The Roth Conversion Alternative

  • Originally published May 18, 2010 , last updated May 24, 2016

A Roth IRA conversion may be a great opportunity for some clients, but what about those who don't want to navigate the following concerns?

  • Additional taxable income associated with the Roth IRA conversion may drive some clients into a higher tax bracket
  • If your client uses traditional IRA assets to pay the tax, they may subject themselves to a 20 percent withholding and a 10 percent penalty
  • For a high-income client who expects to be in a lower tax bracket in retirement, it probably doesn't make sense to pay taxes on a conversion now at a higher rate, rather than pay taxes on withdrawals later
  • Roth funds must be left in place for five years or any gains are taxable, along with a 10 percent penalty if the client is under age 59 1/2.

Life Insurance could be the alternative these people are looking for. It has no income limits, no contribution limits, tax-deferred growth, access to money and increased wealth transfer capabilities.

Use with individuals 59 1/2 or older who:

  • Do not depend on IRA funds for retirement income
  • Do not want to be required to take distributions
  • Have a desire for increased wealth transfer at death
  • Believe that income taxes will be higher in the future

Contract with NACOLAH through Senior Market Sales and start selling the industry’s best lineup of universal life products.