Ep. 291 – Nationwide Monument Advisor For Tax Planning Strategies in Retirement

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In this Episode of the Secure Your Retirement Podcast, Radon Stancil and Murs Tariq discuss the Nationwide Monument Advisor, a unique variable annuity designed to optimize tax planning strategies for retirement. While variable annuities often have a negative reputation due to high fees and restrictions, this product offers a refreshing alternative with minimal costs and significant tax deferral benefits. Learn why Radon and Murs believe this tool can be a game-changer for individuals with non-qualified assets, such as brokerage accounts, who are looking to improve their tax strategies while planning for retirement.

Listen in to learn about how the Nationwide Monument Advisor provides tax-efficient investment opportunities for individuals with non-IRA, non-401(k) assets. Radon and Murs break down the product’s mechanics, compare it to traditional variable annuities, and explain how it fits into a well-rounded retirement planning strategy. Whether you’re looking to manage brokerage account taxes, avoid capital gains, or simplify your tax return, this episode sheds light on how this tool can help secure your retirement.

In this episode, find out:

·      What makes the Nationwide Monument Advisor different from traditional variable annuities.

·      How tax deferral works and why it’s advantageous for non-qualified assets.

·      The importance of low costs in variable annuities and how this product excels.

·      The flexibility of liquidity options and absence of surrender charges.

·      How to leverage this product for retirement income planning and investment management.

Tweetable Quotes:

·      “The Nationwide Monument Advisor flips the script on variable annuities by offering a low-cost, tax-efficient way to manage non-IRA investments.” – Radon Stancil

·      “With tax deferral and no surrender charges, this product removes the barriers that hold many back from optimizing their brokerage accounts.” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast

Here’s the full transcript:

