LM0308-0415 For Agent or Broker Use Only. Not To Be Used With General Public. 412(i) and Lincoln Life Lincoln Financial Group is the marketing name for.

LM0308-0415 For Agent or Broker Use Only. Not To Be Used With General Public.

412(i) and Lincoln Life

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


Richard Forcht, CLU, ChFCRegional Marketing Director Lincoln Financial Distributors

Richard Forcht, CLU, ChFCRegional Marketing Director Lincoln Financial Distributors

For Agent or Broker use only. Not to be used with general public.LM0306-0318.

PROBLEMS

Demographics: Baby Boomers Economics: Market Cycle

Humanomics : Fear Procrastination Greed

LM0308-0415 For Agent or Broker Use Only. Not To Be Used With General Public


NON-Solutions

Defined Contribution Profit Sharing Plans

Defined Contribution Pension Plans



SERP’s

Defined Benefit Pension Plans

§ 412(i)

LIMITED Solutions



§412(i)

Qualified Deferred Compensation Tax Deductible Contributions

Defined Benefit

Age based


Guarantees

Mature Audiences


50+ year old idea / legislation

Exempt from many § 412 rules Must meet certain requirements

§412(i)



Funded solely by annuity contracts or a combination of annuity contracts and life insurance policies

Level annual premiums

Benefit must be guaranteed by the life insurance company

No participant loans

Requirements



Large tax deductible contributions

Fully insured & guaranteed benefits

Simplified administration

Easily understood

Advantages



ADVANTAGESDeductible Contributions

Annuity Maximum Age Only Life & Annuity

40 $89,431 $116,257 45 $125,494 $165,495 50 $192,428 $258,562 55 $249,481 $353,263

* Sample contributions only, actual contributions based on actual policy guarantees



ADVANTAGES Guaranteed Benefits

Fully insured benefits

Up to $2,885,931* lump sum at retirement

Up to $160,000* annual retirement income

* Assuming pre-retirement earnings of at least $160,000 and normal retirement age



ADVANTAGESSimplified Administration

Exempt from :

Minimum funding standard Full funding limitation Quarterly contributions Schedule B actuarial certification Assumption interpretations



DISADVANTAGES Not for every business!

Non discriminatory QP Contributions are fixed and mandatory

No investment flexibility

No policy loans



SOLUTIONS Best fit

Established & highly profitable businesses Mature owner(s) - 45+ Conservative risk tolerance Within 10 years of retirement Few employees <15



SOLUTIONS Case Study

2 Doctors with a very profitable business Ages 68 & 49 Ultra Conservative 5 years from retirement No employees




Each Doctor is 50% owner of PC Each has $200,000 salary

Each wants to defer an additional $100,000

For retirement in 5 years



SOLUTIONS Case Study / Plan Specs

Normal retirement Age 55 or 5 years 109% of compensation for each year < 25 yrs High 3 year average comp

3% Interest assumption




Dr 68 Dr 49 Salary $200,000 $200,000

Contribution $100,035 $99,197

Monthly Benefit $3,638 $2,748

Retirement Age 73 55LM0308-0415 For Agent or Broker Use Only. Not To Be Used With General Public



Total plan cost $199,232

Tax savings @34% 67,739

Net after tax cost $131,493



•Speaking on a panel on aggressive tax practices at

the annual Los Angeles Benefits Conference, senior

officials from the Treasury Department and Internal

Revenue Service said that they are giving “very high

priority” to providing employee plan administrators

and sponsors guidance regarding abusive insurance-

funded defined benefit plans that misuse IRC section

412(i).

CAUTION



This presentation is for educational purposes only. It is not to be usedwith the public. It is intended to be accurate and authoritative inregard to the subject matter covered. It is presented with theunderstanding that neither The Lincoln National Life InsuranceCompany or its representation are not engaged in rendering legal ortax advice.

Clients should be encouraged to seek the independent advice of a professional tax or legal advisor prior to making a tax-related investment decision.

This presentation is for educational purposes only. It is not to be usedwith the public. It is intended to be accurate and authoritative inregard to the subject matter covered. It is presented with theunderstanding that neither The Lincoln National Life InsuranceCompany or its representation are not engaged in rendering legal ortax advice.

Clients should be encouraged to seek the independent advice of a professional tax or legal advisor prior to making a tax-related investment decision.

DISCLOSURE



Michael O. SchulitzLife Insurance LiaisonLincoln Financial Distributors

Michael O. SchulitzLife Insurance LiaisonLincoln Financial Distributors


The Lincoln AdvantageThe Lincoln Advantage

Third Party Administrators Web-based diagnostic No-comp reduction Products

Lincoln Retirement Benefit Annuity

Lincoln WL-ICV

Third Party Administrators Web-based diagnostic No-comp reduction Products

Lincoln Retirement Benefit Annuity

Lincoln WL-ICV

Issued by The Lincoln National LifeInsurance Company on policy formsLN815/LN816 and LN1790AA respectively.


