This bill will allow wealthy individuals holding a significant amount of money in their traditional IRA’s the ability to convert or roll-over that money to a Roth IRA starting in 2010. These conversions will then be taxed at that persons current tax rate with the remainder of the money placed in a tax-free accumulation and tax-free withdrawal Roth IRA. This option is a big plus for wealthy individuals wanting to save on paying taxes. The current options for a person who exceeds the income cap is to roll that money into a Traditional IRA annuity. The only downside is the annuitant will have to pay taxes on future withdrawls. With the new tax bill insurance agents selling annuities to high net-worth clients might miss out on collecting those roll-over assets.
My take is this. If you are an insurance agent with only a Life license servicing a wealthy clientele with potential roll-over assets then you might consider acquiring a securities license. With that securities license you can offer annuities and Roth IRA’s to your clients. As to whether the insurance industry will hurt from potential loss of annuity sales that remains to be seen. It depends on the amount of people who exceed the income cap that have a large sum of money in a traditional IRA.
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