ASF Insurance Agency
Your IRA Balance Is Only Part of the Retirement Picture
You may have spent decades building your IRA. Before deciding how to use it, consider how much will remain after taxes and what your family could receive. A staged Roth conversion can be worth exploring when retirement income and a legacy are both priorities. Adding an annuity introduces a separate decision about protection, growth limits, and access to your money.
How a Staged Roth Conversion Works
A Roth conversion moves assets from a traditional IRA into a Roth IRA. The taxable portion generally becomes ordinary income in the conversion year. Converting smaller amounts over several years can help coordinate that income with your broader tax situation. It does not eliminate the conversion tax.
The right schedule depends on your income, available cash, and retirement needs. A seven-year schedule is one possible design, rather than a requirement or a promise of a better outcome.
Where Annuities May Fit
An October 2026 Executive Capital Resources newsletter describes a design using three annuity accounts for early access, accumulation, and future lifetime income. Separating these goals can make a plan easier to evaluate, but three contracts are not necessary for every household.
A fixed indexed annuity may offer an interest-crediting floor and growth linked to an index. Caps, participation rates, and other contract terms limit credited interest. A zero-percent floor does not remove surrender charges, withdrawals, rider costs, or insurer risk. Registered index-linked annuities differ and can expose the owner to market losses.
An annuity inside an IRA provides no additional tax deferral beyond the IRA itself. Its insurance benefits must justify the costs and restrictions. Request a written explanation of guarantees, surrender values, income benefits, and any charges before committing.
Plan for the Conversion Tax Before Moving Money
Paying conversion taxes from retirement-account withdrawals preserves outside cash, but uses retirement assets. Those withdrawals may also be taxable, so the tax calculation must include them. Compare this approach with paying from outside funds and with a smaller conversion.
Do not assume that converting just before index interest is credited automatically freezes the taxable value. Obtain the insurer’s conversion valuation and have your tax advisor verify the reporting treatment.
Ask your CPA to model the effect on your tax bracket, Medicare premiums, state taxes, and other income-sensitive items. The payment plan matters as much as the conversion schedule.
What the Newsletter Illustration Actually Shows
The source newsletter presents a hypothetical case for a 65-year-old with a $3 million IRA using a 35% tax assumption. It lists $3,202,848 converted over seven years and $1,120,995 in conversion tax. Of that tax, $907,395 is described as funded from within the plan and $213,600 from outside funds.
These amounts illustrate a funding approach; they do not show that the tax disappears. The newsletter also projects substantially higher retirement income and inheritance values. The supplied document does not include enough underlying contract details and calculation assumptions to independently validate those outcomes, so those projections should not be treated as expected results.
Before relying on any comparison, request the full illustration. Check the assumed growth rates, timing of withdrawals, treatment of taxes, guaranteed versus non-guaranteed values, and whether both alternatives use comparable assumptions.
What Your Beneficiaries Need to Know
Many adult children who inherit an IRA must empty it by the end of the tenth year after the owner’s death. Traditional IRA distributions are generally taxable to the extent they represent pre-tax assets. Exceptions and annual distribution requirements can apply.
Inherited Roth IRA distributions are generally tax-free once the applicable five-year requirement is satisfied, but beneficiaries may still face the ten-year deadline. A Roth conversion changes potential income-tax treatment; it does not remove all inheritance rules or guarantee a larger legacy.
Questions to Review Before Choosing a Strategy
Start with the income you need and the cash you must keep accessible. Then compare keeping the traditional IRA, converting part of it, and converting over several years. Evaluate any proposed annuity separately.
Ask whether the plan remains workable with lower credited interest, higher taxes, an unexpected withdrawal, or a change in family needs. Confirm that lifetime income benefits and death benefits serve the goals you actually have. A strong design should remain understandable when the illustration changes.
Discuss Your Retirement Income and Legacy Goals
ASF Insurance Agency can help you explore annuity options and coordinate the insurance discussion with your tax and legal advisors. To discuss your goals with Avi Foox, call 732-798-0091 or contact ASF through the website.
This article is educational and is not personalized tax, legal, or investment advice. Product benefits depend on contract terms; guarantees depend on the insurer’s claims-paying ability. Qualified Roth distributions must meet applicable requirements. Hypothetical results are not guarantees.
Sources
Adapted from Executive Capital Resources Client and Advisor Newsletter October 2026.
IRS Publication 590-A: https://www.irs.gov/publications/p590a
IRS Publication 590-B: https://www.irs.gov/publications/p590b
SEC Investor.gov Annuities: https://www.investor.gov/introduction-investing/investing-basics/investment-products/annuities