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SVTPerformance's Chain of Restaurants
Road Side Pub
7702 plan for retirement?
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<blockquote data-quote="Ohio Snake" data-source="post: 15962779" data-attributes="member: 157862"><p>Yes, Im very familiar with the 7702 plan. First off, it is not really a retirement plan...... its life insurance. The name 7702 comes from an IRS code.</p><p></p><p>Most people buy life insurance to protect their loved ones from the impact of a death. In this common scenario, the buyer wants the lowest premium for the policy type and riders ( if any) on the contract.</p><p></p><p>A 7702 plan, also sold as a Non-MEC Premium Life Insurance Plan is different. The policy type typically used is a Variable Life ( VUL) or Indexed Universal Life Insurance ( IUL) contract. You actually will over-fund a contract with premiums as long the premiums do not exceed the Modified Endowment Contract (MEC) limits as established by the IRS. Another words, the policy MINIMUM death benefit relevant to the premium may be used as long as it does not violate IRS guidelines. </p><p></p><p>The policy is designed around this allowing lots of cash to go in to the policy with the minimal amount of insurance cost. Typically, the death benefit includes the face amount PLUS the cash value in the design. Important riders can be added, if desired. </p><p></p><p>The GOOD: </p><p>Tax deferred growth, tax-free income potential, tax -free death benefit to your loved ones, chronic illness protection via rider ( if wanted), unlimited cash growth ( or loss) if using a VUL, safe capped cash growth ( no market loss potential) if using an IUL.</p><p></p><p>The BAD: </p><p>Must be in good health to keep cost of insurance low, younger the age....the better the cost of insurance, complex way to buy life insurance.</p><p></p><p>Who should consider using it:</p><p>1.) You must believe in the benefits of life insurance.</p><p>2.) You may be funding a Roth IRA to the limit, but want more tax-free income potential than what the Roth IRA can do.</p><p>3.) You may not qualify for a Roth IRA and your 401k does not offer a Roth option for tax free income.</p><p>4.) You may want tax-free access to the cash prior to age 59.5.</p><p>5.) Your willing to make a long term commitment to funding based on what you can comfortably afford.</p><p></p><p>Hope this helps and makes some sense for a complex product. I tried to keep it short and left technical info out.</p><p></p><p></p><p></p><p>Sent from my iPad using Tapatalk</p></blockquote><p></p>
[QUOTE="Ohio Snake, post: 15962779, member: 157862"] Yes, Im very familiar with the 7702 plan. First off, it is not really a retirement plan...... its life insurance. The name 7702 comes from an IRS code. Most people buy life insurance to protect their loved ones from the impact of a death. In this common scenario, the buyer wants the lowest premium for the policy type and riders ( if any) on the contract. A 7702 plan, also sold as a Non-MEC Premium Life Insurance Plan is different. The policy type typically used is a Variable Life ( VUL) or Indexed Universal Life Insurance ( IUL) contract. You actually will over-fund a contract with premiums as long the premiums do not exceed the Modified Endowment Contract (MEC) limits as established by the IRS. Another words, the policy MINIMUM death benefit relevant to the premium may be used as long as it does not violate IRS guidelines. The policy is designed around this allowing lots of cash to go in to the policy with the minimal amount of insurance cost. Typically, the death benefit includes the face amount PLUS the cash value in the design. Important riders can be added, if desired. The GOOD: Tax deferred growth, tax-free income potential, tax -free death benefit to your loved ones, chronic illness protection via rider ( if wanted), unlimited cash growth ( or loss) if using a VUL, safe capped cash growth ( no market loss potential) if using an IUL. The BAD: Must be in good health to keep cost of insurance low, younger the age....the better the cost of insurance, complex way to buy life insurance. Who should consider using it: 1.) You must believe in the benefits of life insurance. 2.) You may be funding a Roth IRA to the limit, but want more tax-free income potential than what the Roth IRA can do. 3.) You may not qualify for a Roth IRA and your 401k does not offer a Roth option for tax free income. 4.) You may want tax-free access to the cash prior to age 59.5. 5.) Your willing to make a long term commitment to funding based on what you can comfortably afford. Hope this helps and makes some sense for a complex product. I tried to keep it short and left technical info out. Sent from my iPad using Tapatalk [/QUOTE]
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