The Benefits
The Benefits of a Life Insurance Retirement Plan, under Internal Revenue Code Section 7702, are many:
LIRP Benefits Summary
- Unlimited contributions (premiums)
- Meaningful income tax-free death benefits, substantially more than any other alternative
- Tax-deferred growth of cash surrender values
- Tax-free retirement income*
- Tax-free loans at ANY age - There's no 10% penalty tax for retiring before age 59½
- Policy death benefits and cash surrender values are assignable as collateral
- No tax penalty or tax liability when used to secure a loan.
- No required minimum distributions (RMDs) like an IRA or qualified plan, like a 401(k), 403(b), or 457 plan, so you can defer after age 70½.
- Tax-free income does not increase income tax liability on Social Security retirement benefits.
- Simple plan administration - No financial planning fees!
- No forms to file with the IRS (business owned policies ARE required to file forms)
- Potential asset protection from creditors and predators (varies by state, please consult with your legal counsel)
- Privacy - policy cash values are generally exempt from disclosure when applying for college financial aid
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*Surrenders to basis are income tax-free, loans are income tax-free as long as the policy matures and pays a death benefit.