• Accelerating IRA distributions could benefit the estate beneficiary if they supplant distributions from assets whose basis steps up at death of the owner.

• As mentioned above, a surviving spouse may be exposed to higher taxation due to the change in filing status. Lower RMDs may reduce that exposure.

There are many strategies that may help minimize retiree’s tax burden. Some of these may illustrate examples of implementing income benefits from deferred or immediate annuities.

Pre-Age 70½: Delay starting Social Security benefits — annuities can provide additional retirement income that could potentially reduce the client’s need to withdraw at earlier ages. Take advantage of delayed credits from Social Security and maximize its guaranteed payments while reducing IRA balance.

Post-Age 70½: Qualified charitable distributions (QCDs) — a nontaxable qualified charitable distribution up to $100,000 annually, from a client’s IRA. As long as the rules for the distribution are followed this can be a more effective tax strategy than a charitable deduction with after-tax dollars.

Any Time: Roth IRA conversions — if clients are concerned about paying higher taxes in the future, a Roth IRA conversion now may make sense. Partial conversions over the course of many years may be an option but beware!! TCJA eliminated the opportunity for conversions to be re-characterized — so the owner cannot reverse the conversion due to poor market performance.

Unneeded or excess withdrawals and RMDs that potentially push your client into the next tax bracket may be managed with pre- and post-tax minimizing options. Options include contributing to an HSA in the years before enrolling in Medicare, purchasing permanent life insurance that my allow for tax free loans or withdrawals, or funding an annuity that can provide beneficiary protection and/or tax deferral of after tax dollars. Consideration should also be given to further protecting retirement assets by purchasing long-term care insurance.

In many situations, non-qualified annuities can help with more than tax deferral that does not require RMDs at age 70 ½. Annuities can provide a guaranteed income stream that your client cannot outlive. They may also help with gifting — one option might be gifting any required distributions that are not needed for income to an annuity, which can help pre-fund a child’s retirement. Also the income may be used to fund a life insurance contract to help with offsetting taxes at death.

Protecting Transferred Assets

After the asset moves to a surviving spouse or other beneficiary, there is the potential for bad investment choices, misuse, or financial abuse. There are some situations where an annuity may help by controlling how the proceeds are distributed to the beneficiary that the client can control. This can be done through a provision in many annuity contracts that allows for the owner to pre determine how the beneficiary will receive death distributions: