It’s Open Season for Roth Conversions – Make Sure You’re Hunting for Them

Bruce Beaty – VP Business Consultant

It seems that everyone is talking about taxes and creating tax-free future income for clients.

Maybe it’s because its tax time, but there seems to be more conversation than ever around national debt (over $28 trillion), stimulus spending and that impact on future taxation, and our current administration has bluntly stated that it will purse higher corporate and personal tax rates.

Now more than ever you have an opportunity to engage with your clients in tax planning and Roth conversion conversations. The time is now.

I noticed this week that one of our carrier partners was highlighting a product that allows for a 10% penalty free withdrawal based on the original deposited amount (rather than the current account value). This is unique in the annuity space and, positioned as a way to build an income bridge to maximize social security. Check out this idea from F&G on the Flex Accumulator. It got me thinking that this could be the ultimate “Deployment vehicle” for Roth conversions. To clarify, this product receives the rollover, say $500,000. Then the liquidity is used to send $50,000 in conversions each year going forward to the “receiving vehicle” 

Note: this is not the only product that could be used in this manner, give us a call and we can give you insight into other options.

Now what to choose for the receiving vehicle? There are several different angles to consider here when it comes to premium bonuses companies like Silac (up to 10%), Equitrust (up to 10%), AmericanLife (up to 16 + (3%)) and others offer large premium bonuses. These bonuses offset the tax impact on conversions at least up to a point.

Perhaps a flexible premium product to keep it simple (one policy, one application): Delaware or Nacolah are popular flex premium solutions. All future growth would be tax free and the client has the flexibility for whatever they want and need when it comes to distributions. With Surrender periods as short as 7 years, and trail commissions available the possibilities are vast.

Consider a large income bonus: Nassau RE (up to 45%, or 14% simple), Global Atlantic Income 150 (50% income-based bonus by year five), Allianz ABC (25%), Athene Agility (15%). Hey, if guaranteed income life is appealing, why not try tax free income for life?

If its “ leave on money” consider and enhanced death benefit product like Global Atlantic 7% simple for 15 years , Allianz ABC or AIG x5 benefit base 250%, or Athene Agility, or Americo’s Heritage Maximizer (30%).

Or, if you really want to get creative take the $50k and put it into a Single premium life product like Equitrust, NWL, Sagicor. Depending on the age and carrier that $50k could buy upwards to $100k in death benefit.

In summary, there a so many different solutions, and I am only highlighting a few here, but the opportunity has never seen such a great sense of urgency as it is seeing today. The power of the Roth conversions include a qualifying distributions (see official rules for details @ being tax free, this includes income doublers, income rider distributions, free withdrawals, and death benefits (including enhanced death benefits.)

Attached you will find the sales idea mentioned up front for Social Security Maximization, but honestly this might be an even bigger opportunity. Check out Kurt’s updated product picks by clicking the button below, or even better call Kurt or Katie today for a run down on any of these or other product recommendations based on your clients’ needs and objectives.

Is Term Life Insurance Right for You?

Term insurance is the simplest form of life insurance. Here’s how it works.

Provided by Asset Marketing Systems

Term insurance is the simplest form of life insurance. It provides temporary life insurance protection on a limited budget. Here’s how it works:

When policy holders buy term insurance, they buy coverage for a specific period and pay a specific price for that coverage.

If the policyholder dies during that time, their beneficiaries receive the benefit from the policy. If they outlive the term of the policy, it is no longer in effect. The person would have to reapply to receive any future benefit.

Unlike permanent insurance, term insurance only pays a death benefit. That’s one of the reasons term insurance tends to be less expensive than permanent insurance.

Many find term life insurance useful for covering specific financial responsibilities if they were to die unexpectedly. Term life insurance is often used to provide funds to cover:

  • Dependent care
  • College education for dependents
  • Mortgages

Would term life insurance be the best coverage for you and your family? That depends on your unique goals, needs, and circumstances. You may want to carefully examine the pros and cons of each type of life insurance before deciding what type of policy will be the best fit for you.

