Welcome!
Retirement Account
Optimization
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• Today’s program will be about 1 hour
• Hold questions until the end of the
workshop
FREE information
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FREE dinner
So what’s the catch?
RELAX
I am not going to ask you to buy anything
or sign anything today.
My hope is that you will find
this information useful and
interesting enough to invite
me for a more personal visit
together.
There are no costs to you for our
personal meetings together.
Not a fee based planner.
If you implement some of my
recommendations, I am
compensated by companies
you choose to work with.
What if I have another planner?
We are often asked to review existing
plans for confirmation or suggestions.
If you like our ideas or suggestions, we
ask that you do that work with us.
In today’s presentation, we are going to
study the past as well as look into the
future.
The GOAL?
Protect and Preserve your retirement
account against two factors that I believe
will alter everyone’s financial future.
Give me your
feedback!
Evaluation
Form
How is this for an idea?
Retirement without taxes!
The Retirement Account
Optimization Strategy
Roth IRA
Perhaps the most important
strategic tax planning tool in
America
Created by Senator William Roth
Taxpayer Relief Act of 1997
Senator William Roth
Deceased December 13, 2003
Roth IRA
It is possible for you, your spouse
and your heirs to enjoy a lifetime of
federal income tax-free benefits
Created by Senator William Roth
Taxpayer Relief Act of 1997
Senator William Roth
Deceased December 13, 2003
Roth IRA
Treasury
Publication
590
Senator William Roth
Deceased December 13, 2003
Roth IRA
“A Roth IRA is Page 59
an individual
retirement
plan…It can be
either an
account or an
annuity.”
Senator William Roth
Deceased December 13, 2003
Roth IRA
“…if you Page 59
satisfy the
requirements,
qualified
distributions
are tax free.”
Senator William Roth
Deceased December 13, 2003
Roth IRA
Page 64
“You can
convert a
traditional
IRA to a
Roth IRA.”
Senator William Roth
Deceased December 13, 2003
Roth IRA
“You can Page 59
leave
amounts in
your Roth
IRA as long
as you live.”
Senator William Roth
Deceased December 13, 2003
Roth IRA Contributions
Unlike traditional IRAs
contributions can be made to a
Roth IRA even after you reach
age 70 ½.
Treasury Publication 590 (page 58). Ultimate IRA Resource by Tax Facts 2004.
Publication
590
Request a
copy!
The Retirement Account Optimization
Strategy
Today, we are going to explore an
approach to help you evaluate if it is
possible and advantageous for you to
convert your existing traditional retirement
account into a Roth IRA.
IRA Roth
Taxable Tax
Free*
* Certain conditions must be met to qualify
Your traditional retirement account
Are you looking forward to the day when
you will be able to withdraw funds from
your IRA at a lower tax rate?
IRA Roth
Taxable Tax
Free*
* Certain conditions must be met to qualify
Your traditional retirement account
Do you think that day will ever come when
you can pull money from your IRA and pay
at a lower tax rate?
IRA Roth
Taxable Tax
Free*
* Certain conditions must be met to qualify
Your traditional retirement account
Do you believe taxes will be HIGHER or
LOWER in the future for you and your
family?
IRA Roth
Taxable Tax
Free*
* Certain conditions must be met to qualify
Your traditional retirement account
The reason I ask these questions is that if
taxes are going to be LOWER in the future,
it might be beneficial for you to remain in a
traditional IRA.
IRA Roth
Taxable Tax
Free*
* Certain conditions must be met to qualify
Tax Pressure on the System
Let’s examine the facts from…
Congressional Budget Office
Social Security Administration
Census Bureau
Leading Experts
Forces are already in motion
that will dramatically change
the American way of life and
the choices we will all need to
make in the future.
Tax Pressure on the System
Let’s examine the facts from…
Congressional Budget Office
Social Security Administration
Census Bureau
Fortunately, with proper
Leading Experts
planning and knowledge, we
can prepare in advance and
significantly improve our
retirement as well as positively
impact the people and things
we care about most.
Tax Pressure on the System
• Americans are living longer than ever before.
• For many, retirement will now last 20 to 30 years or longer.
• This fact has changed the face of Social Security.
80 -
US Life Expectancies
70 -
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
When Social Security was created normal life expectancy
was 63 to 64 years.
Retirement was expected to last 2 to 3 years.
