FOR LIFE

The Lincoln National Life Insurance Company, Fort Wayne, IN,Lincoln Life & Annuity Company of New York, Syracuse, NY

Not FDIC-insuredNot a deposit Not insured by any federal government agency

Not guaranteed by any bank or savings association May go down in value

©2012 Lincoln National CorporationLCN1210-2072646

Beyond retirement plan limitsProtecting a legacy and adding supplementing retirement income with tax-advantaged life insurance

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Agenda

Add flexibility

Enhance control

Supplement existing retirement planning

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Income vs cash flow

Common forms of retirement income

Net after-taxCash Flow

IRS form 1040line 8b

Modified Adjusted Gross Income

Adjusted Gross IncomeIRS form 1040 line 37

Tax exemptTax deferredTaxable Tax free

Possible shrinkage from taxation

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Income affects

Income Tax expense

SocialSecuritybenefits

Medicarepremiums

85% of your benefits are taxable with income over 34K

Your premiums increase with income over 85K

over triple!

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IRC Sec.101(a)(1) Death proceeds are received income tax free by the beneficiary

Rev. Rul. 74-500The inside build up of cash surrender values is generally not taxed

IRC Sec. 72(e)(s)Policy loans are not includable in income on non-MEC policies

IRC Sec. 72(v)There is no penalty for “early” distributions prior to age 59½

IRC Sec. 1035(a) Life Insurance may be exchanged income tax free for an annuity

Life insurance taxation

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Net after-tax cash flow

Income from a 401(k)

Cash flow from a life insurance policy

$20,000 distribution

28% tax

Pre-tax contributions After-tax premiums

$14,400

net after-tax cash flow

$20,000 distribution

0% tax

$20,000

net after-tax cash flow$20,000 distribution

35% tax

$13,000

net after-tax cash flow

$20,000 distribution

0% tax

$20,000

net after-tax cash flow

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Cash flow affects

Cash flow from a life insurance

policy

Tax expense

SocialSecuritybenefits

Medicarepremiums

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Needs

Wants

Dreams

Legacy

Travel, entertainment, gifts, motorcycle

Food, shelter, clothing

Grandchild’s education, vacation home, RV

Heirs, charities

Financial in

dependence

Post-retirement expensesF

requ

ency

Less

More

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Asset and expense matching

Needs

Wants

Dreams

Legacy

Expenses

Asset conversions

Annuities, dividends,

interest

Employer pension, 401K,

IRA, social security

Life insurance living benefits

Life insurance death benefits

Traditional assets

Supplemental assets

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Order of depletionSome retirees plan to deplete qualified plans over their lifetime with one of two results at death:•Excess in qualified plans •Ran out of money

Qui

z

Would your beneficiaries rather have?(A)$1 of qualified money or (B)$1 of life insurance cash value?

Loans and withdrawals reduce your policy’s cash surrender value and death benefit, may cause the policy to lapse, and may have tax implications

Cash value life insurance

Living benefits

in the form of policy loans

Death benefits

transfer income tax-free

+

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Flexibility

Option 1Retire at A65Social Security @ A65Draw down assets to LE

Option 2Retire at A65Social Security @ A65Draw down assets to life expectancyAccess life insurance cashvalues post-LE

Option 3Retire at 63Access life insurance cash values until A65Social Security @ A65Draw down assets to life expectancyAccess life insurance cash values post-LE

Option 4?

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Add flexibility

Enhance control

Supplement existing retirement planning

Family protection

Life insuranceretirement planning

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Important disclosures. Please read.

This material was prepared to support the promotion and marketing of life insurance. Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.

Lincoln life insurance policies are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so.

Policies sold in New York are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer.

All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer.Products and features are subject to state availability. Limitations and exclusions may apply.

©2013 Lincoln National Corporation

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Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.

Affiliates are separately responsible for their own financial and contractual obligations.

1/13 Z03Order code: LIF-SRP-PPT111

Not a deposit Not FDIC-insured Not guaranteed by any bank or savings association May go down in value

Not insured by any federal government agency