Unleash the potential of tax-deferred growth: Take the Challenge!

Calculator Explanation and Limitations

The results of the comparison between a taxable account and a tax-deferred account are designed to be hypothetical comparisons and not actual predictions or projections of future results in the value of your portfolio. You should use it in conjunction with advice from your financial or tax planning advisor and not as the primary basis for your investment decisions. The calculator is based on an analysis of the historical performance of asset classes. Past performance does not guarantee future results. Your actual performance, asset allocation or trading patterns may differ from the values assumed by the calculator, resulting in a different outcome from that calculated. Certain asset classes are riskier than others, please consult your financial advisor for more information. If your tax rate changes you should update your choices in the calculator to reflect those changes. The results provided by the calculator are based on the data as of the date you enter it. Jefferson National Life Insurance Company does not predict or guarantee future results.

Calculation Methodology

For both the taxable and the tax-deferred account, after-tax dollars are contributed at the beginning of the period. In the taxable account, all distributions are reinvested after-tax and basis grows as reinvestments are made. When shares are sold, basis is reduced according to the average-cost method.

In the tax-deferred account, account value grows at the rate of the underlying investment's total return, but basis remains static at the initial investment level. When withdrawals are made, all gains are returned, taxed at the investors' ordinary income rate, before any principal is withdrawn. The tax-deferred account has a flat $240/yr insurance fee.

If the user chooses the "Active trader" option, all returns are assumed to be in the form of short-term capital gains and basis grows with account value. For non-Active Traders, the portfolio is rebalanced annually for both the taxable and the tax-deferred account.

In the taxable account, withdrawal income is generated in the middle of the year by retaining after-tax distributions and then selling additional shares as necessary. In the tax-deferred account, withdrawal income is generated in the middle of the year by withdrawing the necessary amount. Although not represented by the calculator, withdrawals from the tax-deferred account made prior to age 59½ may produce a tax penalty. All dollar values in the calculator are expressed as nominal values.

For both the accumulation period and the withdrawal period, tax rates on dividend income, long-term capital gains and short-term capital gains are set by the user's choice of an ordinary income rate. The calculator assumes that the tax rates currently scheduled to expire December 31, 2010, under the Jobs and Growth Tax Relief Reconciliation Act of 2003, will in fact expire. Lower maximum tax rates on capital gains and dividends would make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the accounts shown. In addition to federal taxes, the calculator assumes a state tax rate of 5.4%, which is the average across all states. Local taxes are not included.

The allocation of asset class returns between NAV return, interest income yield, dividend yield, realized long-term capital gains yield and realized short-term capital gains yield was gathered using data from the CRSP US Mutual Fund Database (MF)© 2007 Center for Research in Security Prices (CRSP® ) at Chicago GSB, The University of Chicago. For each asset class, distribution data reflects the average of all mutual funds available during the 35 year period ending in 2006, adjusted for splits. Annualized asset class total returns are based on the average total return described in Ibbotson's "Stocks, Bonds, Bills, and Inflation" for the eighty year period 1926-2006, less the cost of the mutual funds in the CRSP sample. Although there may be differences between the underlying expenses of the funds in the taxable account and the tax-deferred account, fund expenses are assumed to be identical and returns are net of expenses. These returns are purely hypothetical and do not represent the actual growth rate of any specific portfolio or annuity.

An investor should carefully consider the investment objectives, risks, charges and expenses of the investment before investing or sending money. For a prospectus containing this and additional information, please contact your financial professional. Read it carefully before investing. The summary of product features is not intended to be all-inclusive. Restrictions may apply. The contracts have exclusions and limitations, and may not be available in all states or at all times.

Variable annuities are investments subject to market fluctuation and risk, including possible loss of principal. Your units, when you make a withdrawal or surrender, may be worth more or less than your original investment.

Variable annuities are long-term investments to help you meet retirement and other long-range goals. Withdrawal of tax-deferred accumulations are subject to ordinary income tax. Withdrawals made prior to age 59 ½ may incur a 10% IRS tax penalty. Jefferson National does not offer tax advice. Annuities are not deposits or obligations of, or guaranteed by any bank, nor are they FDIC insured.

Monument Advisor is issued by Jefferson National Life Insurance Company (Dallas, TX) and distributed by Jefferson National Securities Corporation, FINRA member. Policy series JNL-2300-1, JNL-2300-2.

Form #: jef-taxdeferral-20081010 . ©2000 - 2010 Jefferson National Life Insurance Company.