80 -
US Life Expectancies
70 -
Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
At what age do you receive FULL Social Security Benefits?
80 -
US Life Expectancies
70 -
65 Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
Only those folks who lived beyond normal life expectancy
would receive benefits and likely for only a few of years.
80 -
US Life Expectancies
70 -
65 Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
Today, nearly every American expects to receive Social
Security benefits for a much greater period.
80 -
US Life Expectancies
70 -
65 Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
Instead of 2 to 3 years in retirement, many Americans may
spend 2 to 3 decades in retirement!
This increases the obligation on Social Security.
80 -
US Life Expectancies
70 -
65 Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
The challenge is compounding as record numbers of people
begin receiving benefits. The first “baby boomer” began
receiving benefits in 2007.
80 -
US Life Expectancies
70 -
65 Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
There are over 70 million baby boomers.
According to the Congressional Budget Office, in 2020
Social Security will begin paying out more than it takes in.*
80 -
US Life Expectancies
70 -
65 Social Security (1934)
60 -
*Congressional
Budget Office 2005
Testimony.
Statement of
Douglas Holtz-
Eakin, Director,
1929 2002 Page 5)
Source: US Census Bureau
Tax Pressure on the System
How will Congress Address this challenge?
Reduce benefits?
Increase taxes?
A combination of the both?
80 -
US Life Expectancies
70 -
Social Security (1934)
60 -
1929 2002
Source: US Census Bureau
Tax Pressure on the System
It turns out that Social Security is not the largest financial
challenge facing the US government.
Medicare & Medicaid
*Congressional
Budget Office 2005
Testimony.
Statement of
Douglas Holtz-
Eakin, Director,
2050 Page 5)
Source: US Census Bureau
Tax Pressure on the System
By 2050, the cost of Medicare and Medicaid programs
will expand to an amount, “…which is roughly the
current size of the entire federal budget”
Entire Federal
Medicare & Medicaid Budget
*Congressional
Budget Office 2005
Testimony.
Statement of
Douglas Holtz-
Eakin, Director,
2050 Page 5)
Source: US Census Bureau
Tax Pressure on the System
This extraordinary growth increases the government’s
appetite for more tax revenue.
Entire Federal
Medicare & Medicaid Budget
*Congressional
Budget Office 2005
Testimony.
Statement of
Douglas Holtz-
Eakin, Director,
2050 Page 5)
Source: US Census Bureau
Tax Pressure on the System
It is already in the
news…
“The price you will
pay to save social
security and
medicare”
Source: Money Magazine, October 2008
Tax Pressure on the System
Troubled Asset Relief Program (TARP)
“THE BAILOUT”
Just how big is it?
$700 Billion?
Tax Pressure on the System
Troubled Asset Relief Program (TARP)
“THE BAILOUT”
That is not the end of the story…
$700 Billion?
“...the Fed (Federal Reserve) now owns or
finances $1.7 trillion in private sector
assets.”
Source: Michael Cemblast, CIO for JP Morgan Private Client Bank
Eye on the Market, October 3, 2008
Tax Pressure on the System
“Should another few hundred billion be drawn…the
Fed would be the largest private sector bank in the
United States”
$700 Billion?
$1,700 Billion
Source: Michael Cemblast, CIO for JP Morgan Private Client Bank
Eye on the Market, October 3, 2008
Tax Pressure on the System
The Federal Deposit Insurance Corporation (FDIC)
has also gotten into the act…
Deposit guarantees have been increased from
$100,000 to $250,000
Source: Michael Cemblast, CIO for JP Morgan Private Client Bank
Eye on the Market, October 3, 2008
Tax Pressure on the System
The Federal Deposit Insurance Corporation (FDIC)
has also gotten into the act…
“FDIC insurance fund is already below its statutory
minimum level, the safety net just got increased by 2.5
times, and there's no plan to pay for it.”
“The cost of future bank failures will be more
expensive and taxpayers will be on the hook for it.”
Source: Michael Cemblast, CIO for JP Morgan Private Client Bank
Eye on the Market, October 3, 2008
Tax Pressure on the System
IMPORTANT!
The FDIC will be able to pay its obligations as it
ALWAYS has.
You should not be afraid of bank failures if your
account is below the guaranteed ceiling.
Tax Pressure on the System
IMPORTANT!
The FDIC will be able to pay its obligations as it
ALWAYS has.
Congress can and will appropriate funds to allow the
FDIC to cover any guarantees.
