Brian Manderscheid Highlighted in Broker World Magazine
As clients prepare to meet with their financial advisors on planning strategies for the new year, this is the perfect opportunity to discuss how to potentially reduce their future tax obligations with a concept called, Strategic Roth IRA conversions.
Over the past year we witnessed the National debt surpass $31 trillion dollars with record government spending and deficits. Not only has our nation’s debt gone up substantially, so have interest rates which compounds the problem. With no end in sight in reckless government spending, or a chance of a balanced budget, the tax risk your clients face will likely get worse not better.
Fortunately, we can have a retirement tax escape hatch which your clients can utilize to avoid a ticking tax time bomb on their retirement accounts.
It’s no secret that, given the choice, your clients would rather have tax free growth, distribution and transfer than taxable benefits at potentially higher tax rates. Everyone wants a Roth IRA conversion, but simultaneously no one wants to pay the upfront taxes.
What if you could provide your clients up to three discounts on Strategic Roth IRA conversion taxes?
If structured correctly, your clients can use this strategy to enjoy tax-free income in retirement, leave a tax-free legacy to their kids and grandchildren while also minimizing their upfront Roth IRA conversion tax obligations.
The three potential discounts are the 1) tax rate discount; 2) market value discount; and, lastly, 3) tax base discount. First, let’s talk about the tax rate discount.
With the Tax Cuts and Jobs Act sunsetting in 2026, we’re in a unique situation where we know that tax rates will be increasing in 2026 for most clients. The way to paint this picture is by reminding them that they are going to go to bed December 31st, 2025, on New Year’s Eve and wake up the next morning on New Year’s Day, January 1st, 2026, owing more taxes.
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