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| How it works is 1/10 of the lump sum is rolled into the policy cash value each year for ten years, and with the interest in the above proposal, it’s about $57,000 year currently. The owner will owe tax on this amount each year for ten years, upon which time the original lump sum will have completely been converted. Five years is also an option, but most folks like a lighter load on paying the tax, so they choose to spread it out over ten years. As far as distributions, withdrawals can be made up to 10% of the cash value free of early withdrawal penalties. (For example, after twelve months, $5,700 would be available to withdraw tax free, increasing by $5,700 each year). The percentage available for withdrawal increases each year, fully completing the cycle in year ten. Hope I’m answering your question properly. This completely statisfies all the RMD requirements. (which really work the opposite of the way that makes the most sense). If you get terminally ill, an amount equating to 1/2 the original deposit is available immediately tax free. A person would most likely want to take advantage of this feature, if in the unfortunate situation it occurs.
Edited by Boone & Crockett 1/30/2019 12:49
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RE: roth conversion
