Create and Manage Annuities

• NaviPlan allows you to enter deferred (fixed or variable) annuities as well as Annuitized annuities in a Level 1and Level2 plans.
• You cannot combine qualified and non-qualified holdings within the same annuity.
• You cannot combine annuity subaccounts owned by different people within the same annuity.

The answer depends on whether or not the annuity has started to pay out (annuitized) and who the annuitant is.

The payout options for annuities depends heavily on the type of annuity and your selection from the Income Option list.

Entering payout options for variable and fixed annuities:

Payout Option	Steps for entry
Withdrawals as Needed	Variable and fixed annuities with the Withdrawals as Needed income type do not have payout options.
Guaranteed Withdrawal Benefit	From the Annuity Details dialog box, open the Payout Options tab. Note: Variable annuities have separate sections for the annuity's general account and variable subaccounts. If payouts have already started, select Guaranteed Withdrawals Have Started. Under Contract Information, enter: the date of contract. the maximum withdrawal. the minimum age the annuitant must be before payouts can begin. If the annuity has a step-up feature select the Step-up Feature optionand enter: the 1st year the step-up is available. the subsequent step-up years. Under Withdrawal Information, enter: the start date. the withdrawal amount as a percentage of the maximum amount. the benefit base. the growth rate of the benefit base. When you are satisfied with these options, click OK.
Amount Certain	From the Annuity Details dialog box, open the Payout Options tab. Note: Variable annuities have separate sections for the annuity's general account and variable subaccounts. Enter the annuity's start date and payment frequency; if payments are to be made at the end of the selected payment period, select At End of Period. Enter an amount for Payment per $1000. For variable annuities: If payouts from the general account are indexed, select Index Payment and enter a value for Index Rate. Enter an assumed interest rate (AIR) for the general account. If payouts made from the subaccounts are to be calculated separately from the general account, select Variable Payments and enter applicable details under Variable Subaccounts. If the entire value of the annuity will not be redeemed, enter the percentage of value that will be used for payouts in Partial Settlement. When you are satisfied with these options, click OK.
Term Certain	From the Annuity Details dialog box, open the Payout Options tab. Note: Variable annuities have separate sections for the annuity's general account and variable subaccounts. Enter the annuity's start date and payment frequency; if payments are to be made at the end of the selected payment period, select At End of Period. Enter the number of years over which the annuity will pay out. For variable annuities: If payouts from the general account are indexed, select Index Payment and enter a value for Index Rate. Enter an assumed interest rate (AIR) for the general account. If payouts made from the subaccounts are to be calculated separately from the general account, select Variable Payments and enter applicable details under Variable Subaccounts. If the entire value of the annuity will not be redeemed, enter the percentage of value that will be used for payouts in Partial Settlement. When you are satisfied with these options, click OK.
Life Income	From the Annuity Details dialog box, open the Payout Options tab. Note: Variable annuities have separate sections for the annuity's general account and variable subaccounts. Enter the annuity's start date and payment frequency; if payments are to be made at the end of the selected payment period, select At End of Period. Enter the guaranteed number of years for which the annuity will pay out. For variable annuities: If payouts from the general account are indexed, select Index Payment and enter a value for Index Rate. Enter an assumed interest rate (AIR) for the general account. If payouts made from the subaccounts are to be calculated separately from the general account, select Variable Payments and enter applicable details under Variable Subaccounts. If the entire value of the annuity will not be redeemed, enter the percentage of value that will be used for payouts in Partial Settlement. When you are satisfied with these options, click OK.

Entering payout options for annuitized annuities:

Payout Option

Steps for Entry

Annuitized Annuity

Click for the appropriate annuitized annuity. From the Payout Options tab, enter: the annuity's start date. the percentage of the annuity that is taxable. the payout frequency. the number of years over which the annuity will pay out. Under Variable Subaccounts, enter: the benefit amount coming from the subaccounts. the assumed interest rate. To override the return rate of the subaccounts, select Override and enter a new return rate. When you are satisfied with these options, click OK.

Note: Savings strategies can be setup either when entering an annuity, or at a later time.

1. Under Deferred Annuities, click for the appropriate fixed or variable annuity.
2. Go to the Savings Strategy tab.
3. If you are entering a savings strategy for a variable annuity, enter the percentages to be directed to the general account and to the subaccounts.
4. Click Add Savings Strategy.
5. Enter the contribution amount and frequency.
   • You can enter either dollar amounts or percentages here. However, dollar values of 25 or less need to be entered with a dollar sign ($), or else NaviPlan will interpret them as percentages.
   • For certain qualified annuities, you can enter max in the appropriate Salary field to have the employee contribute the maximum allowed amount.
6. Enter the strategy's start and end date.
7. To index the strategy at the rate of inflation, select Infl. To index at a greater or lesser rate, select Infl and enter a different percentage into the +/- Add'l field.
   Note: Infl is inaccessible when a percentage of salary is entered.
8. When you are satisfied with these options, click OK.

Note: The Detailed Tax Method is required for this option.