What you should consider is if tax payer obligations
like this might increase income tax rates in the future.
Imagine your IRA no longer taxable
“YOU SIMPLY CANNOT
BEAT A
0%
TAX RATE ON
WITHDRAWALS!”
“The best source of IRA
Advice”
According to the Wall Street Journal Source: Parlay your IRA Into a Family Fortune by Ed Slott, CPA
Imagine your IRA no longer taxable
“I personally can't
wait to convert my
IRA.”
Source: The Money Book for the Young Fabulous & Broke by Suze Orman
Imagine your IRA no longer taxable
“Letting your
money compound
tax-free for decades
is an investor's
dream.”
Source: The Money Book for the Young Fabulous & Broke by Suze Orman
Roth IRA CONVERSION
The process of re-characterizing
your retirement account from a
taxable account to one that is
designated as federal income
tax free.
Roth IRA CONVERSION
Traditional Retirement Accounts
can be converted to a Roth IRA:
IRAs, Individual Retirement Annuities,
Tax Sheltered Annuities (403b), 401(k)s,
SEPs, SIMPLE IRAs, 457 Plans
Source: Treasury Publication 590, Page 64
Learn more
about Roth
IRA
Re-characterization
Roth IRA CONVERSION
So What’s The Catch?
Dollars within a traditional
retirement account have not always
been taxed.
Roth IRA CONVERSION
So What’s The Catch?
The untaxed dollars converted from a
Traditional Retirement Account to a
Roth IRA are generally taxable as
ordinary income in the year of the
conversion.
Roth IRA CONVERSION
For Example: $100,000 IRA
25% Marginal Tax Rate
$25,000
Owed to IRS*
$100,000
IRA
Taxable
* Assumes full liquidation of retirement account.
**Certain conditions must be met to qualify
Roth IRA CONVERSION
For Example: $100,000 IRA
25% Marginal Tax Rate
$25,000
Owed to IRS*
$75,000
IRA
After
Taxes * Assumes full liquidation of retirement account.
**Certain conditions must be met to qualify
Roth IRA CONVERSION
For Example: $100,000 IRA
25% Marginal Tax Rate
$25,000 $25,000
Owed to IRS*
Tax
To Convert Roth IRA
$75,000
$100,000
$75,000
IRA
Income
After
Taxable Tax
Taxes * Assumes full liquidation of retirement account.
Free**
**Certain conditions must be met to qualify
A typical Roth IRA CONVERSION
For Example: $100,000 IRA
Will tax rates be
higher in the future? 25% Marginal Tax Rate
$25,000 $25,000
Owed to IRS*
Tax
To Convert Roth IRA
$75,000
$100,000
$75,000
IRA
Income
After
Taxable Tax
Taxes * Assumes full liquidation of retirement account.
Free**
**Certain conditions must be met to qualify
A typical Roth IRA CONVERSION
For Example: $100,000 IRA
Will tax rates be
higher in the future? 25% Marginal Tax Rate
$25,000
Owed to IRS*
Roth IRA
Do I want to avoid Required
$75,000
$100,000
Minimum Distributions in the
$75,000
IRA future?
Income
After
Taxable Tax
Taxes * Assumes full liquidation of retirement account.
Free**
**Certain conditions must be met to qualify
A typical Roth IRA CONVERSION
If you answer “YES” to
Will tax rates be
higher in the future? one or both of these
questions
Converting
retirement
your $75,000 Roth IRA
Do I want to avoid Required
account to a Minimum Distributions in the
$75,000
IRA future?
Roth IRA may Income
After
be appropriate Tax
Taxes * Assumes full liquidation of retirement account.
Free**
**Certain conditions must be met to qualify
Roth IRA
“You can Page 59
leave
amounts in
your Roth
IRA as long
as you live.”