Third Party AdministratorsThird Party Administrators

4 TPAs have already signed on These TPAs have agreed to administer

plans without splitting commissions A process for signing up additional

TPAs is in place

4 TPAs have already signed on These TPAs have agreed to administer

plans without splitting commissions A process for signing up additional

TPAs is in place


Web-based DiagnosticWeb-based Diagnostic

Comprehensive plan illustration software - Not available on AWB

Extremely fast plan illustration turn around – seconds not weeks

All that is required to run illustration is an employee census

NAIC illustrations produced simultaneously with plan illustration

Comprehensive plan illustration software - Not available on AWB

Extremely fast plan illustration turn around – seconds not weeks

All that is required to run illustration is an employee census

NAIC illustrations produced simultaneously with plan illustration


No Compensation splits No Compensation splits

TPAs have agreed to provide admin-only support

Majority of competitors split cases with TPAs

TPAs have agreed to provide admin-only support

Majority of competitors split cases with TPAs


Lincoln WL-ICVLincoln WL-ICV

Available in all states Guaranteed interest rate of 4.5% Excess interest credit and excess

mortality credit whole life plan Competitively priced for the 412(i)

market

Available in all states Guaranteed interest rate of 4.5% Excess interest credit and excess

mortality credit whole life plan Competitively priced for the 412(i)

market


Lincoln Retirement Benefit Annuity Lincoln Retirement Benefit Annuity

Individual flexible premium fixed annuity

Available in all states except NY & OR Guaranteed interest rate of 3% to 1.5%

depending on the state Seven year surrender schedule from

year one – not a new money schedule

Individual flexible premium fixed annuity

Available in all states except NY & OR Guaranteed interest rate of 3% to 1.5%

depending on the state Seven year surrender schedule from

year one – not a new money schedule


Submission Process Submission Process

New submission process that coordinates the issuing of annuity contracts and life insurance policiesTwo new forms

Commission DisclosureHold Harmless

Be advised: New Business will only contact the producer – not the TPA

New submission process that coordinates the issuing of annuity contracts and life insurance policiesTwo new forms

Commission DisclosureHold Harmless

Be advised: New Business will only contact the producer – not the TPA

Producer receives 412(i) marketing kit

Producer faxes or emails census to sales support team (goes directly to TPA if needs customized plan)

Producer obtains 412(i) proposal

Producer contacts TPA (if haven’t already)

Life• Application / Illustrations / NB forms• COPY of NB cover sheet• NO MONEY is sent at this time• COPY of Disclosure, Acknowledgement and Indemnity Agreement (form 54321)• COPY of Qualified Retirement Plan - Compensation/ Cost Disclosure (form 54322)• COPY of EPL Agreement (form 54323)

Annuities • Applications* / NB forms• NB cover sheet• MONEY may be sent at this time• Disclosure, Acknowledgement and Indemnity Agreement (form 54321)• Qualified Retirement Plan - Compensation/ Cost Disclosure (form 54322)• EPL Agreement (form 54323)

Normal UW process – (NB contacts producer with UW offer)

If UW offer is different, Producer workswith sales support/TPA to adjust life face,and annuity premium

When offer is accepted producer contacts Lincoln Retirement (Annuities)

TPA• TPA Forms (based on TPA requirements)

• If TPA is new to Lincoln they will have to go through the due diligence process, contact sales support for more information.

• If TPA on application the TPA will need to be licensed/appointed by Lincoln.

Once issued, New Business sends to producer Producer sends materials to TPA to review

Issue annuities to producer

Producer delivers package and gets life money and post-issue requirements signed

Hold for life UW (if applicable)

Producer contacts Lincoln Retirement (Annuities) if UW produces different class/rating

Producer gathers documents and disseminates

NB = New BusinessUW = UnderwritingTPA = Third Party Administrator

*Applications are unique for Annuitiesplease reference application and instructions on CD or on website. Not applicable for LFA.



The Plan Diagnostic The Plan Diagnostic

Running illustrations Advisor training Issuing IDs and Passwords 412(i) plan customization strategies

Running illustrations Advisor training Issuing IDs and Passwords 412(i) plan customization strategies


For Agent or Broker use only. Not to be used with general public.LM0306-0318.LM0308-0415 For Agent or Broker Use Only. Not To Be Used With General Public





412(i) CONTRIBUTION LEVELS

AgeMonthly Benefit

Life Premium Face Amount

Annuity Cash @ 65 Total Cost All Annuity

40 $13,333 $47,647 $2,719,079 $48,613 $2,886,002 $96,260 $76,851

45 $13,333 $63,147 $2,832,934 $65,820 $2,818,885 $128,967 $101,851

50 $13,333 $91,231 $3,188,490 $99,212 $2,818,885 $190,443 $147,147

55 $13,333 $144,351 $3,906,530 $165,332 $2,749,140 $309,683 $232,824

60 $6,667 $155,846 $3,192,752 $198,819 $1,374,570 $354,665 $251,366

Age Monthly Benefit

Life Premium Face Amount

Annuity Cash @ 65 Total Cost All Annuity

56 $12,000 $146,601 $3,755,810 $170,411 $2,474,226 $317,012 $236,454

57 $10,667 $148,876 $3,608,646 $175,902 $2,199,311 $324,778 $240,123

58 $9,333 $151,175 $3,466,713 $182,336 $1,924,398 $333,511 $243,831

59 $8,000 $153,499 $3,328,964 $189,618 $1,649,484 $334,117 $247,578

Assumptions: Normal Retirement Age 65 Life Insurance allocation 50% Preferred Non-Smoker Annuity rate guarantee 3% Life Insurance guarantee rate 4.5%





Marketing Material Marketing Material

Marketing FolderClient BrochureProducer BrochureQ&ACD-ROM with forms, marketing presentations, and process support.

Marketing FolderClient BrochureProducer BrochureQ&ACD-ROM with forms, marketing presentations, and process support.


THANK YOU

Questions?

THANK YOU

Questions?

LM0308-0415 For Agent or Broker Use Only. Not To Be Used With General Public. 412(i) and Lincoln Life Lincoln Financial Group is the marketing name for.

Documents

broker use

general public solutions

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general public disadvantages

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