Life Insurance IRA Roll Over

Steve20

Expert
Just getting my license back in MI. Stop doing insurance for while. I want to go independent, but I want to help a family friend out. They want to take money out of 401k and roll it over into self directed ira. As an insurance agent can I facilitate that and gain a commission? If so, what is the commission?
 
You won't earn an insurance commission doing a roll-over to a self-directed IRA, no.

You can roll it over into an IRA and use the IRA to purchase an annuity and you would be paid that commission.

You cannot roll over to life insurance without making it a taxable distribution - subject to income taxation and penalties. If it's large enough, you may want to consider doing 72(t) distributions until age 59 1/2 and use each distribution to purchase life insurance... but I wouldn't recommend doing that yourself. Get some expert help from a quality IMO. (No, I'm not an IMO.)
 
That's true. They must have either separated from service, or the plan to allow in-service distributions (distributions to an IRA while you're still working there). Normally in-service distributions are available once the participant has reached age 59 1/2. If allowed in the plan documents, it may be allowed sooner.
 
Yeah, it's such a buzzkill that qualified funds can't be used to fund a life insurance strategy.
 

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