cmc16569ppt 04/16

CMC16569PPT 04/16

CMC16569PPT 04/16

For representative use only. Not for public distribution.

A Wealth of Knowledge

Retirement and Wealth Strategies •  Our consultants hold a variety of degrees and designations

including JD, LLM, and MBA; and CFP®,CFS®, CLU®, and ChFC® certifications.

•  Develop and promote ideas to help navigate today’s intricate legal and tax planning environment.

•  Confer with your clients’ professional advisors such as CPAs and estate attorneys to help them understand how our products may meet their needs.

CMC16569PPT 04/16


Important Disclosures

Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your Internal Wholesaler to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money. This material was prepared to support the promotion and marketing of Jackson® variable annuities. Jackson, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties. Clients should contact their own independent advisors as to any tax, accounting or legal statements made herein. Retirement and Wealth Strategies Group communications are intended only to alert you to strategies that may be appropriate for the circumstances described. Your clients should consult with a lawyer and/or tax specialist before adopting or rejecting any strategy the Retirement and Wealth Strategies Group suggests. Only a lawyer and/or tax specialist, after thorough consultation, can recommend a strategy suited to anyone's unique needs. Annuities are long-term, tax-deferred vehicles designed for retirement. Variable annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

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Important Disclosures (continued) Annuities are issued by Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. May not be available in all states and state variations may apply. These products have limitations and restrictions. Contact Jackson for more information. Standard & Poor's is not affiliated with Jackson National Life Distributors LLC. S&P®, S&P 500® and Standard & Poor's® are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by Jackson National Life Insurance Company. The product is not sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of purchasing the product. The S&P 500® Index is unmanaged and not available for direct investment. Index performance does not include the reinvestment of dividends. The S&P 500 Index is a market capitalization-weighted index of 500 stocks that are selected by Standard & Poor’s to represent a broad array of large companies in leading industries. The S&P 500 Index is unmanaged and not available for direct investment. The payment of dividends is not reflected in the index return. Jackson® is the marketing name for Jackson National Life Insurance Company and Jackson National Life Insurance Company of New York. Jackson National Life Distributors LLC.

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Agenda

•  Tax Landscape

•  Stealth Taxes

•  A New Reality

•  Asset Location

•  Tax-deferral1 Strategies

1Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

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Tax Landscape

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$500K

$466K

$259K/$311K

$250K/$200K

$184K - $194K

$160K - $180K

$131K

$130K - $160K

$98K - $118K

$32K-$44K +

$0

AMT - $159,700 Steve Eliach, "Tax Alert: 2016 Cost of Living Adjustments: Minimal Changes From 2015," January 11, 2016.

AMT - $494,900 Steve Eliach, "Tax Alert: 2016 Cost of Living Adjustments:

Minimal Changes From 2015," January 11, 2016.

Married Filing Jointly

Phase-outs

Stealth Taxes: The Everyman Taxpayer

Social Security Benefits Taxation SSA.Gov, “Benefits Planner: Income Taxes And Your

Social Security Benefits,” Dec.14, 2015

American Opportunity Credit Phase-out IRS, American Opportunity Tax Credit,” Dec. 8, 2015

Student Loan Interest Deduction Susana Snyder, US News, “3 Facts to Know About the New

Student Loan Interest Rates,” Jul. 2015; IRS Publication 970, “Student Loan Interest Deduction,” 2016 Traditional IRA Contributions Phase-out

Steve Eliach, "Tax Alert: 2016 Cost of Living Adjustments: Minimal Changes From 2015," January 11, 2016.

