Tax DiversifyingYour Retirement Income

This presentation includes a discussion of one or more tax-related topics. This tax-related discussion was prepared to assist in thepromotion or marketing of the transactions or matters addressed in this material. It is not intended (and cannot be used by any taxpayer)for the purpose of avoiding any IRA penalties that may be imposed upon the taxpayer. Taxpayers should always seek and rely on theadvice of their own independent tax professionals. Please understand that New York Life Insurance Company, its affiliates andsubsidiaries, and agents and employees of any thereof, may not provide legal or tax advice to you. 14

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Retirement Isn’t What It Used to Be

SocialSecurity

Pension &Qualified

PlansPersonalAssets

Once:

Retirement typically lastedabout 10 years

Social Security, definedbenefit pensions andsome personal savingscovered basic expenses

Now:

Retirement can last longer

Many key sources ofincome have been reduced

Increased reliance onpersonal assets

SocialSecurity

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Plans

Personal Assets

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Social Security Is Shaky

Social Security wasnever intended to bethe only source ofincome for retirement

The maximum SocialSecurity Benefit in 2010for a worker retiring atfull retirement age is$2,346 per month1

There are limits on howmuch you can earnbefore your SocialSecurity benefits arereduced and/or taxed

1 http://www.elderlawanswers.com/Elder_Info/Elder_Article.asp?id=700

Without changes, by 2041 the Social SecurityTrust Fund will be exhausted* and there will beenough money to pay only about 75 cents foreach dollar of scheduled benefits.* These estimates are based on the intermediate assumptions from the SocialSecurity Trustees’ Annual Report to the Congress.

“”

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Fewer Pensions, Limits on Qualified Plans

Only 22% of today’s workforce has access to a definedbenefit pension plan1

Fewer employer contributions to pension plans; limits oncompany matching of 401(k) plans1

More reliance on employee contributions

Limitations on contributions

1

‘Trends in Retirement Plan Coverage Over the Last Decade,” Monthly Labor Review, Stephanie Costo, February 2006.

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Personal Assets Are Critical

Most people have more questions than answers when itcomes to planning for retirement– How much will I need?– How much will I have?– How much do I need to save to cover the shortfall?

For personal savings, the questions are:– Where should I put my money?– How will I be affected by taxes?

PersonalAssets

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Tax-Perfect Retirement Planning

The “tax-perfect” retirement plan would include:– Contributions that are tax deductible– Accumulation that is tax deferred– Distributions that are tax free

Such a plan does not exist, but you can have any two ofthese tax benefits

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Where Do You Think Taxes Are Going?

Tax rates are currently at historically low levels, suggestingthey may be higher when you retire

Tax-diversifying your retirement savings might be sensible

The graph above illustrates the high and low marginal tax rates over history. Exemptions, deductions and stateand local taxes are not taken into account when illustrating these marginal tax rates. Your actual tax rates mayvary from those show on the graph. Remember that historical rates are not a guarantee of future rates.Source: U.S. Department of Treasury, Internal Revenue Service, Statistics of Income, Historical income Tax Returns (2008)

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Is Tax Deferral the Best Strategy?

30 years ago, tax rates were sohigh and there were so manytax brackets, deferring incomegenerally reduced the taxburden

In the new tax reality, the taxleverage benefits of deferringmay not exist

Lower tax rates and fewer taxbrackets today call for asmarter strategy

1979-1980 2009

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Your Retirement Savings Tax Options

Roth IRA

Tax-freemunicipal bonds

Cash value lifeinsurance

Traditional IRA

401(k)

Pension plans

Profit-sharingplans

Keogh

FinancialVehicles

After tax

Tax deferred

Tax free

Tax deductible

Tax deferred

Taxable

Tax Treatment

Contributions

Accumulation

Distributions

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A Non-Traditional Solution

1 The cash value in a life insurance policy is accessed through policy loans, which accrue interest at the current rate, and cash withdrawals. Loansand withdrawals will decrease the total death benefit and total cash value.

LifeInsurance

In addition to protecting your family, cash value life insurancecan provide an ideal way to tax-diversify your retirementsavings– Premiums are paid with after-tax dollars– Generates cash value that generally accumulates on a

tax-deferred basis– Allows you access to policy values – before or during

retirement – generally on a tax-free basis1

Upon your death, when many other investmentsare taxed, your beneficiaries also receive thedeath benefit income tax free

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SocialSecurity

Pension &Qualified

Plans

PersonalAssets

A “Self- Completing” Plan!

If you live…– You enjoy all the “living benefits” of life insurance,

including the potential for supplemental tax-freeretirement income

If you become disabled…– With the purchase of the Disability Waiver of

Premium Rider, your premiums are waived, and allthe benefits of your policy stay in force1

If you die…– Your family receives the full value

of the policy, less any unpaid loansand loan interest, income tax free

1 Available on whole life policies

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The Benefits of Tax Diversification

Retirement Income of $90,000Without Tax

Diversification

$90,000401(k)/Qualified Plans

100% taxable

$90,000 taxed at25%1

= $22,500 tax

Tax Diversification Strategy$90,000

$45,000401(k)/Qualified Plans

100% taxable

$45,000 taxed at15%1

= $6,750 tax

$45,000Cash Value Life Ins.

tax free2

$45,000 taxed at0%2

= $0 tax

1 Marginal federal income tax bracket under current rates. 2 If structured properly.

$67,500 to spendafter taxes $83,250 to spend after taxes