Roth Conversion Might Make Sense If...

Roth Conversion Might Make Sense If...

• During retirement the policyowner will be in a higher
tax bracket.
If the policyowner is in a lower tax bracket today than they
expect to be in during retirement, then Roth conversion may
be a good option.
• The policyowner wants to leave heirs with a tax-free inheritance.
As long as the money is in a Roth IRA for 5 years, if the owner
dies, the premium paid and the interest earned will be passed
on to beneficiaries tax-free. In addition, many people who
receive a traditional IRA death benefit take the amount over
a number of years to avoid a large tax hit all at one time. This
is not an issue with a Roth IRA – they can receive the entire
amount at one time with no tax consequences.
• A surviving spouse will need an income source that will not impacted by the higher tax rate of fling single.
When a spouse dies, the single tax status of the surviving
spouse may increase the amount of taxes due. As a result, income they receive may be taxed at a higher level, thus leaving
less income for the surviving spouse and potentially lowering
their standard of living. With a tax-free Roth IRA, the surviving
spouse can more efciently manage their tax situation.
• The policyowner needs an income stream that is tax-free maintain their standard of living while not paying taxes social security.
Income received from a Roth IRA is not taxable income and not included in the Social Security calculation. As a result, income
from the Roth IRA does not result in Social Security income
becoming taxable. Please note that if they are currently receiving
income from social security, the conversion could result in a assessment on that income in the year of the conversion.