Another factor to think about: term policies generally become more expensive as you grow older. If your term life insurance expires and you are facing certain health challenges, such as an injury or disease, you may find that a policy with similar coverage may be much more expensive.

Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.


  1. [11/24/18]

8 Things to Know About the SECURE Act of 2019

Sam Payne, RICP®, CLTC – VP Business Consultant
(Asset Marketing Systems)

The “Setting Every Community up for Retirement Enhancement” Act (SECURE Act) passed in the House last week with a 417-3 vote. This legislation is expected to make it through the Senate during this term, and in doing so, it will be the first major retirement legislation passed since the Pension Protection Act in 2006.

The Senate is working on their version of retirement legislation, it’s called the Retirement Enhancement Securities Act (RSA). As often happens, some of the provisions of the RSA may find their way into the SECURE Act. For this article, I stick to what we know about the SECURE Act, but keep in mind; it has not passed the Senate…

So what are some of the components of the SECURE Act? Out of the 29 or so new provisions, here are 8 things I think advisors should know:

1. Increase Small Employer Access to Retirement Plans – Part of the legislation will attempt to expand small employers capability to offer some form of retirement savings to employees. One way the act proposes to accomplish this is by expanding the ability to run multi-employer plans and streamline the process overall. This would essentially allow small employers to band together to offer reduced overall cost to the employer, and purportedly a reduction in the fiduciary liability.

2. Increase Annuity Options Inside Retirement Accounts – the act proposes to update the safe harbor provision for plan sponsors to select annuity providers to offer in-plan annuities for use within the 401K. The new rules would essentially ease liability concerns, perhaps opening the path for more annuities to be offered in the plan.

3. Increase RMD Ages – the plan proposes to increase the RMD start age from the current 70 ½ to 72.

4. Remove Age Limitation for contributing to an IRA – if RMD ages are going up, it only makes sense to remove the contribution age limits. Individuals are living longer, and as a consequence working longer. Having the ability to continue to contribute to an IRA as long as they work just makes sense.

5. Tax Credit for Automatic Enrollment – this provision would introduce a tax credit for small employers to encourage automatic enrollment into their plan. It’s a $500 credit, and the intention is to offset the costs of operating the plan at the start.

6. Penalty-Free Distributions for the Birth of a Child or Adoption – this provision will provide an exemption from the 10% penalty tax 72(t) for early withdrawal. It would allow an aggregate amount of $5,000 to be distributed from the plan within one year of birth or adoption.

7. Lifetime Income Disclosure for Defined Contribution Plans – the bill will require defined contribution plans to deliver a disclosure at least once every 12 months to illustrate how much income the account balance would generate. As you can imagine, the methodology for determining or calculating that income is still in the works.

8. Removal of “Stretch” IRA Provisions – here is where I see some significant changes to inherited plans. This provision would require most beneficiaries to distribute the account value over ten years.

So these are 8 quick things to know about the SECURE Act, but the real question in my mind is, will this really help Americans save more? I don’t think it will have a huge impact. I believe our continued message needs to be that each individual has the burden of saving for their financial future placed squarely on their shoulders. They should recognize that, and act accordingly.

Using financial tools and concepts with the advice and direction of a financial professional may help Americans better achieve the retirement of their dreams, so be their guide.

Sam Payne

VP Business Consultant

Rates Have Dropped…
Now What?

Kurt Metcalfe – Sr. Annuity Sales Consultant
(Asset Marketing Systems)

The 10-year treasury has gone from 3.2% in November 2018 to the current 2.1% (as of 6/4/19). Of course, this is not the only measurement used by carriers in determining interest rates, but it’s a good guide. It’s clear to see how a 33% decrease can lead to lower caps and higher spreads. So how do we handle this? My simple response… “This changes nothing.”

