611 520,054

2030 55 29.2 17,810 538,6482031 56 28.2 19,101 557,2522032 57 27.2 20,487 575,7732033 58 26.2 21,976 594,1012034 59 25.2 23,575 612,112

2035 60 24.2 25,294 629,6662036 61 23.2 27,141 646,6022037 62 22.2 29,126 662,7382038 63 21.2 31,261 677,8692039 64 20.2 33,558 691,762

2040 65 19.2 36,029 704,1562041 66 18.2 38,690 714,7572042 67 17.2 41,556 723,2342043 68 16.2 44,644 729,2162044 69 15.2 47,975 732,287

2045 70 14.2 51,569 731,9772046 71 13.2 55,453 727,7632047 72 12.2 59,653 719,0542048 73 11.2 64,201 705,1862049 74 10.2 69,136 685,413

2050 75 9.2 74,501 658,8912051 76 8.2 80,353 624,6612052 77 7.2 86,758 581,6282053 78 6.2 93,811 528,5312054 79 5.2 101,641 463,888

Johnny

Year AgeLife

Exp.1

ActualDistributions

2AccountBalance

3


46 37.9 11,341 448,57447 36.9 12,156 467,81748 35.9 13,031 487,53449 34.9 13,969 507,69150 33.9 14,976 528,169

51 32.9 16,054 549,08752 31.9 17,213 570,31053 30.9 18,457 591,77554 29.9 19,792 613,40855 28.9 21,225 635,121

56 27.9 22,764 656,81657 26.9 24,417 678,37658 25.9 26,192 699,67059 24.9 28,099 720,54860 23.9 30,148 740,838

61 22.9 32,351 760,34562 21.9 34,719 778,85063 20.9 37,266 796,10464 19.9 40,005 811,82665 18.9 42,954 825,700

66 17.9 46,129 837,37167 16.9 49,549 846,43868 15.9 53,235 852,45469 14.9 57,212 854,91470 13.9 61,505 853,253

71 12.9 66,144 846,83872 11.9 71,163 834,95373 10.9 76,601 816,79974 9.9 82,505 791,47075 8.9 88,929 757,944

Sally

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3


23 60.1 7,369 466,48324 59.1 7,893 491,24425 58.1 8,455 517,17626 57.1 9,057 544,32127 56.1 9,703 572,665

28 55.1 10,393 602,35929 54.1 11,134 633,39030 53.1 11,928 665,79931 52.1 12,779 699,62632 51.1 13,691 734,908

33 50.1 14,669 771,68334 49.1 15,717 809,98435 48.1 16,840 849,84336 47.1 18,043 891,28937 46.1 19,334 934,345

38 45.1 20,717 979,03239 44.1 22,200 1,025,36440 43.1 23,790 1,073,34941 42.1 25,495 1,122,98942 41.1 27,323 1,174,275

43 40.1 29,284 1,227,19044 39.1 31,386 1,281,70845 38.1 33,641 1,337,78646 37.1 36,059 1,395,37347 36.1 38,653 1,454,396

48 35.1 41,436 1,514,76849 34.1 44,421 1,576,38050 33.1 47,625 1,639,10251 32.1 51,062 1,702,77752 31.1 54,752 1,767,219

Sarah

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

The Split Benefit Roth IRA—Non-Spouse Beneficiary ApproachNext Generation after Bob's Death





August 14, 200923 of 29

2055 80 4.2 110,449 385,9112056 81 3.2 120,597 292,3272057 82 2.2 132,876 179,9142058 83 1.2 149,928 42,5802059 84 0.2 45,560 0

Johnny

Year AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $1,827,301

76 7.9 95,942 715,05777 6.9 103,631 661,48078 5.9 112,115 595,66879 4.9 121,565 515,80080 3.9 132,256 419,650

81 2.9 144,707 304,31882 1.9 160,168 165,45383 0.9 177,035 0

Sally

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $2,177,520

53 30.1 58,712 1,832,21354 29.1 62,963 1,897,50555 28.1 67,527 1,962,80456 27.1 72,428 2,027,77257 26.1 77,692 2,092,023

58 25.1 83,348 2,155,11859 24.1 89,424 2,216,55260 23.1 95,955 2,275,75661 22.1 102,975 2,332,08362 21.1 110,525 2,384,804

63 20.1 118,647 2,433,09364 19.1 127,387 2,476,02365 18.1 136,797 2,512,54766 17.1 146,933 2,541,49367 16.1 157,857 2,561,541

