Putnam IRA

Turning IRA assets into income. Strategy that can help you meet your income and legacy objectives, by seeking to minimize taxes.

1. | 1EO032 274522 4/12
Shi fti ng i nto reti rement
Turni ng IRA assets i nto i ncome
No Bank
Guarantee
May Lose
Value
Not FDIC
Insured

2. | 2EO032 274522 4/12
You can’t take a
distribution before age
59½ without penalty
Calculating required
minimum
distributions is
complicated
Tax benefits stop at the
death of the IRA owner

3. | 3EO032 274522 4/12
Don’t be slowed by penalties
before age 59½
•Access your IRA penalty
free through substantially
equal periodic payments
Withdrawals are subject to income tax and those made before age 59½ may be subject to an additional 10% tax.
Age
70½
Age
59½
No penalty
for
distributions
Must begin
distributions
Penalty for
distributions

4. | 4EO032 274522 4/12
*Distributions taken prior to reaching age 59½ are normally subject to an additional 10% tax.
Distributions of deductible contributions and earnings will be subject to federal income tax.
Follow Rule 72(t) straight to
penalty-free distributions
•You must take systematic payments for five years or
until you reach age 59½, whichever is longer
•Avoids the usual 10% additional tax on taxable IRA
distributions made before age 59½
*

5. | 5EO032 274522 4/12
How does it work?
He must stick to the
distribution schedule for
9.5 years (until age 59½)
Bob retires at age 50
She must stick to the
distribution schedule for
5 years (until age 62)
Sally retires at age 57

6. | 6EO032 274522 4/12
A one-time switch from either the “amortization” or the “annuity” method to the “life expectancy” method.
This hypothetical example assumes a 50-year-old, traditional IRA owner, an account balance of $100,000 with an 8% annualized rate of
return, and an interest rate of 1.4% in conjunction with the IRS mortality table. Performance is not indicative of any Putnam fund, which will
fluctuate.
Not all required years of distribution are shown.
The road you take makes
a difference
Distribution method Life expectancy Amortization Annuity
Year 1 $2,924 $3,699 $3,681
Year 2 3,148 3,699 3,681
Year 3 3,400 3,699 3,681
Year 4 3,661 3,699 3,681
Year 5 3,940 3,699 3,681

7. | 7EO032 274522 4/12
You can’t take a
distribution before age
59½ without penalty
Calculating required
minimum
distributions is
complicated
Tax benefits stop at the
death of the IRA owner

8. | 8EO032 274522 4/12
Mapping your RMD involves
careful planning
•You must start taking
distributions from your
traditional IRA by
April 1 of the year after
you turn 70½*
•IRA regulations make
taking distributions
easy and relatively
favorable from a
tax standpoint
*Note that these distributions are required of traditional IRA owners. Roth IRA owners are not required to take distributions during their lifetime.
Age
70½
Age
59½
No penalty
for
distributions
Must begin
distributions
Penalty for
distributions

9. | 9EO032 274522 4/12
The express route to your RMD
has four checkpoints
*IRA owners who have a spousal beneficiary who is more than ten years younger than the IRA owner may opt to use the IRS joint life expectancy
table.
Just keep in mind
You may change beneficiaries whenever you wish
without affecting the amount of your lifetime
distributions
Beneficiary
Equal to 50% of the minimum required
distribution not taken
Penalty for failure
to withdraw
There is one simple calculation method
*
Calculation method
You must start taking minimum
distributions by April 1 of the year after you turn
70½
Date

10. | 10EO032 274522 4/12
You can’t take a
distribution before age
59½ without penalty
Calculating required
minimum
distributions is
complicated
Tax benefits stop at the
death of the IRA owner

11. | 11EO032 274522 4/12
Extend your roadtrip with a
Stretch IRA
•Extend tax
deferral
•Increase
compounding
potential
•IRA income
for heirs
Age
70½
Age
59½
No penalty
for
distributions
Must begin
distributions
Penalty for
distributions