1. Under Deferred Annuities, click for the appropriate annuity.
2. Go to the Redemptions tab.
3. You may redeem either a portion of the annuity or the entire annuity over time:
   • To redeem the annuity in portions over time, enter either the percentage of the annuity to redeem or an amount to redeem periodically (based on the entry in the Frequency menu) in the Amount ($ or %) field.
   • To redeem the entire annuity as a lump sum, select Redeem All.
4. From the Frequency menu, select how often the redemptions will occur.
5. If applicable, select the Waive Early Withdrawal Penalties.
6. Enter information into the Start Date and End Date fields.
   Note: The End Date field is inaccessible if Redeem All or Lump Sum is selected.
7. To index the strategy at the rate of inflation, select Infl. To index at a greater or lesser rate, select Infl and enter a different percentage into the +/- Add'l field.
   Note: Infl is inaccessible when a percentage of salary is entered.
8. When you are satisfied with these options, click OK.

1. Under Deferred Annuities or Annuitized Annuities, click for the appropriate annuity.
2. Go to the Qualified Account Setup tab.
3. Select the primary and contingent beneficiaries.
4. If applicable, select the Waive Early Withdrawal Penalties.
5. If income in respect of decedent (IRD) taxes are not applicable, select Multi-Generational. When this option is selected, the asset will pass to the beneficiary (not the client/co-client). Estate taxes may still be due, but IRD taxes will be avoided.
6. If the plan type is 403(b), in the Pre-1987 Account Balance field, enter the value of the plan on 12/31/1986. RMD payments on the pre-1987 portion of the account will be delayed until retirement or age 75 (whichever comes first).
7. If the client's retirement date is after age 70½ and the client is allowed to delay RMDs, select Delay RMDs to Retirement.
   Note: If the client's retirement begins before age 70½, this option will not be available. This option does not apply to Roth or IRA accounts of any type.
8. For Other Salary Deferral, Generic Employer-Paid Plan, or Generic Self-Employed Plan, select Treat As Deferred Compensation Plan (i.e. no RMD). These plan types do not require minimum distributions.
9. To apply state taxes to the taxable portion of distributions from this account select State Taxable.
   Note: This step applies only to plans using the Average Tax Method. This option is inapplicable to Roth and 457 accounts.
10. From the RMD Payment Frequency menu, select the desired frequency. If Annual is selected, also select the month in which the payment will be made.
11. To change the market value used to calculate the minimum payout, select the End-of-Year Market Value option and enter a new value.
12. When you are satisfied with these options, click OK.

Note: The Detailed Tax Method is required for this option.

1. Under Deferred Annuities, click for the appropriate annuity.
2. Go to the Redemptions tab and select Substantially Equal Periodic Payments (SEPP).
3. Enter a Start Date, payment Frequency, and Distribution Method for the SEPP strategy.
4. If applicable, select Pro-Rate First/Last Payments.
5. To specify the life expectancy table to use for calculating payments and an interest rate, click for the SEPP strategy and enter data for the Life Expectancy Table and 72(t) Interest Rate fields.
6. When you are satisfied with these options, click OK.

Note: The General Account heading only appears for variable annuities.

Cost Basis/Qualified Basis

• For tax purposes, the amount paid for the annuity. A value cannot be entered in this field if the annuity was purchased in the current plan year.

AIR

• Rate of return that applies to the general account after the account has become annuitized.
  Note: This field only appears for fixed annuities.

Waive Early Withdrawal Penalties

• If assets will be withdrawn from the qualified fund prior to the maturity date and no penalties are associated with the early withdrawal, select Waive early withdrawal penalties.

Pre-Annuitization Annual M&E Fee

• Pre-annuitization annual mortality and expense (M&E) fee for variable annuities. This field does not appear if Withdrawals as Needed or Guaranteed Withdrawal Benefit is selected from the Income Option list.
  • M&E fees are paid from the market value of the subaccount at the end of the month. This reduces the value of the subaccount’s unit balance.
  • Payments occur until the annuitization date, unless the Variable Payments check box on the Payout Options tab is selected, in which case the fee will continue for the life of the annuity.
  • M&E fees will equal $0 if the market value of the variable subaccount is equal to $0.

Annual M&E Fee

• Annual mortality and expense (M&E) fee for variable annuities. This field only appears if Withdrawals as Needed or Guaranteed Withdrawal Benefit is selected from the Income Option list.
  • M&E fees are paid from the market value of the subaccount at the end of the month. This reduces the value of the subaccount’s unit balance.
  • Payments occur until the annuitization date, unless the Variable Payments check box on the Payout Options tab is selected, in which case the fee will continue for the life of the annuity.
  • M&E fees will equal $0 if the market value of the variable subaccount is equal to $0.

Goal Funding

• Goal to be funded by the account or annuity. By default, the retirement goal is 100% funded. However, Withdrawals as Needed annuities can be used to fund education and major purchase goals.
  Note: This field only appears when you are using the Detailed Tax method. It is only accessible when Withdrawals as Needed is selected from the Income Option list.