Shifting into retirement Turning IRA assets into income

Not FDIC insured May lose valueNo bank guarantee

Turning IRA assets into income

Planning how to take IRA distributions as you approach retirement.

PPT032 307716 8/17 2


Three misconceptions

3 Tax benefits stop at the death of the IRA owner

2 Calculating required minimum distributions is complicated

1 You can’t take a distribution before age 59½ without penalty

PPT032 307716 8/17 3


Don’t let penalties before age 59½ erode your savings • 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.

Premature distribution

Normal distribution

Required minimum

distribution

Age 59½

Age 70½

Penalty for distributions

No penalty for distributions

Must begin distributions

PPT032 307716 8/17 4


Utilize Rule 72(t) strategy for 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*

* 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.

PPT032 307716 8/17 5


How does it work?

Bob retires at age 50He must stick to the distribution schedule for 9.5 years (until age 59½)

Sally retires at age 57She must stick to the distribution schedule for 5 years (until age 62)

PPT032 307716 8/17 6


The method you take makes a difference

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.

Distribution method Life expectancy Amortization Annuity

Year 1 $2,924 $3,699$3,681

Year 2 3,148 3,6993,681

Year 3 3,400 3,6993,681

Year 4 3,661 3,6993,681

Year 5 3,940 3,6993,681

PPT032 307716 8/17 7






PPT032 307716 8/17 8


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 59½

Age 70½





Normal distribution

Required minimum

distribution

PPT032 307716 8/17 9


Four facts to remember about RMDsJust keep in mind

* 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.

Date You must start taking minimum distributions by April 1 of the year after you turn 70½

Calculation method There is one simple calculation method*

BeneficiaryYou may change beneficiaries whenever you

wish without affecting the amount of your lifetime distributions

Penalty for failure to withdraw

Equal to 50% of the required minimum distribution not taken

PPT032 307716 8/17 10






PPT032 307716 8/17 11


Extend the life of tax advantages with a Stretch IRA• Extend tax deferral

• Increase compounding potential

• IRA income for heirs

Age 59½

Age 70½





Normal distribution

Required minimum

distribution

PPT032 307716 8/17 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

PPT032 307716 8/17 13


How does it work?Spousal beneficiary example

Bob (age 65) rolls $200K into an IRA and names wife, Sally (age 60), as sole beneficiary.

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 14


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.

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 15



A total of $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 0 Year 10 Year 20 Year 30 Year 40 Year 50

Year 11 distribution$12,019

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 16




$12,019Year 11 distribution



Bruce dies at age 74. Wendy continues the established distribution schedule. No rollover is available.

$270,526 Year 49 distribution

Year 0 Year 50Year 40Year 30Year 20Year 10


PPT032 307716 8/17 17


How does the spousalbeneficiary work?Total of 39 annual distributions$3,200,000 was distributed from the account


Year 0 Year 50Year 40Year 30Year 20Year 10

PPT032 307716 8/17 18


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.

PPT032 307716 8/17 19


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.

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 20



Betty begins RMDs using the IRS’s simple calculation method.

Year 10 distribution = $16,480

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 21



Betty dies at age 72 after receiving $53,443 in distributions over 3 years.

IRA is split evenly between sons Max and Sam.

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 22



Sam (now age 52) decides to liquidatehis portion of the account immediately.

Sam’s lump-sum distribution = $243,158

Year0

Year5

Year10

Year49

Year12

PPT032 307716 8/17 23


Year0

Year5

Year10

Year49

Year12


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.

0 20,000 40,000 60,000 80,000

100,000 120,000 140,000

$243,158

Year12

Year10

Year1

Year49

Sam receives $243,158.In the year following Betty’s death,year 13, Max (now age 47) beginstaking distributions based on hissingle life expectancy.

Annual distributions: Betty MaxSam

PPT032 307716 8/17 24


0 20,000 40,000 60,000 80,000

100,000 120,000 140,000 $243,158

Max’s IRA is depleted.Total of $1,436,936 is received in distributions.

Year12

Year10

Year1

Year49Annual distributions: Betty MaxSam

Year0

Year5

Year10

Year49

Year12


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.

PPT032 307716 8/17 25


How does the non-spousal beneficiary work?Total distributions

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

PPT032 307716 8/17 26


Three helpful facts for planning 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

PPT032 307716 8/17 27


What’s next?• Consider how much IRA income you may need in retirement

• 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

PPT032 307716 8/17 28


Putnam Retail Managementputnam.com

This information is not meant as tax or legal advice.

Please consult your legal or tax advisor before making any decisions.

This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. Putnam, which earns fees when clients select its products and services, is not offering impartial advice in a fiduciary capacity in providing this sales and marketing material. This information is not meant as tax or legal advice. Investors should consult a professional advisor before making investment and financial decisions and for more information on tax rules and other laws, which are complex and subject to change.

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.

Documents

Shifting into retirement Turning IRA assets into income