The Gift of “Tax-Free”

Rayna Beaty, Marketing Communications Specialist / Asset Advisor


Give your clients the gift of “tax-free” retirement by educating them on the power of Roth IRA conversions and Life Insurance. Through these concepts, clients can enjoy tax-free retirement income and leave a tax-free legacy to heirs.  Today let’s focus on the Roth Conversion.

Do you believe taxes will be going up or going down in the future? Many believe that because of the $27 Trillion US debt and change in political parties there is a greater chance that taxes will soon be on the rise. Not meant to be a political statement but more of an economic statement, if you compare previous tax tables from 2016 to current, you will find a drastic reduction.  Even if taxes revert to where they were, that will still be a significant increase. By the way, you can find the 2016 tax tables online and they work well as a sales piece to explain this concept.

How does this affect your clients plan for retirement?  Most retirement portfolios consist of 401(k)s or mutual funds — all taxable dollars.  If taxes will likely increase, wouldn’t it make sense to start looking at tax-free vehicles now? Furthermore, if they plan on leaving a monetary legacy, do you believe their heir’s taxes will be even higher than theirs?

While Roth conversions are not complicated, there are certain measures you will want to take to make sure you are minimizing your client’s tax consequences. For example, you may want to point out how much to convert to avoid bracket creep, perhaps use a laddering method if the conversion amount is larger.  

Roth IRA benefits include:

  • No required minimum distributions—you keep your money and only spend it when you want to.
  • No pre-59 ½ early withdrawal penalties—if all rules are followed.
  • Reducing or eliminating the Medicare surtax. Distributions from a Roth are not included in the Modified Adjusted Gross Income threshold that determines the surtax.
  • Contributions can be made with after-tax dollars if you continue to work, no matter what age you are.  

There may not be a better time to consider a Roth IRA or Roth Conversion than right now. Tax diversifying your client’s portfolio is extremely important.  To help you have this conversation with your clients or to attract new clients, please visit the Portal to access our turnkey Roth IRA conversion sales tools kit.

To learn more about the “how-to” for Roth conversions, and what that conversation means to your bottom line, watch this recorded webinar.

If you are looking for Roth conversion product solutions, register for our upcoming webinar on Thursday, December 17, 2020 at 9:00 a.m. PST. Register here.