12. | 12EO032 274522 4/12
Spousal beneficiary
•Once RMD for the year of death has been made, a spouse
beneficiary may take over decedent’s IRA and treat it as his
or her own (assuming certain requirements are met)
–Spouse can calculate RMDs, if required, based on
the uniform distribution table
–Name new beneficiaries
•Spouse can also transfer funds to a beneficiary IRA
–If the beneficiary spouse is under age 59½, he or she can access the IRA
assets immediately without incurring a 10% early withdrawal penalty
–Spouse beneficiary may still opt to treat the beneficiary IRA as his or her
own at any time in the future

13. | 13EO032 274522 4/12
How does it work?
Spousal beneficiary example
Bob (age 65) rolls $200K into an
IRA and names wife,
Sally (age 60), as sole beneficiary
0YEARYEAR 0

14. | 14EO032 274522 4/12
How does the spousal
beneficiary work?
Bob dies at age 70. Before commencing
RMDs, Sally (age 65) elects to treat the
IRA as her own and designates their son,
Bruce (age 40), as her IRA beneficiary
RMDs have not started
0YEARYEAR 5

15. | 15EO032 274522 4/12
How does the spousal
beneficiary work?
Year 0 Year 50Year 40Year 30Year 20Year 10
Year 11 distribution
$12,019
$3.2 million in income based upon an initial investment of $200,000 and cumulative annual distributions of 39 years. This hypothetical illustration assumes
an 8% annualized return and that distributions are kept to the required minimum. It does not represent the performance of any Putnam fund or investment.
Investors should consider various factors that can affect their decision, such as possible changes to tax laws, the impact of inflation and other risks
including periods of market volatility when investment return and principal value may fluctuate with market conditions.
•Sally dies in Year 10 at age 70 before
commencing RMDs.
•The following year, Bruce (age 45)
begins receiving payments based on his
(much longer) life expectancy under the
new IRS regulations. He names his wife,
Wendy, as his beneficiary.
YEAR 10

16. | 16EO032 274522 4/12
How does the spousal
beneficiary work?
Year 0 Year 50Year 40Year 30Year 20Year 10
Year 11 distribution
$12,019
$3.2 million in income based upon an initial investment of $200,000 and cumulative annual distributions of 39 years. This hypothetical illustration
assumes an 8% annualized return and that distributions are kept to the required minimum. It does not represent the performance of any Putnam fund or
investment. Investors should consider various factors that can affect their decision, such as possible changes to tax laws, the impact of inflation and
other risks including periods of market volatility when investment return and principal value may fluctuate with market conditions.
Year 20 distribution
$24,506
Year 30 distribution
$54,566
Year 40 distribution
$124,329
Bruce dies at age 74. Wendy continues the
established distribution schedule.
No rollover is available
Year 49 distribution
$270,526

17. | 17EO032 274522 4/12
How does the spousal
beneficiary work?
Year 0 Year 50Year 40Year 30Year 20Year 10
$3.2 million in income based upon an initial investment of $200,000 and cumulative annual distributions of 39 years. This hypothetical illustration assumes
an 8% annualized return and that distributions are kept to the required minimum. It does not represent the performance of any Putnam fund or investment.
Investors should consider various factors that can affect their decision, such as possible changes to tax laws, the impact of inflation and other risks
including periods of market volatility when investment return and principal value may fluctuate with market conditions.
Total of 39 annual distributions
$3,200,000 was distributed
from the account

18. | 18EO032 274522 4/12
Non-spousal beneficiaries
•IRA owner may designate a non-spousal
beneficiary, including a minor
•Upon reaching age 70½, owner begins RMDs
•When IRA owner dies, the beneficiary may
establish RMDs based on his/her own life
expectancy and name a new beneficiary,
*
even if RMDs have already started
*Special rules may apply if the designated non-spouse beneficiary is a non-person, such as an estate, trust, or charitable organization.

