Midwest Holding Subsidiary Introduces MYGA Contract: Annuity Moves

Blanchett talked about the value of using a tax exclusion ratio approach to hold down income taxes on annuity distributions.

Security Benefit makes a tax exclusion ratio approach available through its ClearLine Annuity Rising Income Rider, the company says. Security Benefit worked with DPL Financial Partners to develop the rider.

The rider helps an annuity buyer take advantage of the fact that the IRS gives taxpayers two ways to handle annuity distributions that are subject to federal income taxes.

A taxpayer can either pay taxes on all gains first, or use the tax exclusion ratio approach to spread the taxes over the annuitant's lifetime.

The ClearLine rider helps annuity buyers spread the taxes over their lifetimes, and the Blanchett analysis shows that this strategy tends to lead to better results than the other approach, Security Benefit says.

The strategy hinges on an annuity holder's use of one of two available options for calculating taxes on distributions from annuity accounts: either paying taxes on all gains first, or spreading tax payments over the life expectancy of the annuitant. The ClearLine rider helps an annuitant spread tax payments over a lifetime.

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