Roth IRA Contributions Phase-out Steve Eliach, "Tax Alert: 2016 Cost of Living Adjustments:


0.9% / 3.8% Obamacare CCH Tax Briefing, Jan. 2013

1% Pease Phase-outs Steve Eliach, "Tax Alert: 2016 Cost of Living Adjustments:


39.6% Marginal, 23.8% Long-term Capital Gains IRS, Rev. Proc. 2015-53

Lifetime Learning Credit Steve Eliach, "Tax Alert: 2016 Cost of Living Adjustments:


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Stealth Taxes: The Impact of Obamacare

Health Care Reform – Penalty Taxes for High-Income Earners

•  3.8% on Net Investment Income started in 20131

•  $200K+ for Singles

•  $250K+ for Married (filing jointly)

•  Net Investment Income Includes:

•  Capital gains, annuity income, interest, rents, loyalties…

•  Does not include distributions from qualified plans, IRAs, Simples, SEPs, and Roth IRAs

•  Manage exposure with timing/amount of annuity distributions (nonqualified)

1 CCH Tax Briefing, “2013 Year in Review,” January 3, 2014 2 Speaker reference: Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

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Stealth Taxes: Long-term Capital Gains

Single Taxpayer

(2016)

Married Filing Jointly

(2016)

ATRA Long-term Capital Gains

Tax Rate (2016)

Section 1411 Medicare Surtax

(MAGI)

Combined Long-term

Capital Gains Tax Rate

$0-$37,650 $0 - $75,300 0% 0% 0%

$37,651 - $200,000 $75,301 - $250,000 15% 0% 15%

$200,001 - $415,050 $250,001 - $466,950 15% 3.8%* 18.8%

$415,051+ $466,951+ 20% 3.8%* 23.8%

* The 3.8% Medicare Surtax only applies to “net investment income” as defined in Internal Revenue Bulletin 2013-51. The content in this chart is our summarization of information from Chuck Saletta, DailyFinance.com, “Be Prepared for the Capital Gains Tax Rate in 2014,” December 19, 2013; Internal Revenue Bulletin 2013-51; and Rev. Proc. 2015-53.

CMC16569PPT 04/16


Stealth Taxes: What about AMT?

Chart created by Jackson using information from Intuit, TurboTax® TaxCaster 2014. 1 Tax Policy Center, "Tax Topics," 2015. 2 IRS Rev. Proc. 2015-53. 3 Speaker Reference: CNBC, "The Alternative Minimum Tax Changes: CNBC Explains," March 22, 2013. 4 Speaker Reference: CNN Money, "Taxes: the Alternative Minimum Tax," May 28, 2015. Summarization Source: Intuit, TurboTax® TaxCaster 2014.

Each additional dollar of capital gains could phase out 25%1 of your allowed AMT exemption, resulting in a higher actual capital gains rate.

Marginal and Effective Long-Term Capital Gains Tax Rates

2016 Alternative Minimum Tax (AMT)2

Filing Status Exemption Amount

Single $53,900

Married Filing Jointly $83,800

Married Filing Separately $41,900

CMC16569PPT 04/16


Stealth Taxes: Top State Income Tax Rates

28

How many states are nearly 50%? Take updated chart/sourcing from CMC12955

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Taxable Investments Shareholder tax liability arises in two ways

1.  Income realized by:

•  Capital gains distributions

•  Long-term capital gains (taxed at preferential rate) •  Short-term capital gains (taxed at ordinary rates)

•  Dividend distributions

•  Qualified dividends (taxed up to 20%) •  Nonqualified dividends (taxed at ordinary rates)

2.  Capital gains realized by shareholders liquidating shares

•  $200K for Singles and $250K for Married Filing Jointly will also be subject to 3.8% Obamacare tax on net investment income

This slide is our summarization of information from CCH Tax Briefing, 2013 Year in Review, January 3, 2104.

Reality: Different Types of Tax Treatment

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Portfolio Turnover •  A measure of how frequently assets are bought and sold

•  High turnover implies short holding periods which may result in short-term capital gains taxed at ordinary income rates

•  High turnover increases transaction costs and can create tax inefficiency

Reality: Potential Tax Triggers

Phantom Income •  Income paid to a taxpayer during the tax year that is "constructively

received"—but not actually received—at the taxpayer's year-end but still results in income tax liability to the taxpayer

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Reality: Potential Tax Triggers

Embedded Gains/Losses •  Investors purchase the current embedded gains in the investment

portfolio, even though they did not own the investment at the time the gains were earned. –  If shareholder purchases investment one day before ex-dividend

distribution date, they can be subject to both long-term and short-term taxable distributions the next day.

