Many clients reach retirement with a sizable IRA and face a familiar challenge. They must start taking Required Minimum Distributions, even when they don’t need the income. The result is often unwanted taxable income that ends up sitting in a bank account.

There is a smarter way to use those dollars. By combining a SPIA (Single Premium Immediate Annuity) with Whole Life insurance, advisors can help clients turn RMDs into a lasting, tax-efficient legacy.

How It Works

Start with the IRA
The client owns an IRA and must begin RMDs. Whether the money is needed or not, distributions are mandatory and taxable.

Purchase a SPIA inside the IRA
A portion of the IRA is used to buy a SPIA that provides a guaranteed annual income stream. Those payments automatically satisfy RMD rules because the source is qualified money.

A qualified SPIA may satisfy an individual’s RMD, or a portion of their RMD. However, the individual should consult with their personal tax adviser for guidance on their specific situation.

Use the SPIA income to fund a Whole Life policy
The after-tax SPIA income is used to pay premiums on a personally owned Whole Life policy. Over time, the policy builds cash value and creates a permanent, tax-free death benefit.

The result: Instead of letting RMDs accumulate in cash, the funds are redirected to create guaranteed value and a legacy for the next generation.

Example

$500,000 IRA → used to purchase a SPIA

SPIA pays $40,000 per year (RMD satisfied)

After taxes, $30,000 per year funds a Whole Life policy

Policy builds cash value and provides over $700,000 in tax-free death benefit

Why Advisors Use It

Meets RMD requirements automatically

Converts taxable income into tax-efficient wealth transfer

Provides guarantees and protection from market risk

Keeps the plan simple for clients who have enough income elsewhere

Advisor Insight

RMDs do not have to be a frustration for clients. When structured correctly, they can become a strategy. This approach allows advisors to reposition required income into a predictable and efficient wealth transfer tool that strengthens family balance sheets for years to come.

The combination of guaranteed income and tax-free death benefit creates a story clients understand and value.

If you are working with clients who have more IRA income than they need, it may be time to start a different kind of RMD conversation.

Tracking number: 8606534.1

Producer use only. Not for use with, or distribution to, the general public. 

Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. True Wealth Strategies LLC is not an affiliate or subsidiary of Guardian. CA Insurance License # 4205864.