Tax-Free Income, Generation Planning, Estate Tax Mitigation.

Unfunded and under-funded entitlement programs pose a looming tax threat to American savers:

• U.S. Debt on Pace to Top $54 Trillion Over Next 10 Years
• Nassim Taleb Says U.S. Faces A 'Death Spiral' Of Swelling Debt

Fortunately, the preferential tax treatment of life insurance provides a solution.

Clients who have limited exposure to Roth contributions (they are ineligible for a Roth IRA or have maxed out their Roth contributions to their retirement account, backdoor Roth, and other accounts) look for other sources that substitute as Roth contributions, but without upper limitations.

A common way to achieve all of this is through the preferential tax treatment of life insurance as a wealth accumulation vehicle. The most common financial structure involved is known as Index Universal Life (IUL). It also provides death benefit protection that can be partially used as a Long Term Care solution.

Additionally, this financial structure removes the risk of loss from market fluctuations. Eliminating market risk and the uncertainty of future taxes is a key component of financial planning.

An Index Universal Life (IUL) policy allows:

• Tax-free accumulation tracking market indices (ex: S&P 500)
• No market risk on growth (no losses, only gains)
• Tax-free retirement income
• Death benefit protection – tax-free to heirs
• Long Term Care benefits, if needed

This is all through a single financial structure and is thus very advantageous. 

Reading materials – learn about Index Universal Life and other financial structures as part of a comprehensive financial planning solution:  

• IUL Education from Midland National
  • Helpful video and resources.

• The New Holistic Retirement: Emerging Risks for American Savers ... and How to Overcome Them With Long Game Thinking (Ruby, Martin)
  • Short but essential reading regarding how retirement planning is improved by diversifying asset allocation to include not just investments, but life insurance and annuities.  

• How insurance and investments can improve financial wellness | EY – US
  • Similar analysis by Ernst & Young
  • Link here to a .pdf of the Full whitepaper by Ernst & Young.

• The Power of Zero, Revised and Updated: How to Get to the 0% Tax Bracket and Transform Your Retirement

We also work on advanced / generational planning techniques for estate tax mitigation using IUL paired with Irrevocable Life Insurance Trusts (ILITs) and/or placing life insurance on adult children. Click here for a link to this presentation. 

If you are facing the estate tax, you are likely a Qualified Purchaser in which case our private market strategies and capital gains tax mitigation techniques may also be useful to you.

About me: I am a fiduciary (legally obligated to act in your best interest), Registered Investment Advisor (RIA). In my fully virtual practice, I work with clients across the country.  

I look forward to assisting you further.