It’s important to remember what we’re trying to accomplish for your annuity clients. Whether your client is looking for income, growth, or death benefit; the collective key to an FIA sale is safety. Consistent, sustainable income is best created using fixed annuities as their living benefits are stronger than VA counterparts. Rate decreases have left most income riders unaffected and therefore has not changed this sale. You can sit across from a client and tell them exactly how much income they will receive in retirement AND they will never outlive it.

In the past two weeks, I have heard a repeated question that has surprised me, “do we have anything out there that is still good for growth?” My response is always very simple, “Why wouldn’t we?” Sometimes we get stuck in this trap remembering how interest rates were 20-30% higher looking back six months ago. Is it true that those past clients are in a better spot than current/prospective buyers are today? Yes, probably. How does that help your current client? You are working as their advisor at this moment, not the past. We have no idea when interest rates will turn back around and increase. Your client can’t afford to sit on the sidelines and wait. S&P 500 is down 7% in the last month, is that better? If we stick to the basics and fulfill client needs with our best current tools, we are doing the best job. FIAs are not designed to outpace the equities market. I point to Roger Ibbotson’s whitepaper talking about how uncapped FIAs are your bond alternative. With this portion of your client’s money, are they ok with 3.5% – 5.5% per year, net of fees? People that tell them otherwise are promising something that will be difficult to deliver. If your client wants more, they will have to take more risk.

FIAs will not lose a dime of their money. FIAs can create an income stream that clients will not outlive. Those two facts remain the same, regardless of the interest rate environment.

And don’t forget to review our latest top picks and annuity recommendations. Click here to download the flyer.

Five Important Annuity Processing Tips

Mia Dempsey – New Business Department Manager
(Asset Marketing Systems)

We understand that having to go back to your client multiple times for new or corrected paperwork is time consuming and frustrating. Let us help you get it right the first time. Review these tips below for best practices when submitting your Annuity cases:

  • 1. Verify Your Carrier Contract Status
    • Make sure your Continuing Education (CE) credits are current!
      • Licensed agents need 24 hours of CE credits every two years. Some of those credits include AML and Annuity training. You can look up your CE credits via the Department of Insurance for your state.
    • Make sure your Carrier Appointment is current!
      • Call Asset Marketing Systems to confirm you are contracted and active with the carrier. If you have not written business with that carrier in the last 12 months, you may have been terminated.
    • Make sure your Product Training is complete!
      • Many carriers require specific product training. In some cases, each product line has its own training. Check your product training status with the AMS licensing department.
    • Do not take the application until you are sure all items above are in place.
      • Taking an application with one or more of these items missing most likely will require you to get updated paperwork signed.
  • 2. Keep up-to-date on Product Information & Rates Changes
  • 3. FireLight Tips – (E-Application)
    • Jurisdiction Selection
      • Incorrect state selection will require you to start over with a new case.
    • Optional Redtail Data Upload
      • If you are a Redtail CRM user, this is an optional selection for you. Via FireLight you can select the client information in your Redtail CRM to pre-populate portions of the application.
      • If you do not have the Redtail CRM or would rather manually populate the information, select the chevrons to the right to skip this page.
    • Where to View Missing Items
      • Click the chevrons at the top left of the page, under the Data Entry counter, and open the pages available. The red highlighted pages are those missing information.
      • If you still can’t find what’s missing, click the red “comment” icon on the top right of the page and missing information will be highlighted.
  • 4. Where to Send Your Annuity Applications
    • AMS case manages certain annuity carrier applications
      • Most of the carriers shown below require Asset to case manage the applications. Please make sure to send these applications to Asset (send copies to Asset if you submit the originals direct to the carrier at
        • 1. Ameritas – FlexMark Select (Optional)
        • 2. Americo – ClassicMark & LibertyMark (Optional)
        • 3. Athene – BCA
        • 4. Delaware Life – Retirement Chapters (Optional)
        • 5. Nationwide – New Heights
        • 6. North American – Prime Path
        • 7. Transamerica – Secure Retirement Index II
      • The remainder of our annuity carriers work directly with the agent’s office to obtain outstanding requirements on cases. These applications should be sent directly to the carrier. For these direct submit carriers, duplicated case management efforts on the part of Asset Case Managers who aren’t privy to info sent directly by the agent or his staff can cause confusion.
  • 5. Funding the Case
    • Transferring Money
      • Call the transferring company to confirm if a specific transfer form is required.
      • Annuity transfers require a current statement from the existing policy to be submitted with the application.
      • Since most carriers will not accept e-Signed Transfer of Asset (TOA) forms, it’s advisable to get a TOA physically signed by the client to be safe.
    • Sending a Physical Check
      • Send the check with the original application packet, OR
      • Wait for a policy number from the carrier and reference that number on the memo section of the check. This will allow the carrier to match it to the correct policy.

