Social SecurityBenefits

Did you know…

As much as 85% of Social Security benefits could be subject to income tax?

According to the Revenue Reconciliation Act of 1993, if your earnings are above certain
limits, your Social Security benefits may be taxed at a higher rate. The chart below outlines
the filing status, income levels and percentage of Social Security benefits subject to tax.

Filing Status

Single Taxpayer

$25,000 – 34,000

Married Filing Jointly

$32,000 – 44,000

Soc. Sec. Ben.
Subject to tax

How much of your income is ultimately subject to taxes depends on how much provisional
income you have. Provisional income includes not only normal earned income, such as interest
from CDs or mutual funds, but also one-half of Social Security benefits received and even tax-
exempt income such as interest from tax-free municipal bonds!
As a result, you have few opportunities to reposition your assets and control your personal tax

So what can you do?

One type of income not included in this formula is tax-deferred income. Seldom has the special
benefit of tax-deferral been more important to you as a tool to minimize your tax bill.

By putting some of your assets into tax-deferred annuities and leaving the interest to compound tax-
deferred, you can control your income flow to meet your own needs, without receiving unneeded dollars
which only increase your tax bracket.

With Tax-Deferred Annuities, You can …

Earn interest without paying current taxes on it, until withdrawn.
Earn more interest on the interest, thus compounding your asset growth, and giving you even
more income potential later if you need it.
Reduce your tax liability on your hard-earned retirement income!

In addition, Tax-Deferred Annuities offer:

Competitive interest rates
No risk to premium, due to index volatility
Multiple liquidity options, if needed.

Would additional tax-deferred interest benefits reduce your taxes and increase your disposable
income? Consider your options and take advantage of the opportunities annuities make
available to you. Tax-Deferred Annuities are one of the best opportunities you have.

Avoid the Social Security Tax “Trap”

You have paid into Social Security all your working lives. Do you have to pay federal
income taxes on your benefits too? Not necessarily.
With a tax-deferred variable annuity, you not only get long-term growth potential, but
you may also reduce the amount of your current taxable income.

How Much of Client Benefits Can Be Taxed?

As much as 85% of your clients’ Social Security benefits could be subject to federal
income tax. What’s more, the formula to determine the taxable amount includes tax-
exempt income, such as that from municipal bonds and qualified U.S. Savings Bonds.

Here’s How It Works

Adjusted Gross Income
(plus student loan interest and
tuition fees and deductions)


Provisional Income
(used to determine taxable amount)

If between $25,000-$34,000 for single
persons and $32,000-$44,000 for married
couples filing jointly, then…

…up to 50% of benefit
subject to tax

Variable Annuities Can Help Reduce the Amount of Taxable Income!

Since earnings in an annuity are generally tax deferred, your earnings (until withdrawn) do
not have to be included in the formula to determine taxable Social Security income.

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