Senator William Roth
Deceased December 13, 2003
Impact of Required Minimum Distributions vs. Roth IRA with No Distributions
70 Year Old - $112,486 IRA (25% marginal tax rate) – 5.0% Yield
Age Traditional IRA Required Value Net of Roth IRA Roth IRA
Distributions Taxes Advantage
70 $115,762 $4,224 $86,821 $86,821 $0
71 $117,115 $4,419 $87,836 $91,162 $3,326
72 $118,331 $4,622 $88,748 $95,721 $6,972
73 $119,394 $4,833 $89,546 $100,507 $10,961
74 $120,289 $5,054 $90,217 $105,532 $15,315
75 $120,997 $5,283 $90,748 $110,809 $20,060
76 $121,500 $5,522 $91,125 $116,349 $25,224
77 $121,777 $5,744 $91,332 $122,167 $30,834
78 $121,834 $6,001 $91,376 $128,275 $36,899
79 $121,625 $6,236 $91,219 $134,689 $43,470
80 $121,159 $6,478 $90,869 $141,423 $50,554
81 $120,415 $6,726 $90,311 $148,494 $58,183
Source: Brentmark Software Pension Distribution Planner ver. 6.34. “Traditional IRA” column illustrates hypothetical IRA value without tax impact. Table
assumes no tax rate increase. If future tax rates are higher, the Roth IRA Advantage would be even greater. “Value Net of Taxes” column assumes full
liquidation of IRA to illustrate hypothetical tax obligation. * Net of taxes.
Impact of Required Minimum Distributions vs. Roth IRA with No Distributions
70 Year Old - $112,486 IRA (25% marginal tax rate) – 5.0% Yield
Age Traditional IRA Required Value Net of Roth IRA Roth IRA
Distributions Taxes Advantage
70 $115,762 $4,224 $86,821 $86,821 $0
71 $117,115 $4,419 $87,836 $91,162 $3,326
72 $118,331 $4,622 $88,748 $95,721 $6,972
73 $119,394 $4,833 $89,546 $100,507 $10,961
74 $120,289 $5,054 $90,217 $105,532 $15,315
75 $120,997 $5,283 $90,748 $110,809 $20,060
76 $121,500 $5,522 $91,125 $116,349 $25,224
77 $121,777 $5,744 $91,332 $122,167 $30,834
78 $121,834 $6,001 $91,376 $128,275 $36,899
79 $121,625 $6,236 $91,219 $134,689 $43,470
80 $121,159 $6,478 $90,869 $141,423 $50,554
81 $120,415 $6,726 $90,311 $148,494 $58,183
Source: Brentmark Software Pension Distribution Planner ver. 6.34. “Traditional IRA” column illustrates hypothetical IRA value without tax impact. Table
assumes no tax rate increase. If future tax rates are higher, the Roth IRA Advantage would be even greater. “Value Net of Taxes” column assumes full
liquidation of IRA to illustrate hypothetical tax obligation. * Net of taxes.
Impact of Required Minimum Distributions vs. Roth IRA with No Distributions
70 Year Old - $112,486 IRA (25% marginal tax rate) – 5.0% Yield
Age Traditional IRA Required Value Net of Roth IRA Roth IRA
Distributions Taxes Advantage
70 $115,762 $4,224 $86,821 $86,821 $0
71 $117,115 $4,419 $87,836 $91,162 $3,326
72 $118,331 $4,622 $88,748 $95,721 $6,972
73 $119,394 $4,833 $89,546 $100,507 $10,961
74 $120,289 $5,054 $90,217 $105,532 $15,315
75 $120,997 $5,283 $90,748 $110,809 $20,060
76 $121,500 $5,522 $91,125 $116,349 $25,224
77 $121,777 $5,744 $91,332 $122,167 $30,834
78 $121,834 $6,001 $91,376 $128,275 $36,899
79 $121,625 $6,236 $91,219 $134,689 $43,470
80 $121,159 $6,478 $90,869 $141,423 $50,554
81 $120,415 $6,726 $90,311 $148,494 $58,183
Source: Brentmark Software Pension Distribution Planner ver. 6.34. “Traditional IRA” column illustrates hypothetical IRA value without tax impact. Table
assumes no tax rate increase. If future tax rates are higher, the Roth IRA Advantage would be even greater. “Value Net of Taxes” column assumes full
liquidation of IRA to illustrate hypothetical tax obligation. * Net of taxes.
