Leveraging Home Equity to Efficiently Fund Roth Conversion Taxes

Executive Summary

Roth conversions can create long‑term planning advantages: tax‑free growth, tax‑free retirement income, and no Required Minimum Distributions (RMDs). The challenge is that income tax liability is generally due for the year of the Roth conversion. Some clients fund that tax by liquidating tax-deferred retirement assets, which reduces future compounding and may trigger early‑withdrawal penalties for those under age 59½.

CHEIFS® by Cornerstone Financing is an alternative solution that could solve the tax funding problem. It converts a portion of home equity into liquidity without debt, monthly payments, or a fixed term (in years), allowing clients to fund the conversion tax while preserving other retirement capital.

Introduction

Traditional IRA’s and 401(k)’s tax liability is deferred until RMDs and other distributions, which are taxed at future rates that are not guaranteed or may change. Roth conversions eliminate RMDs and can provide tax-free growth and income for qualified distributions.

Many Financial Advisors view Roth conversions as a powerful tool for strengthening retirement and legacy planning strategies. But clients inevitably ask, “Where do I get the money for the up-front taxes?”

Traditional funding options, such as selling investments, taking plan withdrawals, or using cash reserves, can create tax drag, disrupt portfolios, reduce AUM, or weaken long term liquidity.

CHEIFS is a prime, non-debt home equity investment (HEI) funding solution designed specifically with financial advisors in mind. Homeowner clients retain ownership and control of their homes during the contract term, while converting a portion of home equity to fund long-term insurance, investment, and retirement strategies.

Using CHEIFS to fund a Roth conversion tax bill has the potential to allow some homeowners to preserve more of their tax‑advantaged retirement capital, which may support more sustainable retirement cash‑flow and long‑term wealth‑transfer goals.

How CHEIFS Works

CHEIFS is a non-recourse home equity investment agreement (HEI) that provides up-front funds without debt, monthly payments, or a fixed term (in years).

Homeowners sell an interest in their home’s future value in exchange for an up-front investment payment, while retaining home ownership and occupancy. Under the CHEIFS Prime program, for every 1% of the starting appraised home value Cornerstone invests, it receives a 2.25% share of the home’s future value, not to exceed an annualized cost cap of 12.99% on the investment payment, compounded annually.  There is no payment obligation to Cornerstone until a settlement event occurs, such as the homeowner’s death, home sale, or permanent move-out. At that time, the Investor receives payment of its percentage share multiplied by the home’s then appraised value, subject to the annualized cost cap.

Please see additional information at the end of this paper and visit CHEIFS.com for other program and product details, additional costs and eligibility.

Why Consider CHEIFS for Roth Conversions?

Funding the Roth conversion tax outside of tax-advantaged retirement accounts could help clients –

• Preserve Retirement Capital — Clients can roll over the full balance to the Roth IRA, preserving more assets for long-term, tax-free compounding.
• Extends Retirement Cash Flow — Starting with a larger Roth balance may also allow for more sustained tax-free withdrawals during retirement.
• Avoid a Potential Early Withdrawal Penalty — Clients under age 59½ may avoid a 10% federal early withdrawal penalty on amounts withdrawn to pay the tax.
• Minimize AUM Disruption — Keeping more of the client’s investment portfolio intact can support long-term planning continuity.

Using CHEIFS as a tax funding alternative — by converting dormant home equity into strategic liquidity — could help advisors implement planning strategies that support these objectives.

CHEIFS is Integrated into InsMark’s Wealthy and Wise+™: Advisors can model CHEIFS directly inside Wealthy and Wise+, comparing side by side (Status Quo vs. CHEIFS) funding strategies — for Roth conversion taxes, annuities, long term care planning, life insurance, income, and estate transfers — while highlighting potential estimated tax effects, cash flows, and long-term net-worth outcomes. CHEIFS program terms are integrated inside the Wealthy and Wise+ analyses, giving advisors a single solution to model a non-debt home equity investment funding strategy into planning scenarios.

Conclusion

Roth conversions can be a powerful planning tool, but only when the associated tax bill is handled efficiently.

CHEIFS gives advisors a strategic way to fund that tax liability without reducing the client’s retirement accounts, disrupting the investments, or adding debt or monthly payments.

For homeowners with strong equity positions, CHEIFS may offer an additional source of liquidity to support Roth conversions and assist with long term financial planning.

Visit CHEIFS.com today to learn more, try our CHEIFS calculator, and request a quote.

This paper is for licensed financial advisors only. It is provided for informational and promotional purposes only and is not investment, financial or tax advice. Cornerstone and its employees do not provide financial, investment, legal, or tax advice. Any tax considerations in this paper are limited to federal taxes, which are subject to change. The future growth of retirement investments, home values, and potential tax savings from a Roth IRA conversion are uncertain and outcomes are not guaranteed. CHEIFS involves costs, obligations, restrictions and risks that, in some situations, may outweigh potential benefits. Advisors should evaluate the suitability of all available strategies according to each client’s unique situation and consult appropriate specialists.

This is not an offer or commitment. CHEIFS is subject to home appraisal, underwriting and approval. Additional costs include an origination fee of up to 2.99% of the investment payment or $2,000, whichever is more, and third-party closing costs such as credit reports, appraisal, title, recording, notaries, and closing, which may be deducted from the investment payment or paid separately. During the term, homeowners must continue to occupy, maintain, and insure the home and timely pay all property taxes, insurance premiums, and payments on any other mortgages. Homeowner’s obligations are secured by a mortgage or trust deed against the home in no lower than second lien position. Programs vary by property value and available equity. Additional fees, terms and conditions apply. Terms may vary and are subject to change. Not available in all states. Cornerstone does not offer CHEIFS or solicit business related to properties located in New York or Minnesota. Visit cheifs.com for additional details.

CHEIFS is offered exclusively by Cornerstone Financing LLC, and its subsidiary Domus Funding Corp (California only), and does business as “Domus Funding LLC” in OH and as “Domus Funding” in NH (all referred to as “Cornerstone” or “Cornerstone Financing”). Principal Office: 86 Summit Ave., Ste. 201, Summit, NJ 07901. Toll-free (855) 462-4343. NMLS #2557707, www.nmlsconsumeraccess.org. For available states and licensing information, please visit us online at cheifs.com/licensing/.

InsMark® is a registered trademark of InsMark LLC. Wealthy and Wise+™ is a trademark of InsMark LLC. The Wealthy and Wise+ software is owned by InsMark LLC and is used with permission. InsMark is not an agent, partner, or affiliate of Cornerstone, and Cornerstone assumes no responsibility or liability for its software, products, services, representations, information, or conduct.

© 2026 Cornerstone Financing LLC.  “CHEIFS CONVERTING HOME EQUITY INTO FINANCIAL SUCCESS” and “CHEIFS” are registered service marks of Cornerstone Financing LLC.  All rights reserved.