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Increase your IRA or Pension Plan up to 20 Times…Tax Free

Overview

If you don't need some or all of the income from your IRA or Pension Plan to support your lifestyle and provide for your retirements, you may be wasting a great deal of money.

The tax advantages your IRA or Pension Plan provided during your lifetime disappear at your death. All assets contained within your IRA or Pension Plan at the time of your death will still be subject to ordinary income tax and up to 55% estate tax that will devastate your heir's inheritance.

But if you do some preliminary planning with your IRA or Pension Plan now you can greatly increase your legacy.

Client Profile

Stephen (67) and Mary (64) Haines have an overall estate of $10,000,000, including $1,000,000 in a traditional IRA that is growing at 8% a year. They have many other assets that provide them enough income to live on, including several rental properties. The Haines would like to leave their IRA intact for their three children; however, they know they must start taking RMDs when Stephen reaches age 70 ½. They are also concerned about estate liquidity, and do not want their children to have to sell the rental properties to pay estate taxes.

Solution

The Haines will take withdrawals from their IRA and use the after-tax withdrawals to fund an ILIT. Initially, the Haines will withdraw $30,000 a year after taxes, but this amount will increase over time to comply with the RMD rules. The ILIT will use this increasing income stream to purchase a $4,000,000 life insurance policy on Stephen and Mary's lives.1 This approach not only increases the amount left to their heirs, but also provides liquidity so that other assets do not need to be sold to pay taxes.

Conclusion

By using a portion of the IRA distributions to purchase a last-to-die life insurance policy the Haines can receive a greater than 10 times return. Their heirs will receive $4,337,114 instead of $416,079. Furthermore, the $4,000,000 life insurance policy will go to their three daughter's income and estate tax free.

The $1,000,000 IRA or Pension Plan would have to increase over 21 times to become worth $21 million in order to produce the same after-tax $4,337,114 for their children.

It is difficult to believe your $1 million IRA or Pension Plan is going to increase to $21 million. Clearly, this program outperforms your IRA or Pension Plan at any age. It begs the question, "What is the point of retaining your IRA or Pension Plan for your heirs when this method can perform so much more effectively?"

Click here to Receive Additional Information on Increasing Your IRA or Pension Plan or Contact Us Directly at (949) 515-1501.
  1. Life insurance death benefits are generally excludable from the beneficiary's gross income for income tax purposes. There are few exceptions such as when a life insurance policy is transferred for a valuable consideration.
This material does not constitute tax, legal, or accounting advice, and neither Newport Financial Group, Inc. nor any of its advisors, employees are in the business of offering such advice. It cannot be used by any taxpayer for purpose of avoiding any IRS penalty. Anyone interested in these transactions or topics should seek advice based on his or her particular circumstances from your appropriate advisor.