WealthPRIME Insureplus

Did you know, that by folding life insurance into your retirement plan, you can earn tax free distributions in retirement? This is an underutilized strategy, often reserved for the top 1% of wage earners. As actuaries in plan design, we help clients execute this strategy at relatively low cost.

There are multiple reasons that ultra-high net worth individuals pursue this strategy to build wealth:

  • Tax Deductible Life Insurance
  • Tax free distributions in retirement
  • Higher deductibility of retirement plans
  • Death Benefit for their heirs

The InsurePLUS strategy is a three-step process:

Step # 1 Fund – Use pre-tax contributions to fund your life insurance.

Step #2 Exchange – Swap out the policy out of the retirement plan in year 5, and it might even be discounted.

Step #3 Maximize Value – Let life insurance grow with compound interest until age 70 for a tax-free retirement income.

Why combine Cash Balance Plan and Insurance?

Cash balance plans are often the ideal retirement plan structure for high net-worth professionals such as hedge fund managers, physician’s groups, attorneys, or any closely held profitable business. Cash Balance plans:

Mitigates taxes today – By contributing more to your retirement (often $100,000-$300,000 annually) the client can drop to a lower tax bracket and reduce their overall tax liability.

Reduces tax obligation in retirement – Buy utilizing various insurance strategies, the investor can realize substantial tax-free retirement income and a secondary death benefit.

Reduces risk – Cash Balance Plans provide ERISA creditor protection.

Offers Diversification – Cash Balance assets can even be invested in funds that are not tied to the stock market. Most accounts are “pooled” at the direction of the trustee.

Is an estate planning vehicle – Such account providing income to the investor. But in the event of their death, provide death benefit.

See the illustration below for an example of how you can maximize tax free distributions in retirement