Impact of Required Minimum Distributions vs. Roth IRA with No Distributions
70 Year Old - $112,486 IRA (25% marginal tax rate) – 5.0% Yield
Age Traditional IRA Required Value Net of Roth IRA Roth IRA
Distributions Taxes Advantage
70 $115,762 $4,224 $86,821 $86,821 $0
71 $117,115 $4,419 $87,836 $91,162 $3,326
72 $118,331 $4,622 $88,748 $95,721 $6,972
73 $119,394 $4,833 $89,546 $100,507 $10,961
74 $120,289 $5,054 $90,217 $105,532 $15,315
75 $120,997 $5,283 $90,748 $110,809 $20,060
76 $121,500 $5,522 $91,125 $116,349 $25,224
77 $121,777 $5,744 $91,332 $122,167 $30,834
78 $121,834 $6,001 $91,376 $128,275 $36,899
79 $121,625 $6,236 $91,219 $134,689 $43,470
80 $121,159 $6,478 $90,869 $141,423 $50,554
81 $120,415 $6,726 $90,311 $148,494 $58,183
64% MORE*
Source: Brentmark Software Pension Distribution Planner ver. 6.34. “Traditional IRA” column illustrates hypothetical IRA value without tax impact. Table
assumes no tax rate increase. If future tax rates are higher, the Roth IRA Advantage would be even greater. “Value Net of Taxes” column assumes full
liquidation of IRA to illustrate hypothetical tax obligation. * Net of taxes.
Eliminating
Required
Minimum
Distributions
Age Traditional IRA Required Value Net of Roth IRA Roth IRA
Distributions Required
Taxes Advantage
70 $115,762 $4,224 $86,821 $86,821 $0
71 $117,115 $4,419 Distributions from
$87,836 $91,162 $3,326
72
73
$118,331
$119,394
$4,622
$4,833
a traditional $10,961
$88,748
$89,546
$95,721
$100,507
$6,972
74 $120,289 $5,054 retirement account
$90,217 $105,532 $15,315
75 $120,997 $5,283 $90,748 $110,809 $20,060
76 $121,500 $5,522 may increase the
$91,125 $116,349 $25,224
77
78
$121,777
$121,834
$5,744
$6,001
taxes you pay $30,834
$91,332
$91,376
$122,167
$128,275
on
$36,899
79 $121,625 $6,236 your Social $43,470
$91,219 $134,689
80 $121,159 $6,478 $90,869 $141,423 $50,554
81 $120,415 $6,726 Security Benefits
$90,311 $148,494 $58,183
Source: Brentmark Software Pension Distribution Planner ver. 6.34. “Traditional IRA” column illustrates hypothetical IRA value without tax impact. Table
assumes no tax rate increase. If future tax rates are higher, the Roth IRA Advantage would be even greater. “Value Net of Taxes” column assumes full
liquidation of IRA to illustrate hypothetical tax obligation. * Net of taxes.
“Threshold” or “Provisional” Income
SINGLE MARRIED
• 85%
34,000+ 44,000+ • Taxable
25,000 32,000 • 50%
to 34,000 to 44,000 • Taxable
25,000 32,000 • Not
& under & under • Taxable
Source: Social Security Administration
Age Traditional IRA Required Value Net of Roth IRA Roth IRA
70 $115,762
Distributions
$4,224
Distributions
Taxes
$86,821 $86,821
Advantage
$0
71
72
$117,115
$118,331
$4,419
$4,622
from a ROTH
$87,836
$88,748
$91,162
$95,721
$3,326
$6,972
73
74
$119,394
$120,289
$4,833
$5,054
IRA do not
$89,546
$90,217
$100,507
$105,532
$10,961
$15,315
75
76
$120,997
$121,500
$5,283
$5,522
increase your
$90,748
$91,125
$110,809
$116,349
$20,060
$25,224
77
78
$121,777 $5,744 taxes on Social
$91,332
$91,376
$122,167
$128,275
$30,834
$36,899
$121,834 $6,001
79 $121,625 $6,236 Security
$91,219 $134,689 $43,470
80 $121,159 $6,478 $90,869 $141,423 $50,554
81 $120,415 $6,726 benefits.
$90,311 $148,494 $58,183
Treasury Publication 590 (Page 65) and Appendix B Worksheet (Page 83)
Reducing
potential taxes
on Social
Security
benefits
A typical Roth IRA CONVERSION
Do I want to avoid the
“TAX BURDEN”
being passed onto my
beneficiaries?
Qualified
Roth IRA distributions to
beneficiaries are not
taxable
Page 68 “Generally, the entire
interest in the Roth
IRA must be
distributed by the end
of the 5th calendar
year after the year of
the owner’s death.”
Qualified
Roth IRA distributions to
beneficiaries are not
taxable
Page 68 “If paid as an annuity,
the entire interest
must be payable over
a period not greater
than the designated
beneficiary’s life
expectancy...”
