What Do I Need to Know About Life Insurance Inside a Qualified Plan?

What Do I Need to Know About Life Insurance Inside a Qualified Plan?

Qualified retirement plans are designed to encourage employees to save money now, so that they will have enough to sustain themselves when they are no longer working. A plan like this meets all the requirements of the Internal Revenue Code, which means it is eligible for certain tax benefits. In simpler terms, a qualified plan is a tax-favored accumulation vehicle like permanent (cash value) life insurance.

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Govt. regulations of life insurance in qualified plan

Govt. regulations of life insurance in qualified plan

Life insurance inside of a qualified retirement program, like any other financial tool, has certain government regulation issues and concerns to deal with before making a decision. One thing to take into consideration is the Employee Retirement Income Security Act (ERISA) of 1974 – when life insurance or annuities are included in a qualified plan.

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Is a policy inside a qualified retirement a good idea?

Is a policy inside a qualified retirement a good idea?

Paying life insurance and annuity premiums with qualified-plan dollars is quite controversial. Every situation is different; some may benefit from a plan life this while others may not. A good place to start is by looking at a 403(b) plan, which is a tax-deferred retirement plan for employers of school and other nonprofit organizations.

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