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Non-Qualified Settlement Created Opportunity for a Fixed-Indexed Annuity

Structures

A financial advisor referred a prospective client of his to introduce the structured settlement options. Through the conversation, it was discovered that this was an employment case to be settled for $7.2 million. After the attorney fee was paid, the claimant would receive $4.9million. The idea of providing a pre-taxed contribution and tax-deferred performance for the claimant was also discussed because of the non-qualified nature of the funds. This was very exciting for the claimant. The claimant wanted the best growth opportunity available with downside protection from losses.

The claimant elected to defer $2.45 million of the settlement in a fixed-indexed annuity (FIA) with an assignment to Structured Assignments, Inc. (SAI) and the remaining $2.45 million in cash. By deferring $2.45 million, the claimant reduced the immediate tax liability by $980,000. The FIA would grow for 10 years and then be distributed in taxable periodic payments over 20 years. The indexed annuity would provide the larger market-driven growth opportunity and still provide protection from any losses. These tax advantages and the indexed annuity would not be an option for the claimant if a non-qualified assignment through SAI were not available.

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