Qualified
Roth IRA distributions to
beneficiaries are not
taxable
Page 68 This means the
beneficiary can
“STRETCH” their
Roth IRA benefits
over their lifetime on
an income tax free
basis!
Roth IRA STRETCH
Current Roth IRA Account Value:
$100,000
Interest rate: 5.0%
Roth IRA Owner Age: 65
Spouse Age: 65
Beneficiaries: Son, age 43 (50%)
Grandson, age 16 (50%)
Source: Brentmark Software Pension Distribution Planner ver. 6.34. Assumes owner and spouse make no distributions from Roth IRA.
Roth IRA STRETCH
ROTH Federal
Roth IRA Account Value:
$843,495 Income Tax-Free!
$100,000
Source: Brentmark Software Pension Distribution Planner ver. 6.34. Assumes owner and spouse make no distributions from Roth IRA. Beginning
balance $100,000. Assumed interest rate is 5.0%. Owner is 65, Spouse is 65, Beneficiaries are 43 years old (50%) and 46 years old (50%).
Traditional Stretch IRA
ROTH Federal
Using a traditional IRA
and the same $843,495 Income Tax-Free!
assumptions
$397,464 in IRA
Distributions
$298,098 Value
After Taxes
$100,000
Source: Brentmark Software Pension Distribution Planner ver. 6.34. Assumes owner and spouse make no distributions from Roth IRA. Beginning
balance $100,000. Assumed interest rate is 5.0%. Owner is 65, Spouse is 65, Beneficiaries are 43 years old (50%) and 46 years old (50%). 25%
Marginal Tax Rate.
The ROTH Advantage
ROTH Federal
$843,495 Income Tax-Free!
That’s 283% $397,464 in IRA
more money Distributions
net of taxes! $298,098 Value
After Taxes
Source: Brentmark Software Pension Distribution Planner ver. 6.34. Assumes owner and spouse make no distributions from Roth IRA. Beginning
balance $100,000. Assumed interest rate is 5.0%. Owner is 65, Spouse is 65, Beneficiaries are 43 years old (50%) and 46 years old (50%). 25%
Marginal Tax Rate.
Leaving a
Federal
Income Tax-
Free Legacy
Now that we have examined the
basics of ROTH IRA Conversion
Let’s evaluate the
The Retirement Account
Optimization Strategy
Retirement Account Optimization
• Recover a portion of the tax cost from
conversion on a tax-free basis
• Evaluate optimal conversion method
• Convert from a Traditional to a Roth IRA
• Protect assets from Market Volatility
Retirement Account Optimization
• Recover a portion of the tax for conversion
Certain deferred annuities pay an up front bonus
on funds you place in the annuity.
For example: $100,000
10% Bonus: $ 10,000
Beginning Value: $110,000
Conversion Evaluation
Option One: $100,000 IRA
25% Marginal Tax Rate
$82,500 Starting
$25,000 $25,000 Value
Owed to IRS* 10% Bonus! $7,500
Tax
To Convert Roth IRA
$75,000
$100,000
$75,000
IRA
Income
After
Taxable Tax
Taxes * Assumes full liquidation of retirement account.
Free**
**Certain conditions must be met to qualify
Optimal Conversion
Option Two: $100,000 IRA
$110,000
25% Marginal Tax Rate Starting Value
10% Bonus! $10,000
$25,000 $25,000
Owed to IRS*
Tax Roth IRA
paid from another $100,000
$75,000
$100,000 source of funds
Income
IRA Tax
Taxable
After Free**
Taxes * Assumes full liquidation of retirement account.
**Certain conditions must be met to qualify
Optimal Conversion
Benefit after of Taxes: $35,000
$110,000
Cost of Conversion: $25,000 Starting Value
Net Benefit Day One: $10,000 10% Bonus! $10,000
$25,000
Owed to IRS* Roth IRA
Annuity
$75,000
$100,000 $100,000
IRA Income
Tax
After
Taxable Free**
Taxes * Assumes full liquidation of retirement account.
**Certain conditions must be met to qualify
Optimal Conversion
Benefit net of Taxes: $35,000
$110,000
Cost of Conversion: $25,000 Starting Value
10% Bonus! $10,000
Optimal Sources to Pay Tax
Assets that have already paid income Roth IRA
taxes (Non-Qualified Money) Annuity
CDs - Excess Funds in Checking $100,000
Money Market Funds - Savings Income
Poorly Performing Investments Tax
Free**
Poorly Performing Real Estate
Learn more
about your
optimal
conversion
strategy
Imagine your IRA no longer taxable
“Letting your
money compound
tax-free for decades
is an investor's
dream.”
