Nationwide Monument Advisor for Tax Planning Strategies

Planning for retirement requires a comprehensive approach, especially when it comes to tax-efficient strategies that allow you to maximize the growth and distribution of your investments. Enter the Nationwide Monument Advisor, a unique variable annuity that we regularly recommend as a strategic tool for tax planning. But wait—if you’ve ever been hesitant about variable annuities, you’re not alone. Traditionally, they come with high fees and other drawbacks that make them less attractive. However, this product breaks the mold, offering unique advantages for those looking to reduce their tax burdens while securing retirement income.

In this blog, we’ll dive into the details of how the Nationwide Monument Advisor works, why it differs from other variable annuities, and how it fits into your overall tax planning strategies. Whether you’re managing a brokerage account, optimizing retirement planning tools, or simply looking for ways to defer taxes and improve your investment returns, this innovative product could be the missing piece in your financial puzzle.

What Is the Nationwide Monument Advisor?

The Nationwide Monument Advisor is a variable annuity designed to provide tax deferral on non-IRA, non-qualified funds. Unlike traditional variable annuities, which often carry high costs, this product is affordable and highly flexible. Here’s a quick breakdown of how it works:

• Tax Deferral: Contributions to this annuity grow tax-deferred, meaning you won’t pay taxes on gains or interest until you withdraw the funds.
• Investment Options: The product offers over 350 fund choices, enabling you to mirror a typical brokerage account’s investment strategy.
• Low Fees: At just $20 per month ($240 annually), the Monument Advisor eliminates the high administrative and rider costs typically associated with variable annuities.
• Liquidity: It offers full liquidity from day one, with no surrender charges, allowing you to withdraw your funds anytime without penalty.

This combination of features makes the Nationwide Monument Advisor an attractive option for individuals seeking tax-efficient investments without the drawbacks of traditional annuities.

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Why Consider a Variable Annuity for Tax Planning?

For years, variable annuities have been viewed skeptically due to their high fees, which can range from 2% to 5% annually. These fees often erode investment performance, making them less appealing compared to other investment vehicles. However, the Nationwide Monument Advisor changes the game by removing these excessive costs while retaining the benefits of tax deferral.

Who Should Consider This Product?

If you have a brokerage account with significant unrealized gains or are managing non-qualified assets, this product could simplify your tax situation. It’s particularly beneficial if:

• You want to avoid paying taxes on dividends, interest, or capital gains.
• You’re considering Roth conversions and need to reduce taxable income.
• You’re looking for flexibility in managing your portfolio without triggering taxable events.

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How Does Tax Deferral Work?

Imagine you’ve invested $100,000 in a brokerage account. Over time, it grows to $200,000. In a traditional account, you’d owe taxes on dividends, interest, and any gains realized during rebalancing. However, by moving these assets into the Nationwide Monument Advisor, you can defer taxes on that growth until withdrawal. This tax deferral allows your investments to grow more efficiently, compounding returns without the drag of annual tax payments.

Additionally, the product offers significant advantages for retirement income planning, as you can control when and how you withdraw funds to manage your tax liability strategically.

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The Costs: A Game-Changer in the Annuity World

Traditional variable annuities come with several layers of fees, including:

1. Administrative charges
2. Mortality and expense risk fees
3. Rider fees for optional benefits
4. Investment management fees

These costs often total 2%–4% annually, significantly reducing your net returns. By contrast, the Nationwide Monument Advisor charges a flat $20 per month—regardless of your account balance. Whether you invest $50,000 or $1 million, your cost remains $240 per year, making it one of the most cost-effective options in the industry.

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Liquidity and Flexibility

Another standout feature of this product is its 100% liquidity from day one. Unlike most annuities, which impose surrender charges for early withdrawals, the Nationwide Monument Advisor allows you to access your funds anytime without penalty. This flexibility ensures your money remains available for unexpected expenses or changes in your financial strategy.

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Fixed vs. Variable Annuities: Understanding the Differences

When discussing annuities, it’s essential to understand the differences between fixed and variable annuities. Here’s a quick comparison:

FeatureFixed AnnuityVariable Annuity (Monument Advisor)RiskLow (guaranteed principal)Moderate to High (market-dependent)FeesLowMinimal ($240 annually)Tax DeferralYesYesLiquidityLimited (surrender charges)Full liquidity from day oneInvestment GrowthFixed interest rateMarket-driven, with higher growth potential

For those seeking growth potential and tax efficiency without high fees, the Nationwide Monument Advisor offers the best of both worlds.

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Case Studies: Real-Life Applications

To illustrate how this product can work for you, let’s explore two common scenarios:

1. Managing Embedded Gains in a Brokerage Account

A client with $500,000 in a brokerage account had significant unrealized gains in several long-held stocks. Selling these positions would trigger substantial capital gains taxes, so the client felt “handcuffed” to underperforming investments. By transferring the funds into the Nationwide Monument Advisor, the client gained the freedom to rebalance their portfolio without immediate tax consequences. This flexibility allowed them to shift into higher-performing investments while deferring taxes on the gains.

2. Reducing Taxable Income for Roth Conversions

Another client wanted to execute Roth conversions but was concerned about the additional taxable income generated by dividends and capital gains from their brokerage account. By moving these assets into the Monument Advisor, they eliminated these taxable events, creating a cleaner tax return and allowing them to optimize their Roth conversion strategy.

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Advantages for Beneficiaries

One question we often receive is, “What happens to this account when I pass away?” The answer is simple: Your beneficiaries inherit the funds and have options for managing their tax liability. They can take the entire balance as a lump sum, paying taxes on the gains immediately, or opt for a more tax-efficient approach by withdrawing the funds over several years. Unlike IRAs, there’s no mandatory 10-year withdrawal rule, providing greater flexibility for estate planning.

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Who Should Avoid This Product?

While the Nationwide Monument Advisor offers numerous advantages, it may not be suitable for everyone. For example:

• Investors under age 59? may face a 10% penalty on early withdrawals, per IRS rules.
• Those seeking guaranteed principal protection should consider fixed annuities
• If you have no need for tax deferral (e.g., if all your assets are in IRAs or 401(k)s), this product may not add value.

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Is the Nationwide Monument Advisor Right for You?

The Nationwide Monument Advisor is an innovative tool for tax planning strategies, particularly for those managing brokerage account taxes or seeking tax-efficient investments. Its low costs, tax deferral benefits, and flexibility make it a powerful option for improving your retirement income planning and ensuring you’re prepared to retire comfortably.

If you want to understand all this a little better, we offer a complimentary phone call that you can schedule with us on our website. If we can’t answer all your questions in just 15 minutes, we’ll guide you to the next steps to find the answers you need.

Schedule your complimentary call with us and learn more about Nationwide Monument Advisor for Tax Planning Strategies.