While you cannot directly roll over your qualified plans, such as a 401(k) or IRA, into a whole life insurance policy used for Infinite Banking, you can utilize the funds from these plans to help fund a whole life policy.
However, this process requires careful planning and may have tax implications.
Here’s a general outline of how you can use qualified plan funds for a whole life policy:
Withdraw funds from your qualified plan: To use the funds from your 401(k) or IRA for a whole life policy, you’ll need to withdraw the money from your qualified plan. Keep in mind that withdrawals from a traditional 401(k) or IRA are generally subject to income taxes, and early withdrawals (before age 59½) may incur a 10% penalty.
Evaluate tax implications: Consult with a tax advisor to understand the tax consequences of withdrawing funds from your qualified plan, including any potential penalties and the impact on your overall tax situation.
Apply for a whole life insurance policy: Work with an insurance agent to apply for a dividend-paying whole life insurance policy suitable for Infinite Banking. This may involve underwriting, medical exams, and potentially higher premiums due to age or health status.
Fund the policy: Use the withdrawn funds from your qualified plan to pay the premiums on your whole life policy. Depending on the policy and the amount of money you have available, you might be able to fund the policy with a single premium, a limited number of premium payments, or ongoing premium payments.
Start practicing Infinite Banking: Once the whole life policy is in force, you can begin using the Infinite Banking concept to manage your cash flow, invest, and save for future financial needs.
Why would someone take capital from a qualified plan to fund a dividend paying whole life insurance policy with a mutual life insurance carrier?
You can set up a a tax-free retirement through the Infinite Banking strategy.
This allows you to assert control over the uncontrollable variable of tax rates.
Tax rates today in the United States is extremely low if you look at the history of taxation in the United States.
If you look at the history of marginal tax rates you can see how low taxes currently are.
With the Nation Public Debt over $32 trillion and government programs like social Security and Medicare insolvent, there is extremely high probability that marginal tax rates will increase significantly.
The worst financial strategy right now is to defer taxes to a date in the future.
Pay taxes when you can control how much you pay in taxes and when you pay taxes.
Here is an example of a male that is 60 years old that moved $1 million into a dividend paying. whole life insurance policy with a mutual life insurance carrier over five years.
By moving the $200,000 per year into the policy over five years, this man would have a tax free retirement income of $62,561 per year from age 66 to age 90. This man would have taken $1,564,025 of income over the 25 years.
He would have had the option to take less per year and or more if he wanted.
This man has taken control over his taxes and will not pay taxes in the future when the probability of tax rates being higher is very high.
You can download the full report “Unlocking Your Infinite Banking Questions” here.
You can watch all of our educational videos on Infinite Banking here.
Disclaimer and Waiver
Michiel Laubscher & Laubscher Wealth Management LLC is not an investment advisor and is not licensed to sell securities. None of the information provided is intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other offerings. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information contained herein is at your own risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Michiel Laubscher & Laubscher Wealth Management LLC does not promise or guarantee any income or specific result from using the information contained herein and is not liable for any loss or damage caused by your reliance on the information contained herein. Always seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, or other content.