Radon Stancil:	Welcome to Secure Your Retirement podcast. Today Murs and I are going to go through a very specific product because we use it as well as people ask us about it all times. So the product is called Nationwide Monument Advisor. Why are we going to do this? Well, it’s because we believe that this is a great vehicle for people who would like to get tax advantaged treatment on their non IRA non 401k type money. So what is this product? Well, it is a variable annuity. Now, don’t turn me off yet and say you just said a really bad word saying variable annuity because I want you to understand what this is and why we recommend it, because if you’ve known us for a while, you would know that Murs and I would pretty much say we don’t want to use variable annuities, but yet here we are talking about a product that we use that is a variable annuity.
	So first and foremost, what we’re going to do today is draw some comparisons about why this product, this variable annuity is something we recommend, and then why other variable annuities are things that we don’t recommend? So first of all, what is a variable annuity? Well, a variable annuity is an annuity contract, an insurance contract with an insurance company in this case nationwide, and then with that contract being an annuity, it gets special tax treatment, which is tax deferment. Real brief. What that means if I put a hundred thousand dollars in and it grows to 200,000, I get to do all that the whole time not paying taxes on that growth. Now I’m going to have to pay tax on that when I pull it out, but I get all the benefits and we’re going to talk about that a little bit today as well. Now I can do all kinds of things with an annuity.
	I can get tax, not only tax deferment, I can get income off of it, I can pull withdrawals from it. One caveat on that though, and this is just one thing that we need to keep in mind, is that I should not take income out of the annuity prior to 59 and a half, and the reason why is because that’s a part of the tax code that’s not about this particular product, but it’s about the tax code saying if I take it out prior to 59.5, I’m going to have a 10% penalty. So I don’t want go through all the different pros and cons right now because we’re going to just take you through the basics and then what we’re going to do is talk about why are we recommending this? How does it work? What is my liquidity? We’re going to take you through all those different aspects as we have this discussion, but I’m going to turn it over to Murs now. He’ll give us a little bit more of the details.
Murs Tariq:	Yeah, the Nationwide Monument advisor is the name of the product that we use for, and the purpose is for clients that have non IRA assets that would like, there’s a reason as to why they would like tax deferral on these non IRA non-qualified assets. So think about your brokerage account at a Schwab or at a Vanguard or at a Fidelity and it’s cash that you’ve invested over the years and you’re in a handful of positions, and at the end of this episode, we’ll kind of get to why or who would think about using something like this. But at the end of the day, typically what we’re taking is that type of money brokerage account type money or cash in the bank, and we want some tax advantages on it. So I’m going to outline the basics of how this product works, and again, go back into some comparisons around the industry standard on variable annuities.
	So the name of the product nationwide, monument advisor, the type of money, what we would prefer to put in there and how you invest. So variable annuity is you’re buying funds in the market so that nothing is changing with this product. We’re still buying funds in the market and we are exposed to risk based on how we allocate those funds. So you could have an s and p fund, you could have a NASDAQ fund. It’s going to go up, it’s going to go down. There is no guarantee of principle here, like we talk about in the other annuity world, which is the fixed annuity space. This is variable, which means there is market risk involved. I want to make that clear. So we have the ability to invest in the market and pick up tax deferral. We’ll come back to why that’s important. Now, the big thing about variable annuities and why we have in the past not spoken negatively, but we’ve chosen not to really use those as part of what we do.
	The big reason being is the cost and variable annuities can be rather high. I’ve sat across families that have a variable annuity, and once you get under the chassis and you add up these things called administration charges, mortality and expense rider charges, underlying investment fees, you add all those up and you’re in the realm of anywhere between two to four, even up to 5% internally, which becomes a major drag on investment performance. That’s been the major reason as to why we’ve avoided these types of products. The nationwide monument advisor doesn’t have that, and that’s why we like it so much. It does have a cost in it, but it is minimal. The cost of it to be in this product is $20 per month, or we could look at it as $240 a year. So there is no percentage charge to it. That’s the big difference.
	A lot of annuities are going to have that variable. Annuities are going to have the two, three, 4%, and if you think about it on maybe $50,000, two or three or 4% isn’t much, but if you got a million dollars in there and it’s two or three or 4%, well that starts to add up on you. In the case of the Monument advisor, it’s regardless of how much you have in the product, it’s $240 a year regardless. So there is no percentage movement or anything like that as far as liquidity goes in this product, that’s also rather important and a little bit unique. In most cases in the annuity world, you’re going to have a surrender charge schedule. Another way to look at that phrase is a period of time that I’m committed to being in the product. If I want to leave early, there’s penalties involved.
	Usually in the variable space you’re looking at a three to seven up to a 10 year surrender charge period where you have that commitment. Now there is liquidity access that you can tap into the liquidity in it, but it’s hard to walk away fully. In the nationwide monument advisor, the liquidity is 100% from day one. So there is no true surrender charge schedule or anything like that. Theoretically, you could put the money in today and you could withdraw it a week from now if you wanted to. So that is very nice. It pretty much now is operating like a brokerage account operates.
Radon Stancil:	Yeah, I just wanted to talk on that real quick about that. You might wonder, well, how do we decipher between the fix that Murs talked about and this particular product In the past, we would say the only reason why we would ever use an annuity is to get some safety. If I don’t need safety, there’s no reason to do an annuity like a variable annuity. And that would be why are you going to pay all these fees? And I’m in the market anyway because I might as well just be in a brokerage account and the fees outweigh the benefit. So today though, what we say is, if I want safety, well then I could go into a fixed annuity. But once I get that allocation right, and now let’s say I’ve got non IRA money and I go, I’ve already got my safety that’s already in place.
	I’m still trying to get growth on the money. And now we say, well, if we’re going to do that and we don’t want to have to pay the taxes on the growth or on capital gains as we sell things and all those kind of things, then I could go over into the variable annuity and I can put my money there. There is no disadvantage to me from a fee perspective except for that $20. We’ve got over 350 different funds that we can invest in. So we mimic in the nationwide Monument product, we mimic what we’re doing over in our custodian, whether that be Charles Schwab or Fidelity or whatever that is. We mimic that exact same thing and we’re able to get very good returns over there if the market’s going up as well. But Mercer told you if the market’s going down, we’ve got that risk. We’re not putting on this to protect on the downside. But let’s talk a little bit about maybe some of the cases that we’ve done this on before Murs, how we utilize this.
Murs Tariq:	So think about, imagine that you’ve got a million dollars or 500,000 in a brokerage account. It’s at Charles Schwab or Fidelity and it’s invested in funds. It’s invested in a handful of different ETFs or even stocks, whatever you want. And the problem that we see consistently is that I’ve been in this stock for so long, I’ve got so many gains embedded in this stock. I don’t really like this stock anymore, but I’m kind of handcuffed because the only way to get out of this stock or this fund is to sell it, and if I sell it, I realize a capital gain that I’m just not willing to pay. So way too often that decision around, I know I want to get out of this, but I’m avoiding the taxes on it, leads to a scenario where the investment value of the account starts to fall because going through a market downturn or whatever it is, and we’re losing money because we didn’t want to pay tax to get out of the position.
	So in the nationwide monument advisor, the Berry annuity, we pick up tax defer ability. Well, what does that actually really mean if we’re tax deferred? Once we’re in that type of space, we can make trades, we can move around in the investment world, and we’re never worried about any type of capital gains. So it releases those handcuffs on us to say, maybe we want to be more exposed to large cap in technology this year, but we see a shift and maybe we want to go make adjustments and we’re making adjustments without being worried about the taxable implications on this type of money. Whereas in the brokerage scenario, you’ve got to worry about capital gains. You’ve got to worry about income coming off of interest. You’ve got to worry about dividends that are being spun off, and it can really mess with your year over year tax return. So that’s a big one, is just making your brokerage account money a whole lot simpler from a tax perspective. It cleans up your tax return.
Radon Stancil:	Yeah, so the idea here is if you’ve got money that is in a brokerage account and you’re thinking, man, I don’t want to get the spinoff of dividends or capital gains, then it’s a great thing. By the way, another one is that we’ve got some clients who have sizable brokerage accounts and they’re concerned about the fact that they want to do Roth conversions, for example, and so we want to get that off the books. We don’t want to have that spinoff of dividends and the capital gains, and so we’re able to shield all that and get it off the tax return because we’re going to put it over in tax deferment and we can pick and choose when we’re going to actually incur a tax. I get a good compound effect because I’m not having to pay the tax and I get the compound off of these returns.
	Another question that comes up though real quick before we wrap up is how do my beneficiaries, what do they have to deal with on this? Well, they get the money. You put them down as a beneficiary, they inherit it, and they have a choice. They could take it all as a lump sum and pay the tax on whatever gain there is, or they can take it out over a period of years taking little bits of it so they only pay tax on the little bit that they’re taking out. So they have an option there to spread it over a number of years, and it’s not like an IRA that has to be done in 10 years. They can spread it out over a longer period of time, and they can continue to get that tax deferment and get that growth. So there are some advantages even for the beneficiaries as well.