Most people are familiar with the concept of a Roth IRA as a strategic funding idea for supplemental retirement income.  Ironically, many of the same people who want to participate in a Roth IRA are ineligible due to income levels that exceed the limits imposed.  What if there existed a plan that could provide the same tax benefits as a Roth IRA, without the restriction or limitations?

Life Insurance, for all the criticism it takes for the associated expenses and “die-to-collect” benefit theme, does have one distinct characteristic: you cannot beat the tax treatment.  In general, and if structured properly, keep this in mind: most anything that comes out of a life insurance policy, either at the death of the insured or during the insured’s life, comes out income tax free. If you stay within the guidelines and commit to a funding strategy, a case can be made that the back-end tax-free distributions are worth more than an up-front deduction.  That is why Roth IRAs have flourished in the first place!

Here is an interesting thought.  Any form of permanent life insurance is afforded the same tax treatment.  First-in, first-out followed by properly structured policy loans can lead to tax-free distributions.  Whole life, traditional universal life, indexed universal life, market-based universal life, all are eligible but all must adhere to the same rules.  There is an old saying that “you know a concept is good when the IRS puts restrictions on it.”  That is why for every dollar of contribution, based on age and gender of the insured, a minimum dollar of death benefit must be purchased.  It also means that in theory, there is no dollar limit (keeping the death benefit ratio in mind) of contribution!

If you are under the age of 55 and feel that you need to supplement your current retirement savings strategy with this “Roth IRA Alternative,” please complete the form below for further details and a customized illustration.