Roth Conversions, Mirrored Contracts & Why This Conversation Matters Right Now

If you’ve been in this business long enough, you already know this: taxes are not going down long term. Clients know it. They feel it. They may not articulate it perfectly, but they sense it.

That’s why Roth conversion conversations are no longer “advanced planning.” They’re becoming mainstream retirement planning topics.

Several of our key carriers now give us the ability to take a single premium of qualified funds and systematically convert those dollars internally into a Roth IRA over time. And this is where it gets powerful. And clients can tailor the conversion schedule.

Five years.
Ten years.
Or somewhere in between.

Instead of taking a massive lump sum distribution and getting crushed by taxes in one calendar year, they can stretch the tax burden out. Each year, they simply pay tax on the portion that was converted that year.

And the real beauty of this — what several carriers call the “mirrored contract concept.”

With this concept you have:

Contract A – The qualified account.
Contract B – The mirrored Roth account.

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The single premium goes into Contract A. Each time a distribution is made for conversion purposes, the funds move into Contract B — and that mirrored contract carries the same values, surrender schedule, and crediting strategies/rates.

Same chassis. Same structure. Just different tax status.

At the end of the five- or ten-year window — however the client designs it — the entire contract has transitioned from qualified to Roth. Now you’ve got tax-free growth potential and tax-free distributions down the road, without having taken the hit all at once.

We are actively working on client-facing marketing pieces to help you articulate this clearly. Because once a client understands the mirrored concept visually, the light bulb goes on. It stops feeling like a tax event and starts feeling like a controlled migration from taxable to tax-free. Look out for these pieces in the coming weeks.

Medicare considerations are important to note …

Large Roth conversions can impact a client’s Modified Adjusted Gross Income (MAGI), which can trigger higher Medicare Part B and Part D premiums due to IRMAA adjustments. That doesn’t mean “don’t do it.” It means planning it properly. Stretch it out intelligently. Coordinate it with income levels. Be strategic about timing and partner with a CPA on complex cases.

Additionally, annuity business right now is coming in at a record pace. And we are fortunate to have carriers offering premium bonuses north of 20% on 10-year surrender periods. We’ve got carriers locking S&P 500 annual point-to-point caps for the entire surrender charge period.

If you’re like me, you’ve had that call before:

“Joe, the market was up. My friends made money. Why didn’t my annuity credit anything?”

And you’re re-explaining caps, spreads, participation rates, volatility control strategies — and sometimes the client just hears, “It didn’t credit any interest this year.”

We can’t control how the S&P 500 performs. But with guaranteed cap structures locked for the entire surrender period, we can control the predictability of the cap rates. No renewal rate surprises.

And let me just say this plainly — I’m grateful. Grateful for the agents writing business with the Ohlson Group. Grateful to those participating in our lead program. Grateful to those working the Elevate workshops and actively writing business.

Agents who are working marketing plans — whether through leads, workshops, or refinancing outdated annuities — are seeing real momentum. This quarter is shaping up to be one of the strongest we’ve had. The old saying “app-tivity leads to activity” holds true.

And as we continue to layer in strategic conversations like Roth conversions — especially using tools like mirrored contracts — you jump from “annuity salesperson” to “retirement income expert.”

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Until Next Time – Good Selling! 

​Joseph R. Ohlson, LUTCF
President
1-877-844-0900
[email protected]