Comparing a 401K to a IUL

Oct 12, 2017

  1. js44
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    js44 Expert

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    Ideally, my businesses(1 S-Corp, 1 C-Corp) and my real estate holding LLCs and my securities holding LPs should buy me the policy(premium tax deductible) and the policies (my Trust should be the ultimate beneficiary as my business will go to my trust if something happens to me) hold the cash for potential use to acquire more real estate and more securities. Can you structure this way? please pm me.
     
    Last edited: Mar 19, 2018
    js44, Mar 19, 2018
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  2. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    I am far from an expert on business life insurance.

    My thoughts would be that you would buy a key-man policy, but normally on a key-man policy, your business itself would be the beneficiary, not a trust.

    https://finsecurity.com/finsecurity/pdfs/compliance/2b3-02.pdf

    Or, you could set it up as a non-qualified executive compensation plan, but the policy would be held in your name, not the business name.

    https://finsecurity.com/finsecurity/pdfs/compliance/2b4-02.pdf

    I'm sure there's a more creative option, but I'm not well versed in those areas.
     
    DHK, Mar 19, 2018
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  3. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Perhaps, but if I speak the truth, and shy away from all the other junk OR even help to disprove it... then my credibility often skyrockets with my prospects for doing that.
     
    DHK, Mar 19, 2018
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  4. js44
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    js44 Expert

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    (my Trust should be the ultimate beneficiary as my business will go to my trust if something happens to me) -- I have changed this.

    Anyone who can handle this kind of complex setup, please pm me. Policy should be EIUL, Should be able to borrow from year 1 or max year 2(no surrender charges), structured so as hold 100k premiums for 3 years with the possibility of upto 10, should have min DB related expenses as DB is not the goal here, premiums should be tax deductible or atleast guaranteed no lapse portion of the premiums should be tax deductible. Thanks

    Question: Can a policy have two owners? 50% business, 50% personal? So that the min no lapse premium is paid by the business and is tax deducted and the other "stuffing" part of the premium is paid individually?

    Or any other creative solutions? Any takers? Thanks
     
    js44, Mar 19, 2018
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  5. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Life insurance premiums are almost never deductible outside of an IRS qualified retirement plan, unless you want the death benefit to be taxable. The only other way would be to set up an "executive bonus plan" where the amount of the premiums are deductible from the business taxes, but the premiums (and optionally the income tax on the bonus) are "bonused" to an employee.


    Otherwise, I'm sure there's probably some "split dollar" life insurance variation that could probably do (almost) exactly what you're looking to do (aside from the deductability). That's one of my weakest areas of this business as I've never really wrapped my head around that very well.
     
    DHK, Mar 19, 2018
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  6. mespinosa
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    mespinosa Expert

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    Yet, you churn out designs to middle America who don't invest like this. You pitch to rich guys like this(is a place to store cash for potential use) and you pitch to poor guys like that(shot at the market to get rich). ha!
     
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