WHAT WE DO
Convert your IRA to a Roth on your timeline — not the IRS's. Use FIA bonus credits to soften the tax. Grow tax-free for life. Pass it to your kids without losing 40% to taxes.
See what this means for you ↓Most people think their 401(k) and traditional IRA are retirement accounts. They're not. They're tax-deferred liabilities. Every dollar in those accounts is pre-tax — meaning the IRS owns a piece of every dollar you've saved.
And here's the part nobody tells you: the IRS gets to decide what their piece is worth — later. After you've stopped working. After Congress raises rates. After Required Minimum Distributions force you to pull money out whether you need it or not.
At age 73 — or 75 if you were born in 1960 or later — the IRS comes calling.
RMDs force withdrawals. Those withdrawals push you into higher tax brackets. Those higher brackets make more of your Social Security taxable. That extra income drives up your Medicare premiums. The account you spent 30 years building can hand 40-50% of itself to the government over your retirement.
Most advisors won't show you the math on this. Either because they don't know it, or because the products they sell don't solve it. We do both.
A Roth conversion is the cleanest way to take money the IRS partially owns and turn it into money that's 100% yours. Once it's converted, three things change forever:
The catch? You have to pay the tax now. That's where most people stop — because writing a tax check feels worse than letting the IRS collect quietly over time.
This is where Smart Life Financial does something nobody else in your local market is doing.
We use FIA bonus credits to soften the conversion tax.
Some fixed indexed annuities add a premium bonus when you fund them. Bonuses usually come with surrender charges and may vest over time. We use that bonus to offset part of the conversion tax. In the example below, an illustrative 10% bonus covers about a third of it.
Then we spread the conversion over several years and size each one to your tax bracket and the IRMAA lines. Sometimes staying under a line wins. Sometimes crossing it on purpose does. Either way, you see the cost before you convert. Methodical, not panicked.
"This isn't tax avoidance. It's tax architecture."
One married couple, both 62, with $1 million in a traditional IRA and $150,000 of income until they retire at 70. Same 6% growth on both sides, so the only differences are taxes, the bonus, and Medicare surcharges.
Pay nothing now. The tax bill waits.
Pay the tax now, at today’s rates, on purpose.
About $228,000 more for the family, after every tax and surcharge.
$1,352,491 − $1,083,817 − $40,387 = $228,287
Even without the bonus, converting still comes out about $107,000 ahead. The bonus widens the gap. It isn’t what makes the math work.
Option B pays tax now at about 22.9%. Option A’s kids pay 32% later, on a bigger balance, squeezed into 10 years, often during their own peak earning years. Paying the lower rate on purpose is the whole strategy.
Option B also pays $40,387 in Medicare surcharges. The conversions push the couple’s income to $317,113, which is IRMAA level 2. That’s a real cost, and it’s still worth paying. A plan that stays under every IRMAA line would convert less each year and leave money in the IRA past 70. Whether that’s better depends on your numbers.
| Age | Convert | Federal tax | Income for IRMAA | IRMAA level | Surcharge (2 years later) |
|---|---|---|---|---|---|
| 62 | $167,113 | $38,235 | $317,113 | 2 | $0 (age 64, before Medicare) |
| 63 | $167,113 | $38,235 | $317,113 | 2 | $5,769.60 |
| 64 | $167,113 | $38,235 | $317,113 | 2 | $5,769.60 |
| 65 | $167,113 | $38,169 | $317,113 | 2 | $5,769.60 |
| 66 | $167,113 | $38,169 | $317,113 | 2 | $5,769.60 |
| 67 | $167,113 | $38,169 | $317,113 | 2 | $5,769.60 |
| 68 | $167,113 | $38,169 | $317,113 | 2 | $5,769.60 |
| 69 | $167,113 | $38,169 | $317,113 | 2 | $5,769.60 |
| Total | $1,336,904 | $305,550 | $40,387.20 |
Tax drops slightly at 65 because the standard deduction rises for each spouse 65 or older. Conversions total more than $1.1 million because the account keeps growing while it’s being converted.
Illustrative example, not a projection or a quote. Assumes a married couple filing jointly, both age 62, $1,000,000 traditional IRA, $150,000 of wages through age 69. Both options grow 6% every year; actual returns vary, and annuity crediting is subject to caps, participation rates, and other contract terms. The 10% bonus is illustrative; bonuses typically come with surrender charges and may vest over time, and conversions are assumed to be made without surrendering the contract. Federal income tax only, using 2026 brackets and standard deductions held flat; state tax is not included. Tax on each conversion is withheld from the conversion. IRMAA uses 2026 CMS figures; income from age 63 on affects premiums from age 65. Heirs are assumed to pay 32% on inherited IRA withdrawals. Not tax advice.
Year-by-year plan showing exactly how much to convert each year, what bracket it puts you in, what your IRMAA exposure is, and what your tax check will be — for the entire conversion window.
We model the right product for your situation — bonus credit, growth strategy, LTC multiplier — and show you exactly how much of the tax it absorbs.
Every plan we deliver comes with an IRC-cited tax proof your CPA can verify line by line. We don't show you a sales pitch. We show you the math.
Permanent record of every conversion, every 1099-R, every Form 8606, every basis calculation. If the IRS ever asks, the audit defense file is one button away.
We don't just plan it. We execute it with you. Year-end 1099-R coordination, bracket monitoring, and adjustments as your situation evolves.
This is multi-year work. Your conversion plan changes as the tax code changes, as your income changes, as life changes. We're with you the whole way.
Two ways to begin. Pick whichever feels right. If you want to fill out the Discovery Form first so we have your numbers when we talk, start there. If you'd rather have a conversation first, book a call. Either path leads to the same place — a custom plan with real math, designed for your life.
Built for what's next. Strategy for the world that's coming — not the one that's gone.
Disclosures
Smart Life Financial LLC is an independent insurance agency. Scott Borhauer, NPN 20016169.
Any references to guaranteed income, lifetime income, principal protection, or annuity benefits refer to insurance contracts. Guarantees are subject to the claims-paying ability of the issuing insurance company. Annuities are not bank deposits, not FDIC insured, not insured by any federal government agency, and may lose value in the case of early surrender. Product features, fees, surrender schedules, and income amounts vary by carrier, product, state, age, and issue date and are subject to change. No specific product is recommended on this page.
Any examples shown are hypothetical and for illustrative purposes only. They do not represent a quote, an offer, or the performance of any specific product. Individual results depend on your own circumstances.
This material is for informational purposes and does not constitute tax, legal, or investment advice. Rollovers, Roth conversions, required minimum distributions, and estate planning decisions carry tax and legal consequences. Consult a qualified tax professional and attorney regarding your specific situation.
Smart Life Financial LLC · 8530 Eagle Point Blvd, Suite 100, Lake Elmo, MN 55042 · (952) 592-3900