Over 150.000 insurance professionals and consumers come to the Insurance Forum every month. Click here to register for FREE


Go Back   Insurance Forums > Insurance Agents and Brokers Forum > Life Insurance Forum

Reply to Whole Life Funded Through Solo 401k     
Old 02-16-2016, 07:05 AM   #1
New Member
 
Join Date: Apr 2014
Posts:4
State: Brokerguy21 is an Insurance Agent from
Whole Life Funded Through Solo 401k Whole Life Funded Through Solo 401k
Ran into a pretty big prospect recently, we have has a few meetings. He is a CEO of a company, he wants to fund a 5 year custom whole life from a 401k, not a 72t. He is claiming he could put up to 56,000 a year from a 401k into whole life?
He wants to do the same for his wife and two kids

He said there is tax advantages to doing it this way. Any knowledge on this?
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 02-16-2016, 10:07 AM   #2
Guru
 
Join Date: Oct 2009
Posts:6,456
State: scagnt83 is an Insurance Agent from South Carolina
scagnt83 is a member of 5000 posts Super VIP club
Whole Life Funded Through Solo 401k Re: Whole Life Funded Through Solo 401k
Originally Posted by Brokerguy21 View Post
Ran into a pretty big prospect recently, we have has a few meetings. He is a CEO of a company, he wants to fund a 5 year custom whole life from a 401k, not a 72t. He is claiming he could put up to 56,000 a year from a 401k into whole life?
He wants to do the same for his wife and two kids

He said there is tax advantages to doing it this way. Any knowledge on this?
If you have never done this before you need to reach out to one of the advanced planning teams at a carrier such as LFG, Mass Mutual, Penn, ON, etc.

If you are not a registered rep or RIA then you need to check your state laws to make sure that Qualified Plans are not classified as a Registered Product.


If it is just a 401k then he will not be able to put the full $56k into life premiums... and actually the Qualified Plan limit for 2016 including catch up contributions is $59k, not $56k.

If he uses WL he can put up to 50% of contributions into premiums.
If he uses UL he can put up to 25% of contributions into premiums.
There are exceptions for aged money within the plan.

That means at most he can use $29,500 of his yearly contributions to purchase WL or $14,750 into a UL/IUL/VUL.

Even though you can get more WL premiums into the plan via yearly contributions, UL actually gives a much better tax advantage due to the IRS regulations. Without getting real deep into it, only the COI is taxable for UL which is much less than what will be taxed with WL.


There are different strategies for using life insurance within a qualified plan, so you need to pin down on what he wants to accomplish with this.

If he wants to put in more than those limits then he needs to add on a Defined Benefit Plan like a Cash Balance Plan.
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 02-16-2016, 11:10 AM   #3
Guru
 
Join Date: Feb 2009
Posts:391
State: coachd is an Insurance Agent from Illinois
Whole Life Funded Through Solo 401k Re: Whole Life Funded Through Solo 401k
Talk with Adv, planning at home offices. Many things he can do. It depends on what he wants to accomplish.
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 02-17-2016, 10:32 PM   #4
New Member
 
Join Date: Apr 2014
Posts:4
State: Brokerguy21 is an Insurance Agent from
Whole Life Funded Through Solo 401k Re: Whole Life Funded Through Solo 401k Brokerguy21 is the thread starter for: Whole Life Funded Through Solo 401k

Yes i have been in the business awhile I just have never heard sold anything like this I want to be sure its the best for him. We have a very good advanced planning group so I think they will guide him right.

Will the death benefit be taxable if he funds it with the 401k?
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 03-02-2016, 12:11 AM   #5
Super Genius
 
Join Date: Feb 2016
Posts:74
State: dahonored1 is an Insurance Agent from Undisclosed Location
Whole Life Funded Through Solo 401k
I'm new to insurance, but I've tried best to keep up with tax advantage strategies. How can I fund a WL or UL with a 401k? Is it something like taking distributions and overfunding a WL policy?
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 03-02-2016, 07:30 AM   #6
Guru
 
Join Date: Oct 2009
Posts:6,456
State: scagnt83 is an Insurance Agent from South Carolina
scagnt83 is a member of 5000 posts Super VIP club
Whole Life Funded Through Solo 401k Re: Whole Life Funded Through Solo 401k
Originally Posted by dahonored1 View Post
I'm new to insurance, but I've tried best to keep up with tax advantage strategies. How can I fund a WL or UL with a 401k? Is it something like taking distributions and overfunding a WL policy?
Read the thread.
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 03-02-2016, 10:41 PM   #7
Super Genius
 
Join Date: Feb 2016
Posts:74
State: dahonored1 is an Insurance Agent from Undisclosed Location
Whole Life Funded Through Solo 401k
Originally Posted by scagnt83 View Post
Read the thread.
I thought 401k only restricts you to mutual funds..how can I make it so I can fund a WL policy.
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Old 03-02-2016, 11:24 PM   #8
DHK
Guru
DHK on Whole Life Funded Through Solo 401k
 
Join Date: Nov 2007
Posts:6,011
State: DHK is an Insurance Agent from California
DHK is a member of 5000 posts Super VIP club
Whole Life Funded Through Solo 401k Re: Whole Life Funded Through Solo 401k
Here's the resource to look up regarding life insurance within qualified plans:

https://www.irs.gov/publications/p560/ch04.html

This isn't something that you can choose as a participant within your 401(k) plan. This is something that can only be done on the plan management and installation level.

If you happen to already be selling 401(k) and other executive compensation plans in the business arena, then go for it. If not, I wouldn't spend much time on this at all.
------------------------------------
  Reply With Quote to Whole Life Funded Through Solo 401k
Reply to Whole Life Funded Through Solo 401k 

  Insurance Agent Forum > Insurance Forums > Insurance Agents and Brokers Forum > Life Insurance Forum


Tags
401k, whole life




Similar Threads with Whole Life Funded Through Solo 401k
Thread Thread Starter Forum Replies Last Post
Check Both Husband and Wife Have Sufficient Life Insurance soby Life Insurance Forum 4 01-23-2017 02:47 PM
EIULs and Missed Fortune honestagent Life Insurance Forum 86 08-21-2016 12:22 PM
My personal experience with Aflac STIBROKER Employee Benefits Forum 709 07-31-2016 09:00 AM
Final Expense Leads atlantainsguy Final Expense Forum 71 10-09-2012 09:52 AM



All times are GMT -5. The time now is 09:41 AM.

Forum enabled with vBulletin®
Copyright ©2000 - 2017, vBulletin Solutions, Inc.


Join the Forum - It's FREE

Share This Page



Weekly Poll

Where do we go from here? POLL
Nothing - No ACA fixes - status quo
29.82 %
HHS Rulings and band aid bills
17.54 %
Hail Mary repeal and/or replace bill
17.54 %
A bipartisan bill to fix ACA
35.09 %

Voters: 57. This poll is closed