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For Producer Use Only
SALES WEEK: A Set-and-Forget Solution for Ineligible Beneficiaries
INHERITED IRA SALES
A set-and-forget solution from EquiTrust
The passage of the Secure Act in 2020 changed the way Inherited IRAs are distributed to ineligible, non-spouse beneficiaries. It eliminated the “stretch IRA” provision for most non-spouse beneficiaries, meaning they can no longer “stretch” Inherited IRA withdrawals over a lifetime, but must follow a 10-year rule for taxation of the account.
What does that really mean for your clients?
Now, ineligible, non-spouse beneficiaries, regardless of whether the deceased Owner reached their Required Beginning Date (RBD) for Required Minimum Distributions (RMDs), will have to pay taxes on their Inherited IRA within 10 years after the original Owner's death, or face IRS penalties.
If you have clients in this position, that's where you — and EquiTrust — come in. Our Partial Tax Conversion can be a great solution to help them either satisfy their RMDs during the 10-year period or just convert and spread out the taxation over the 10 years.
Putting a Partial Tax Conversion (PTC) to work for your clients
You can help your clients who are ineligible beneficiaries lessen the amount of taxes paid in retirement by implementing a partial or systematic tax conversion of the Inherited IRA contract into a tax-deferred Non-Qualified contract over time. The new contract mirrors the original contract, except for the tax qualification, with the same:
Effective date
Client roles
Agent
Account allocations
Credited rates
Riders
A PTC is a set-it-and-forget-it way to spread out the taxation on the conversion over a number of years rather than waiting until the end of the 10th year and paying all the taxes at one time. Only the future gain will be taxed on distribution.
1. This is the benefit-base bonus applied only to the income rider value – not the contract’s Accumulation Value. Withdrawals before age 59½ may result in a 10% IRS penalty tax.
EquiTrust does not offer investment advice to any individual or agent/producer and this material should not be construed as investment advice. Products underwritten and issued by EquiTrust Life Insurance Company, West Des Moines, Iowa. Products distributed by EquiTrust Insurance Marketing Services; in California doing business as EQT Insurance Marketing Services.