19. | 19EO032 274522 4/12
How does the non-spousal
beneficiary work?
Betty (age 60) rolls $200K into an IRA
She names her sons — Max, age 34,
and Sam, age 40 — as beneficiaries
0YEARYEAR 0

20. | 20EO032 274522 4/12
How does the non-spousal
beneficiary work?
Betty begins RMDs using the IRS’s
simple calculation method
Year 10 distribution = $16,480
0YEAR1YEAR 0

21. | 21EO032 274522 4/12
How does the non-spousal
beneficiary work?
Betty dies at age 72 after receiving
$53,443 in distributions over 3 years
IRA split evenly between sons
Max and Sam
0YEAR1YEAR 2

22. | 22EO032 274522 4/12
How does the non-spousal
beneficiary work?
Sam (now age 52) decides to liquidate
his portion of the account immediately
Sam’s lump-sum distribution = $243,158
0YEAR1YEAR 2

23. | 23EO032 274522 4/12
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
This hypothetical example assumes an 8% annualized return with distributions on an initial $200,000 investment based initially on the uniform distribution
table. After the owner’s death, distributions are based on the non-recalculated single life expectancy of a single beneficiary. Distributions are taken at the
end of the year and are kept to the required minimum. Performance is not indicative of any Putnam fund.
How does the non-spousal
beneficiary work?
Sam receives $243,158.
In the year following Betty’s death,
year 13, Max (now age 47) begins
taking distributions based on his
single life expectancy
$243,158
Year
12
Year
10
Year
1
Year
49
Annual distributions: Betty MaxSam
YEAR 12

24. | 24EO032 274522 4/12
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
This hypothetical example assumes an 8% annualized return with distributions on an initial $200,000 investment based initially on the uniform distribution
table. After the owner’s death, distributions are based on the non-recalculated single life expectancy of a single beneficiary. Distributions are taken at the
end of the year and are kept to the required minimum. Performance is not indicative of any Putnam fund.
How does the non-spousal
beneficiary work?
Max’s IRA is depleted.
Total of $1,436,936 received
in distributions
$243,158
Year
12
Year
10
Year
1
Year
49
Annual distributions: Betty MaxSam
YEAR 49

25. | 25EO032 274522 4/12
How does the non-spousal
beneficiary work?
Max has received
over $1 million
more than Sam
This hypothetical example assumes an 8% annualized return with distributions on an initial $200,000 investment based initially on the uniform distribution
table. After the owner’s death, distributions are based on the non-recalculated single life expectancy of a single beneficiary. Distributions are taken at the
end of the year and are kept to the required minimum. Earnings on Sam’s distribution are not reflected. Performance is not indicative of any Putnam fund.
Betty Sam Max
$53,443
$243,158
$1,436,936
Total distributions

26. | 26EO032 274522 4/12
Three helpful facts on the road
to retirement
•You can take a distribution before age 59½
without penalty
•Calculating RMDs is straightforward
•Tax benefits can continue after the death of
the IRA owner

27. | 27EO032 274522 4/12
What’s next?
•Consider how much IRA income you may need
in retirement
•Complete a Putnam IRA checklist and inventory
•Check your IRA beneficiary designations, but know
that they can be changed without affecting RMDs
•Ask your financial representative about ways to help
make the most of your IRA

28. | 28EO032 274522 4/12
This information is not meant as tax or legal advice.
Please consult your legal or tax advisor before making
any decisions.
Investors should carefully consider the investment
objectives, risks, charges, and expenses of a fund
before investing.
For a prospectus, or a summary prospectus if
available, containing this and other information
for any Putnam fund or product, call your financial
representative or call Putnam at 1-800-225-1581.
Please read the prospectus carefully before investing.
Putnam Retail Management
putnam.com

29. | 29EO032 274522 4/12
Shi fti ng i nto reti rement
Turni ng IRA assets i nto i ncome
No Bank
Guarantee
May Lose
Value
Not FDIC
Insured