If you are not contracted with Asset, contact us to
learn more at 866-546-5267.

Understanding the Small Business Market – Four Phases of the Business Owner

Jeff S. – Financial Advisor
(Asset Marketing Systems)

Having worked with business owners for over 50 years, I have learned a few lessons – almost always the hard way!

For many producers, the business owner market seems like the “Holy Grail,” because they can see all the opportunities to help. Buy-Sell agreements, retirement plans, overfunded life insurance, the list goes on and on. However, businesses go through four stages in a company’s life cycle, and the issues to deal with change at each stage. We’ll discuss each phase and what you can focus on to do the best job possible for the prospect.

But first, there is one universal truth that you need to understand, not only for business owners but for every prospect you’ll ever meet.

1. There must be real issues/problems to be solved.
2. The prospect needs to have a desire to solve them.
3. And they must have the money to do something about the issue/problem.

If any of these three elements is missing, a sale cannot take place. When you look back at sales you have lost you’ll see one of these items is missing. Also, when you are at the first appointment, and you find out one of the three is missing it’s a good time to move on to the next prospect. Rick Metcalfe was fond of saying, “the most powerful word in sales is NEXT” do not waste your time!

Phase One Business Owners:

They are a start-up, often “Mom and Pop” businesses.

Needs: Everything, but the most immediate is customers.
Desire: They may have it, but can’t do anything about it because of…
Money: It’s usually is very scarce, and what they have is needed for the business.

If they can create a small budget, then try to solve big problems in the most economical way possible. For these business owners, term insurance is a good solution.

Phase Two Business Owners:

These are usually still “Mom and Pop” businesses, but they’ve had 5+ years of growth. They probably have 5 or more employees, and Mom does the books in an office instead of at the kitchen table.

Needs: They still have needs in almost every area you can imagine and…
Desire: They may have a desire to solve them if…
Money: They have the money.

To solve their issues, you should still focus on the areas that can truly devastate the family: death, disability, and LTC. If there are funds still available, then it would be appropriate to discuss retirement options.

Phase Three Business Owners:

This is the most difficult phase. You drive up and see a parking lot full of employees’ cars next to a large manufacturing plant.

Needs: You are convinced he needs a buy-sell, overfunded life insurance for retirement, and the list goes on and on.

Money: You “know” he has tons of money that can be used to solve his problems – the new Porsche and the picture of his plane proves that.

Desire: I put this last because when dealing with Phase Three business owners, this is almost always the one element lacking because they feel invincible. Their business normally has never faced a true financial crisis. Also, their ego prevents them from admitting they need help. No matter how competent you are, they are mentally “patting you on the head” and thinking, “I’m smarter than you, go away.”

If you are working with a Phase Three, what catches their attention is the new “shiny penny,” it appeals to their greed. But even if you have that “shiny penny” don’t be surprised if they find a way not to implement.

Phase Four Business Owners:

Phase Four business owners can be the most rewarding to work with, from both an intellectual position and a financial one. They know they don’t know everything, and they will listen to good advice. But if you are just “selling” and not solving real issues, they will end the appointment quickly.

