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  • LIRP

    Lets say I have maxed out 401K, cash balance, Backdoor ROTH, debts, etc. Is there any reason I should not  use extra cash for a LIRP. The only other option I can see is after tax Wealthfront account, etc.
    Thanks

  • #2




    Lets say I have maxed out 401K, cash balance, Backdoor ROTH, debts, etc. Is there any reason I should not  use extra cash for a LIRP. The only other option I can see is after tax Wealthfront account, etc.
    Thanks
    Click to expand...


    A LIRP (Life Insurance Retirement Plan for the rest of the world) is a gimmick to sell costly insurance products sealed in a nice package that is stamped "Retirement Plan" on the pretty wrapping paper. If you wouldn't buy whole or universal as your primary life insurance coverage, there is even more reason not to overpay for a LIRP for the sole purpose of tax savings or deferral.

    The problem that many people run into with focusing on taxes is that the tax tail begins to wag the dog. Your primary attention should be to grow your wealth based upon a financial plan using your resources to meet your goals in the most optimal way possible. Tax savings is just one consideration but it must be viewed in the overall context of what is best for your plan as a whole.

    There are many benefits to an after-tax account:

    • Absolute flexibility as to timing and choice

    • Cost basis in investments you sell

    • Reduced tax rates on long-term capital gains and dividends

    • Stepped-up basis if used in estate planning


    To address your statement that the only other option you can see is a taxable account, you might also consider real estate, starting a business, using excess cash flow to meet other goals such as education funding - all according to the financial plan you have in place which should be the engine to reach your goals and get you to your destination.

     
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      The vast majority are not very good, if you look at one be sure to look at one that waives the surrender charge so that if you get in and it is not performing to your expectations then you can get out without taking the big financial hit.

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