This slide is our summarization of information from David Peltier, The Street, “When Must I Buy a Stock to Get the Dividend?” August 10, 2015.

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15

The S&P 500 Index is a market capitalization-weighted index of 500 stocks that are selected by Standard & Poor’s to represent a broad array of large companies in leading industries. The S&P 500 Index is unmanaged and not available for direct investment. The payment of dividends is not reflected in the index return.

Remember: it’s not what you make. It’s what you keep.

Capital Gains Distributions* (Billions of dollars, 1999-2014)

Reality: Tax Loss Carry Forwards

Chart Source: ICI, 2015 Investment Company Fact Book; Lipper, June 6 2015.

* Assumes dividends were reinvested

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Asset Location: Tax Treatment of Certain Assets May Surprise You

FIXED INCOME

INTERNATIONAL EQUITY

REIT

EQUITY A

LT ASSETS

This illustration is hypothetical and not intended to reflect the past or future performance of any product. Annuities are long-term, tax-deferred vehicles designed for retirement. Variable annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. 1 Source: Lipper, a Thomson Reuters Company, year-end 2014. 2 Speaker reference: Lipper Tax Drag Data, year-end 2014. 3 Speaker reference: Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

Fixed Income Average 10-year Turnover1: 173%

Equities Average 10-year Turnover1: 82%

Tax Treatment by Asset Type

Taxed at normal capital gains rate

Some or all gains may be taxed as ordinary income

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•  Ordinary income tax treatment is often cited as a disadvantage

•  No one actually pays taxes at the marginal tax rate

•  Progressive tax system blends rates

•  $100K AGI is in the 25% marginal bracket (filing jointly) but effective tax rate is less than 17% (this is updated for 2016)

•  $100,000 - $75,300 = $24,700 x 25% = $6,175 + $10,367.50 = $16,542.50

•  $16,542.50/$100,000 = 16.5%

25% Marginal Rate

Effective Tax Rates 39.6% Cap

13.8%-19.4%

Blended Tax Rate

This slide is our summarization of information from IRS, Rev. Proc. 2015-53. 1Speaker reference: Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

Asset Location: Annuities and Blended Tax Rates

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Resources: Managing Adjusted Gross Income

•  1040 Review •  AGI: An important line on the

1040 •  The higher the AGI, the

more deductions and credits a client can miss out on

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Resources: Tax Deferral Illustrator Powered By Morningstar®

© 2015 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

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Tax-Deferral1 Strategies: Stretch

Lump Sum Out in 5

Annuitization Nonqualified Stretch

Anything over cost basis will be taxable

as ordinary income

5 years to take full amount; yearly amount will be taxable

as ordinary income

Can take advantage of exclusion ratio; can limit ability

to take more if needed

Distributes death benefit over beneficiary’s

life expectancy

1 Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

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Control from the Grave

Tax-Deferral Strategies: Customized Wealth Transfer

Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

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Post-Death 1035 Exchange (Nonqualified Stretch Only)

Tax-Deferral Strategies: 1035 Exchange

* IRA Pub 590, Appendix B, Table 1 (Single Life Expectancy Table) Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

Results in

$228K systematic

withdrawals over daughter’s lifetime

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•  Managing AGI can help clients navigate today’s complex tax-planning environment

•  Asset Location can help address income-tax inefficiencies brought about by a diversified portfolio

•  Post-death planning tools like non-qualified stretch, control from the grave, and post-death 1035 can extend tax deferral1 and tax control into future generations

Conclusion

1 Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA. It also may not be available if the annuity is owned by a “non-natural person” such as a corporation or certain types of trusts.

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Jackson’s Retirement and Wealth Strategies department is here to help you with your clients’ asset accumulation, distribution and post death planning needs

•  Resources available •  Marketing: Power Planning, CRT Producer Guide, One-pagers •  Attorney and CPA Meetings

•  Advanced Case Design

•  Tax Deferral Illustrator powered by Morningstar®

•  Call your Jackson Wholesaler and ask for RAWS today!

A Wealth of Knowledge

cmc16569ppt 04/16

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