Needs: Legacy planning, business continuity, retirement planning and more.

Desire: Is usually high for the issues they care about – they need to tie up loose ends.

Money: Usually not a concern if they have strong feelings about an issue or issues.

Phase Four Busines Owners know good information from bad, so be well prepared when dealing with them. Because of their stage of life, almost all of your financial products arsenal may be needed to solve their problems.

One word of warning – sometimes Phase Three Business owners just grow old, and they still “pat us on the head.”

Hiring and Retaining Top Employees – How Small Business Owners Can Compete

Josh Ver Hoeve – VP Annuity & Life Distribution
(Asset Marketing Systems)

May is National Small Business Month.

Do you work with small businesses or small business owners? Over the past fifteen years, I have worked with some of the most successful financial advisors in the country, and one of the most apparent challenges has been turning business owners into clients. For the advisors that are in the business owner market, they typically got there by creating relationships with single individuals who introduced or referred them to a business owner. Almost all of the advisors in the business owner space got there by networking and relationships.

In several instances, this happened by over-delivering to a single client and giving so much to one person that they felt an obligation to refer to you, much like any referral-based advisor practice. Most of you reading this right now are small business owners. Understanding a business owner’s concerns is imperative in creating a relationship with them. *There are 28 million small businesses in the United States which outnumber corporations by over 1,000 to 1. Seventy percent of those small businesses are owned and operated by a single individual. Because there is no secret sauce to getting a new business owner client, let’s focus on one of the most common issues business owners face and how we might be able to appeal to this concern.

According to, twenty percent of small business owners say that employee retention is their largest roadblock to business growth. Finding the right person for the job and attracting that individual enough not just to take the job, but also stay with the organization is very challenging. How can a small business compete with recruiting and keeping talent in the same way a large corporation can? Indexed Universal Life is one of the answers. First, think about all of the challenges business owners face, and then think about the benefits of an indexed universal life policy, from tax-free income to living benefits. Then comes the question of cost to a small business owner. But what if they can’t provide enough benefit?

This concern transitions us to Kai-Zen which is a strategy you can use to leverage business owner dollars. Take a look at a quick video on this very concept from Grace Bernard from NIW:

Interested in more information? Contact the Life Sales team at Asset Marketing for more information at 888-303-8755.

Also, E-mail to request your Allianz Life Business Insurance Kit!

*Business Insider

Tax Season is Here!

Josh Ver Hoeve – VP Annuity & Life Distribution

It’s that time of year again — TAX season. As many of you are working with clients, you may have gotten comments about tax refunds being less than expected. After all, taxes were reduced, and deductions increased, so shouldn’t refunds be larger? Well, tax refunds are only down eight percent on average this year ( However, I think we all seem to be hearing about those cases in which certain individuals were hit harder. The three most popular reasons for lower refunds are; 1st the loss of a $4,100 personal exemption, 2nd limits on state and property tax deductions, and 3rd, perhaps the most substantial impact, more money in your paycheck with adjusted withholdings.

Conventional financial wisdom from many CPAs and financial planners advises clients to stash more away into tax-deferred accounts like IRAs and 401(k)s to solve an immediate tax issue, sometimes ignoring what those same tax savings today will cost in the future. Perhaps we need to see tax rates go back to 80+% like they were sixty years ago before people start saving for retirement differently.

We are currently over $22 trillion in debt. A pretty interesting website along with videos depicting that debt can be found at To give us perspective, we have doubled our national debt in just the last ten years, and have tripled it in the last fifteen years. In the year I was born, 1982, we were just under $1 trillion of debt, and we are now 22 times that amount! Plain and simple, taxes have to go up at some point, and we might all agree that they’re not only on sale today, but actually predictable right now.

