Utilized by High Income Earners who are Max Funding their 401(k)/403(b)
Individuals earning more than $138k or Married Couples earning more than $218k – YOU ARE NOT ELIGIBLE TO OPEN A ROTH IRA
Tax Loophole allows you to use a Variable Universal Life or Indexed Universal Life insurance policy as a ROTH IRA
What is a Roth IRA and why would I want one?
Roth IRA’s allow you to fund a Retirement Plan with After-Tax Dollars and in return you are able to take 100% Tax-Free withdrawals during retirement
So, if your Traditional IRA or 401(k) has grown to $1 million, when you start taking withdrawals you will pay an income tax on those withdrawals
Roth IRA’s would give you the full $1 million Tax-Free
What is the Strategy?
Step 1 – Max Fund your 401(k) or 403(b) — for 2023 the max contribution is $22,500, or $30,000 for people Age 50 or older
Step 2 – Decide how much additional money you would ideally put into your 401(k), 403(b) or IRA — good rule of thumb is to do at least 15% of your gross annual income
Step 3 – Decide how many years you’d like to invest for (typically 5-15 year investment horizon)
Step 4 – Treat and Monitor your investment account the exact same way as your 401(k), 403(b) or IRA
Step 5 – at whatever age you want, begin taking annual tax-free withdrawals from your Investment Portfolio inside the Life Insurance
Where will my money be invested?
You and/or your Investment Team will have 100% control of how the Separate Account is invested by the Life Insurance Company
You can choose & change your investments at Any Time!
The Separate Account gives you the option to allocate your funds across as many as 86 Indexed & Mutual funds offered by firms such as JPMorgan, Goldman Sachs, BlackRock, Invesco, PIMCO, Fidelity, Morgan Stanley, T. Rowe Price, Lord Abbett, Janus Henderson, Franklin Templeton, VanEck & More
Additionally, in years when you want to be Conservative, you can allocate as much of your funds as you want into a “Buffered Index” Strategy
Buffered Index funds allow you to invest in the S&P 500 with between a 10-20% downside buffer and still maintain as high as an 18% Point for Point Cap
If you are Co-Owner of a business then you should have a Buy/Sell Agreement in place
Buy/Sell Agreement is a legal document that states if you were to die then your partner would owe your family “X” amount of money to purchase your shares of the business
If your business is valued at $5 million and you each have 50% ownership then you both should have $2.5 million of Life Insurance on each other
If you die, the Life Insurance Death Benefit is paid to your partner as a Tax-Free $2.5 million payment
Your partner then uses that $2.5 million of Cash to buy your shares from your family
KeyMan Insurance
Companies buy these policies on Employees or Partners who’s skills are necessary to the business in order to maintain the same level of revenue
For Example: There is a Law Firm that only has 1 attorney who does Estate Planning. If that attorney dies then the Estate Planning division of their business completely stops until they replace that individual. This creates a Financial Loss.
The Life Insurance Death Benefit bridges the gap between the loss of the employee and hiring/getting a new person started (Replaces Lossed Income)
The Death Benefit also pays the cost to hire a replacement employee
