The document outlines a Roth alternative solution, also known as the synthetic Roth strategy, which allows individuals to convert an IRA to an index universal life insurance policy instead of a Roth IRA to avoid estate tax implications and retain capital growth tax-free. This strategy utilizes a trust to own the policy, enabling access to cash surrender value while maintaining the death benefit outside of one's estate, thereby enhancing generational wealth transfer. The financing for the tax consequence of conversion is structured through a 20-year loan, with favorable rates and conditions.

2. RG
Consulting
Group,
LLC
Executive
Summary
-­
Roth
Alternative
Solution
(or
Synthetic
Roth
Strategy)
2010
is
the
year
of
the
Roth
Conversion.
The
IRS
has
created
a
timeline
where
one
can
pay
the
income
tax
on
their
IRA
and
convert
it
to
a
Roth
IRA,
where
it
can
grow
capital
gains
and
income
tax
free.
Anything
that
is
left
in
the
Roth
IRA
will
still
be
in
one’s
estate.
The
largest
objection
to
this
process,
other
than
the
fact
that
it
doesn’t
solve
the
estate
tax
dilemma,
is
that
most
Americans
do
not
have
the
capital
to
pay
the
tax
consequence.
Overfunded
life
insurance
policies
are
likely
the
only
other
place
where
one’s
capital
can
grow
income
and
capital
gains
tax-­‐free.
Thus,
rather
than
converting
an
IRA
to
a
Roth
IRA,
coming
out
of
pocket
for
the
tax
consequence
and
having
anything
remaining
in
the
Roth
subject
to
estate
tax,
we
convert
the
IRA
to
an
index
UL
life
insurance
policy
and
finance
an
amount
equivalent
to
the
tax
consequence.
The
policy
is
owned
by
a
trust
that
will
not
be
subject
to
estate
tax.
Indexed
Universal
Life
policies
use
various
indices
such
as
the
S&P
500
and
are
able
to
credit
at
an
excess
participation
rate,
while
mitigating
all
downside
risk.
For
Example,
Minnesota
Life
(Aa3
Moody’s
rated)
currently
has
a
140%
participation
in
the
S&P
500
with
a
2.5%
floor.
This
means
if
the
S&P
gains
5.71%
in
a
point-­‐to-­‐point
year,
the
excess
cash
in
the
policy
would
be
credited
8%
(5.71
*
1.40).
If
the
market
were
to
go
down
25%,
the
cash
in
the
policy
would
be
credited
with
the
2.5%
floor.
The
lending
aspect
of
the
transaction
involves
a
financing
source
loaning
to
a
trust.
The
loan
term
is
20
years
and
can
be
prepaid
at
anytime
without
penalty.
Interest
can
be
paid
from
the
policy’s
cash
surrender
value
or
capitalized
within
the
loan.
The
rate
is
6-­‐month
LIBOR
+
350
bp’s,
with
a
floor
rate
of
4.0%.
As
of
October
27,
2010,
6-­‐month
LIBOR
is
0.45%.
Currently
this
loan
rate
would
be
3.95%
(thus,
the
4.00%
floor
rate
would
currently
apply).
This
rate
would
readjust
every
6
months.
The
trust
used
for
this
transaction
would
most
likely
be
a
South
Dakota,
Georgia,
Alaska
or
Delaware-­‐sitused
Intentionally-­‐Defective
Grantor
Trust
(IDGT).
The
unique
aspect
of
an
IDGT
is
that
the
insured
and
beneficiaries
are
able
to
access
the
cash
surrender
value
of
the
policy.
With
this
in
mind,
the
client
is
able
to
take
withdrawals
up
to
basis,
and
policy
loans
if
they
need
income
during
their
life,
while
keeping
the
death
benefit
of
the
policy
outside
of
the
estate.
Thus,
generational
wealth
transfer
is
greatly
enhanced
while
maintaining
retirement
cash
flow.
In
effect,
the
Roth
Alternative
Solution,
or
Synthetic
Roth
Strategy,
is
an
enhanced
version
of
a
Roth
IRA
that
optimizes
generational
wealth
transfer
while
effectively
shielding
one’s
retirement
nest-­‐egg
from
market
downturns.
The
capital
in
the
policy
will
grow
annually,
normally
without
income
tax
and
capital
gains
tax.
The
original
tax
consequence
due
to
IRA
conversion
is
financed.
The
insurance
products
have
guaranteed
floors
to
mitigate
all
downside
risk
and
to
promote
growth
and
preservation
of
capital,
and
excess
participation
to
achieve
returns
above
those
of
traditional
equity
market
indices.
All
of
this
occurs
while
keeping
the
asset
out
of
one’s
estate
by
using
an
Intentionally
Defective
Grantor
Trust.
Ryshard
Grzanka,
RG
Consulting
Group,
LLC
Phone:
(917)
715-­‐0758
rg@rgllc.net
THIS SUMMARY IS NOT AN OFFER OR A COMMITMENT TO EXTEND CREDIT IN ANY FORM AND REMAINS SUBJECT TO, AMONG
OTHER THINGS; (I) CREDIT APPROVAL, (II) DUE DILIGENCE AND (III) MUTUALLY SATISFACTORY DOCUMENTATION.
RG Consulting Group, LLC., makes no warranties or representations as to the accuracy and completeness of the
information contained in this communication, including any attachment(s) thereto. The information contained herein is
provided for the convenience of the recipient without any warranty of any kind, express or implied, and are not intended to
provide specific advice or recommendations for any individual or entity. RG Consulting Group, LLC., recommends that
the intended recipient consult their own attorney, accountant or tax advisor with regard to their individual situation.