68 15.1 169,638 2,571,21069 14.1 182,355 2,568,84070 13.1 196,095 2,552,56471 12.1 210,956 2,520,28872 11.1 227,053 2,469,655

73 10.1 244,520 2,398,01074 9.1 263,518 2,302,35375 8.1 284,241 2,179,27776 7.1 306,940 2,024,88677 6.1 331,949 1,834,680

78 5.1 359,741 1,603,36679 4.1 391,065 1,324,53780 3.1 427,270 989,98481 2.1 471,421 587,86282 1.1 534,420 94,592

Sarah

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3






August 14, 200924 of 29

83 0.1 101,214 0

Sarah

AgeLife

Exp.1

ActualDistributions

2AccountBalance

3

Total: $6,926,414






August 14, 200925 of 29


2009 60 59 513,889 3,083,3942010 61 60 527,453 3,163,5042011 62 61 540,494 3,246,385

YearClient

AgeSpouse

AgeAccountBalance

OtherAssets1

Bob converts the Traditional IRA to a Roth IRA in 2012. Taxes of$162,148 are due on the conversion and are paid from OtherAssets.

2012 63 62 578,328 3,331,9742013 64 63 618,811 3,236,5342014 65 64 662,128 3,304,5022015 66 65 708,477 3,373,8962016 67 66 758,070 3,444,748

2017 68 67 811,135 3,517,0882018 69 68 867,915 3,590,9472019 70 69 928,669 3,666,3562020 71 70 993,675 3,743,3502021 72 71 1,063,233 3,821,960

2022 73 72 1,137,659 3,902,2212023 74 73 1,217,295 3,984,1682024 75 74 1,302,506 4,067,836

YearClient

AgeSpouse

Age

RothAccountBalance

OtherAssets1

Bob dies in year 2024. At Bob's death, the Roth IRA is distributedto the named beneficiaries. Estate taxes of $125,078 will be due onthese amounts.

Continuation of this analysis assumes that Bob's estate has sufficientcash liquidity for all transfer costs without using this Roth IRA.Bob's Death Occurs in Year 2024

Total of Other Assets1 $4,067,836Life insurance on Bob inside of estate2 $0Estimated Account Balance $1,302,506Estimated share of estate taxes3 $125,078

Liquidity needed to continue this approach $125,078Existing life insurance on Bob outside of estate4 $0Proposed new life insurance outside of estate4 $0

Mary's Death Occurs in Year 2029Total of Other Assets1 $4,505,468Life insurance on Mary inside of estate2 $0Estimated Account Balance $1,620,889Estimated share of estate taxes3 $704,963

Liquidity needed to continue this approach $704,963Existing life insurance on Mary outside of estate4 $0

The Split Benefit Roth IRA—Non-Spouse Beneficiary ApproachWealth Transfer Costs



3Estate tax calculations are based on the total of the Account Balance, the Other Assets, and any Life Insurance included in the estate. No probate fees or expenses areconsidered. Bob's Applicable Credit Amount is considered in estimating taxes. Estimated Share of Estate Taxes is the ratio that the Account Balance bears to the Total Estate.



August 14, 200926 of 29

General Assumptions

Bob's DOB: January 1, 1949 and Mary's DOB: May 11, 1950

Calculations assume that the value of All Other Assets (excluding life insurance) is equal to $3,000,000. These assets are assumed to earn 3.00% interest.Hypothetical rates of return illustrated are not associated with any particular investment product.

Calculations assume an ordinary income tax rate of 30.00%.

There may be instances when a distribution from the Roth IRA could be taxable.

Split Benefit Roth IRA Assumptions

Current qualified plan amount is $500,000, with a growth rate of 7.00%. Hypothetical rates of return illustrated are not associated with any particular investmentproduct.

The account balance is grown pro-rata based on the date entered.

Distribution from the Roth IRA are generally not taxable.

There are no Required Minimum Distributions from Qualified Plans for 2009 only.

Beneficiary Information

Beneficiary Name Date of Birth Percentage SplitJohnny January 1, 1975 33.00%Sally January 1, 1979 33.00%Sarah January 1, 2002 34.00%These illustrations assume all distributions to non-spouse beneficiaries are income tax free.

Traditional IRA

Contributions may be tax deductible and earnings are tax-deferred, but taxable when withdrawn. Required minimum distributions must begin by age 70½.Deductibility of contributions is based on modified adjusted gross income (MAGI) (for 2009, single $65,000 and married, filing jointly $109,000) and not being aparticipant in an employer sponsored retirement plan.

Roth IRA

Contributions are not tax deductible but earnings are tax-deferred and are generally not taxable upon withdrawal. Contributions are limited to $5,000 for 2009($6,000 if 50 or over). The ability to contribute is phased out if your MAGI is $166,000 - $176,000 for married, filing jointly in 2009, and eliminated thereafter. (Thephase out is $105,000 - $120,000 for single taxpayers.) Withdrawals of contributions to Roth IRAs are not subject to income tax or the 10% early withdrawal penaltytax. Withdrawals of earnings within 5 years of establishing a Roth IRA are taxed as ordinary income. Earnings taken prior to age 59½ are taxed as ordinary income,and may be subject to a 10% early distribution penalty tax, with certain exceptions. There is no required minimum distributions at any age.

AssumptionsDetails and Assumptions for Split Benefit Roth IRA Calculations


August 14, 200927 of 29

Conversion of Traditional IRA to Roth IRA

Prior to 2010, a Traditional IRA cannot be converted to a Roth IRA if MAGI exceeds $100,000. Amounts converted from the Traditional IRA are taxable in the yearof the conversion. However, amounts converted to Roth IRA in 2010 only will be reported equally in 2011 and 2012; therefore, income taxes are paid equally in 2012and 2013. Withdrawals of converted amounts within five years of each conversion to Roth IRA may be subject to the 10% early distribution penalty tax, andwithdrawals of earnings may be subject to the 10% early distribution penalty tax and/or taxed as ordinary income.

Final Regulations

Required Minimum Distributions are calculated based on the Single Life Expectancy Table. The Uniform Lifetime Table is permitted to be used for lifetimedistributions for calendar years beginning on or after January 1, 2002 and must be used for lifetime distributions for calendar years beginning on or after January 1,2003.

Tax Relief Act of 2001 Compliant

This illustration shows the effect of this law on your estimated estate if you (and your spouse) die in the year shown. The Tax Relief Act of 2001 reduces themaximum rate and increases the applicable exclusion amount each year through 2009 with no estate tax in year 2010. A "sunset provision" voids the new law in 2011and retroactively restores the law effective in 2001.

Roth IRA Rollover Assumptions

Bob is not required to take distributions. Mary is named beneficiary.

Each non-spouse beneficiary takes distributions based on the single life expectancy of the oldest beneficiary, minus one each year, if the beneficiaries failed to splitthe Roth IRA into separate accounts by December 31 of the year following the year of your death.

Split Benefit Roth IRA-Rollover and Split Assumptions

Bob is not required to take distributions. Mary is named beneficiary.

After your death Mary rolls over the balance and continues distributions based on his/her own life expectancy according to the Uniform Lifetime Table.

At Bob's death, the IRA is split into separate IRAs with named beneficiaries.

Distributions continue to each beneficiary at Bob's death calculated on the named beneficiary's life expectancy as of 12/31 in the year following Mary's death.

Mary's estate is assumed to have cash liquidity to fund estate taxes outside of IRAs for this analysis.

Split Benefit Roth IRA-Non-Spouse Beneficiary Assumptions

Bob is not required to take distributions. At your death, the roth IRA is split into Roth IRAs with each non-spouse beneficiary.

Your death is assumed in year 2024. Your estate is assumed to have enough cash liquidity outside of Roth IRAs in this analysis.

Each non-spouse beneficiary continues taking distributions based on his or her life expectancy and is assumed to live to the life expectancy used in the illustration.

Distributions continue to each beneficiary at your death calculated on the named beneficiary's life expectancy as of 12/31 following your death.

Assumptions (Continued)Details and Assumptions for Split Benefit Roth IRA Calculations


August 14, 200928 of 29

Distribution Assumptions

A qualified distribution from a Roth IRA is generally any payment or distribution made after the 5-taxable-year period beginning with the first year for which acontribution was made to a Roth IRA set up for you, and that is made on or after you reach age 59½, along with some other exceptions. Part of any distribution that isnot a qualified distribution may be taxable as ordinary income and subject to the additional 10% tax on early distributions. Distributions of conversion contributionswithin a 5-year period following a conversion may be subject to the 10% early distribution tax, even if the contributions have been included as income in an earlyyear.

Distributions from a Roth IRA are generally not taxable.

Desired distributions from the qualified plan for premiums, expenses, or gifts are deducted from the Account Balance of the owner and/or spouse. If the AccountBalance is not sufficient, the payments will still be assumed made from other assets of the owner or spouse and will be deducted from any "Other Assets" shown.

Assumptions (Continued)Details and Assumptions for Split Benefit Roth IRA Calculations


August 14, 200929 of 29

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