If you're like most high net worth individuals, you're always looking for new ways to invest your money. And if you're looking for a way to invest your money that comes with a number of tax benefits, then an insurance LIRP might be just what you're looking for.
An insurance LIRP, or life insurance retirement plan, is a type of investment account that is sponsored by life insurance companies. Unlike a traditional IRA or 401(k), which are subject to income taxes, an insurance LIRP grows on a tax-free basis. This means that you don't have to pay any taxes on the money that you earn in the account.
What's more, withdrawals from an insurance LIRP are also tax-free. So, if you're in a high tax bracket, an insurance LIRP can be a great way to shield your income from the IRS. There's about to be 80,000 more of those guys by the way....
How an Insurance LIRP Works
An insurance LIRP works much like a Roth IRA or 401(k). You make contributions to the account on a post-tax basis. The big difference unlike the limits on those types of accounts (up to $6,000 per year under 50 years old for an IRA, and $20,500 per year for a 401k), you name your own list! And the money grows tax-free.
The principal difference between an insurance LIRP and a traditional retirement account is that your money is invested in options without you being directly exposed to the market itself. And when you die, your beneficiary will receive the death benefit tax free without having to go through probate, which can be used to help pay for things like funeral expenses, estate taxes, or final medical bills.
While life insurance may not be everyone's idea of a fun investment, there are some significant advantages to investing in an insurance LIRP. For one thing, life insurance policies offer protection from market volatility.
Another advantage of investing in an insurance LIRP is that you can use the cash value of the policy to supplement your retirement income if needed. Again, tax free! Although you can't access the money in your traditional IRA or 401(k) without paying penalties and taxes, you can take loans against the cash value of your life insurance policy without incurring any penalties or taxes.
If you're looking for a way to invest your money with some serious tax benefits, then an insurance LIRP might be just what you're looking for. With its tax-free growth and tax-free withdrawals, an insurance LIRP can be a great way to shelter your income from the IRS. Plus, with its cash value and protection from market volatility, an insurance LIRP can provide you with some much-needed peace of mind when planning for retirement and leaving a legacy behind for your loved ones.