A typical 50-year-old saving for a retirement age of 67 will gamble with 401(k) contributions in hopes that the tax rate is lower in twenty years when they access the cash. Of course one of the unique investments that works unlike anything else is cash value life insurance. We can pay that tax now, and take it tax-free at retirement. While IUL is an amazing product, the IUL industry is spinning right now. We had a major regulation put into place about three years ago requiring us to show clients specific RORs and specific loan arbitrage. At first glance, these regulations made sense. They made sense to me and everyone else who thought a 10% ROR on an IUL illustration was absurd. However, the regulation Actuarial Guideline 49 (AG49) has had the opposite effect.

Insurance carriers are simply revising products to illustrate at 6-7% which seems reasonable, but they have added crediting bonuses and increased fees. Don’t get me wrong, crediting bonuses are great, but it’s starting to get out of hand. To pay for many of these bonuses, fees and costs on IUL have nearly doubled and tripled. In addition to insurance carriers trying to outpace regulations, we have new CSO tables which must be used for ALL life insurance products. What this means is clients are living longer, and because of that, every insurance carrier must revise or create new products using the updated mortality tables. The deadline for this is 01/01/2020 so we will see a plethora of new products come out this year in the life insurance space. The effect will be different for each type of life insurance. We would assume everything should be less expensive. However reserve requirements have also increased, so even though people are living longer, premiums will go up for most policies.

Asset’s life team will work diligently to keep you informed as this happens. We’re committed to vetting out products thoroughly before recommending them to you. Life insurance is a long-term commitment, sometimes as long as 30, 40 or even 50+ years. For this reason, it’s vitally important to make sure the products we recommend are not just the best today or a year from now, but even more important that they stand the test of time. Allianz, National Life Group, and Minnesota Life have been core carriers for us on the IUL side, and they have all held true to their promises. You won’t get a product recommendation from Asset because the cap is high today when we know that same cap rate is just as important year after year. The Asset life team spends a tremendous amount of time understanding carrier pricing and product development to assure the best solutions.

Back to taxes…have you used the Planning Compass with a client before? Do you know what the Planning Compass is? This tool compares all of the statistics discussed above to determine which product makes the best sense to use when saving for retirement. It’s a dynamic calculator that compares cash value life insurance with tax-deferred accounts. Start by filling out the Request Form then call our life team to schedule a thirty-minute phone/web call with us to show you the power of this tool.

There is over $2.5 trillion in IRA assets in the United States, and when I speak with advisors, they all tend to agree with me that taxes are on sale and the future holds tax increases. If we can agree on that, how about we all do our clients a favor and take some of that $2.5 trillion in IRA assets and convert them to a Roth IRA. Contact our annuity team at 888-303-8755 to tell you about Fixed Indexed Annuities that work well with Roth conversions! If you missed Kurt Metcalfe’s breakout at Sales & Networking on “Annuity Product Niches” which includes these “Roth-friendly” annuities, you need to hear it.

Taxes are inevitable, so let’s do all we can to protect the retirement incomes of our clients from them!

Add Value with the QCD conversation.

Sam Payne RICP®, CLTC VP, Business Consultant

Referrals, the holy grail of any enterprise, are a byproduct of providing exceptional service and value to your existing clients. So much so that they want to share you with their friends and acquaintances, and so you become referable.

Informing and educating your clients about Qualified Charitable Distributions (QCD) and the benefits of using them while filling out their tax forms, I believe is one of those opportunities to add value. The more value you add, you more likely you will become more referable.

What is a QCD? QCD have been around in some form since the Pension Protection Act in 2006. Their value changed as a result of the Tax Cuts and Jobs Act of 2015. And under current tax law, they can provide an additional benefit for tax years 2018 through 2025. Before 2018, the QCD strategic importance lay primarily in the fact that it could help older taxpayers meet their philanthropic goals while also satisfying individual retirement account (IRA) required minimum distributions (RMDs).