Source: The Money Book for the Young Fabulous & Broke by Suze Orman
Imagine your IRA no longer taxable
$179,178
10 Years
“Letting your
money compound
tax-free for decades Federal
Income Tax
is an investor's Free Growth
dream.”
$110,0000
5% Yield
Source: The Money Book for the Young Fabulous & Broke by Suze Orman
Roth IRA Optimization
• Recover a portion of the tax cost from
conversion on a tax-free basis
• Evaluate optimal conversion method
• Convert from a Traditional to a Roth IRA
• Protect assets from Market Volatility
Protect Assets from Market Volatility
$147,745
5%
$100,000 $90,345
Difference
$57,400
42.6%
Loss in
8 Years
Source: www.finance.yahoo.com. S&P 500 Index (2000 to Nov. 18, 2008). Assumes traditional IRA is converted in 2000 and taxes paid
from another non-qualified source.
Getting a Bonus
$162,520
5%
$110,000 $105,120
Difference
$57,400
42.6%
Loss in
8 Years
Source: www.finance.yahoo.com. S&P 500 Index (2000 to Nov. 18, 2008). Assumes traditional IRA is converted in 2000 and taxes paid
from another non-qualified source. 10% Annuity Premium Bonus
Guarantee
growth and
reduce market
volatility
Retirement Account Optimization
Strategy
Implementation:
This strategy is accomplished by working
together to evaluate your personal
situation.
Not all products are appropriate for all
people.
Retirement Account Optimization
Strategy
Implementation:
When we do meet…
“Do you think that you will spend most of the
money in your Retirement Account between
now and the time that you and your spouse
pass away?”
“YES”
“We do think we will spend
most of the money in our
Retirement Account during our
lives.”
Lifetime Guaranteed Income Plan
Lifetime Guaranteed Income Plan
75 Year old hypothetical example:
$100,000
Growing for 5-years
10.285% Annual cash flow return
$10,285
GUARANTEED for LIFE!
Guarantee a
lifetime of
income
“NO”
“We do not anticipate spending
most of the money in our
Retirement Account during our
lives.”
Wealth Transfer
Wealth Transfer
Hypothetical example:
$100,000
Growing for 10-years
$176,000
GUARANTEED Wealth Transfer
Guarantee
growth and
how to pass it
onto
beneficiaries
income tax-
free
If they “STRETCH” the ROTH
Roth IRA Account Value:
$843,495
ROTH IRA
Federal Income
Tax-Free!
$100,000
Source: Brentmark Software Pension Distribution Planner ver. 6.34. Assumes owner and spouse make no distributions from Roth IRA. Beginning
balance $100,000. Assumed interest rate is 5.0%. Owner is 65, Spouse is 65, Beneficiaries are 43 years old (50%) and 46 years old (50%).
STRETCH
Roth IRA
Concept
Any additional
comments are
greatly
appreciated!
Retirement Account Optimization
Strategy
Our Approach is Different
We will help you assess:
• Your current financial situation.
• Your tax status.
• Your personal goals and
objectives.
• Your risk tolerance.
• We may also consider other
information you provide.
Retirement Account Optimization
Strategy
It’s About Making Better Decisions
• Preserve the wealth you have worked so hard
to accumulate over the years.
• Reduce your exposure to unnecessary taxes.
• Reduce your exposure to unnecessary risk.
• Improve the income you are receiving on your
savings.
• Increase the amount of money you leave to
each other and to your heirs.
• Reduce the costs and delays associated with
the transfer of wealth to your heirs.
If you implement some of my
recommendations, I am
compensated by companies
you choose to work with.
Retirement Account Optimization
Strategy
The next step…
Request a
confidential review
Retirement Success
Free Consultation
Mr. Smith
Name__________________________________________
777-1234
Telephone#_____________________________________
X My preferred day/time for an appointment is:
Mon / Tue / Wed / Thu / Fri
2:00 AM/PM
Time:_______________
Thank You For Coming!
Retirement Account
Optimization
This is event is the primary way
my firm meets new customers.
Thank You For Coming!
Retirement Account
Optimization