You’re probably familiar with Benjamin Franklin’s famous quip about how the only two things you can be sure of are death and taxes. Now, we’re not saying a LIRP will help you cheat the Grim Reaper (although a LIRP’s tax-free death benefit will help you provide for your beneficiaries when you’re gone). But it can help you to keep Uncle Sam away from your door during tax season, as you earn tax-free income for the rest of your life.
Are you interested yet? Then this episode of our podcast is for you. In this installment, Managing Partner Michael Neft (who has a LIRP himself) discusses how a LIRP offers all of the benefits of a Roth IRA…turbocharged!
Roth IRA’s offer a lot of benefits, including tax-free growth, access to funds, and the lack of required minimum distributions – but they aren’t without risks. The success of your Roth IRA depends on market conditions; if the market is doing well, you do well. But if the market takes a dive, you can lose some of your funds.
That’s one of the most significant advantages of a LIRP compared to a Roth IRA. With a LIRP, you still earn more when the market is up. If the S&P 500 enjoys a 5% upturn, so will your LIRP. This proportion applies all the way up to a LIRP’s 12.25% cap. But if the market is in the red, your funds won’t be. Your principal can’t be less than zero, so even in a recession or a depression year, your earnings will stay neutral, not decrease.
Here are some other things LIRPs offer that Roth IRA’s don’t:
- Long-term care funds
- Death benefits for beneficiaries
- The potential for a fully paid-up life insurance plan
When you utilize the indexing strategy for your LIRP, you’ll start by mitigating your taxes by paying them up-front over a five-year period. After that, all your income will be tax-free!
If you’re anywhere in the Hunterdon County, Mercer County, Middlesex County, Somerset County, Burlington County, or Camden County areas of NJ, or the Bucks County, Montgomery County, Northampton County, or Lehigh County areas of PA, SRS can help you make these life insurance plans work for you. Contact us today for a consultation!