Since the passage of the Tax Cuts and Jobs Act of 2017, and the increase in the standard deduction, many individuals find themselves in a position where their total itemized deductions do not exceed the standard deduction, so deducting charitable contributions will not have the benefit it may have previously.

Here’s an example: For the 2018 tax year, a couple plan to file jointly. They are both age 75 and anticipate adjusted gross income (AGI) of $125,000, including $60,000 in RMDs.

  • $125,000 total income (including 60,000 RMD)
  • Standard deduction $26,600
  • Charitable gift $5,000
  • Taxable income $98,400 ($125,000 minus standard deduction)

If the QCD were utilized, the taxable income would be $93,400 saving approximately $1,100 in taxes.

Let’s try and make this a little easier. What is a QCD in a nutshell? It is a section of the tax code designed to help older Americans fulfill their charitable wishes directly from an IRA.

What does it do? It allows individuals who are required to receive required minimum distributions from IRA’s to have their, or some portion of their RMD, sent directly to the charity so that the RMD does not show up as income on the individual’s tax return.

What does that mean? You can still make your charitable donations, and by using the QCD, you may be able to save some taxes along the way.

Reach out to your Business Consultant for more information on QCD, the rules, and limitations. You can also begin talking to your clients currently receiving RMDs. Start the conversation by asking if they are giving to a charity annually and if they are utilizing the QCD?

This is one of many ways to add value to your clients and become more referable. We have a great brochure, “A Guide On How To Gain Clients Through Effective Referral Process,” that shares other ideas to attract more referrals.

Reach out to your Marketing Consultant with any questions and on how you can get started at (858) 303-8755.

The Roth Revolution

Bruce Beaty MBA,CLU, ChFC, RICP, LACP, CSA – VP, Business Consultant

As a planning tool, Roth IRAs have many advantages including the ability to create tax-free growth, income, and death benefits as articulated in David McKnight’s book, “The Power of Zero.”

Roth IRA contributions are limited based on earned income and include a phase-out range depending on one’s tax status:

  • Single $122,000-$137,000
  • Joint $193,000-$203,000

However, Roth conversions are available to all, and while a conversion will increase this year’s taxable income, many experts agree that income taxes are “on sale,” including industry guru and CPA, Ed Slott.

Some clients may have more flexibility in controlling their taxable income than others in any given year, including clients with other tax-free options like existing Roths, cash value life insurance, as well as business owners. These individuals can reduce their taxable income without affecting their lifestyle, and create a taxable income vacuum. (This creates room in their tax bracket to conduct a conversion without increasing their marginal rates to excessive levels.)

Every one of your clients has the opportunity to consider a conversion and for many that may make a lot of sense to do now and for the next several years under the current tax structure.

Here is an example:
Consider an example of a married couple age 65+ filing jointly with $30,000 of Social Security as their base income and $3,300,000 or less in retirement accounts.

Note: 2019 standard deduction (65+ joint) = $27,000

Income: Fed Tax: Taxable:
Social Security 30,000 X85% 25,500
IRA & Other 166,100 166,100
Total 196,100 191,600
Standard Deduction -27,000
Net Taxable 164,600
(10% bracket – Max 19,400) 19,400 X10% 1,940
(12% bracket – Max 78,950) 59,550 X12%
(22% bracket – Max 168,400) 85,650 X22%
Total 27,929 = 14%

With a life expectancy of 20 years, your client can use or transfer from their retirement accounts up to $166,100 per year or $3,322,000 at 14% income tax.

The Bottom Line?

With the premium bonus options available some up to 12-13% (and even one year in the fixed bucket), your clients can be made whole from the tax impact in as short as one year, and now they have the ability to
capitalize on all the benefits of a Roth IRA. Some producers also like to use a large income rider bonus solution for clients. Besides, who doesn’t like the sound of tax-free income for life and a tax-free death benefit to boot?

Contact our Asset Marketing Systems Team to explore the best options for your clients today at 888-303-8755.

-Bruce Beaty

VP/ Business Consultant