This would also provide him approximately $55,000 tax-free income from age 70 to age 90 ($1,375,000), and his PB account would still have $809,241 cash value with a $1,236,199 death benefit compared to the Bank's $340,056 with never having any life insurance. Plus, with PB the account throughout its history has been very liquid for emergencies, purchase of inventory or other "Big Ticket Items", down cycles in business, and in his case, the money is protected from outside predators such as the probate courts and lawsuits. This example is based on current dividends. Which account makes the most sense to you? Which account would your family choose for you to invest your business account with? Special Note: On December 20, 2019, "The Secured Act: Changes in the Rules of Retirement" went into effect. With the stroke of a pen, Congress eliminated the Stretch IRA, and its strategy to shelter inherited income. Under the new law, non-spouse beneficiaries will have to withdraw all the funds in the inherited IRA within 10 years from the death of the original account owner. This is a maneuver for the government to get their tax dollars sooner rather than later. I want to recap seven reasons for never putting money in a government- qualified plan 401(k), 403 (b), IRA, or SEP: 1. 2. 3. 4. 1. As history has shown us repeatedly, one can lose a large amount of money overnight. In 1987 the Dow Jones 30 dropped 22% in one day. Do you remember the years 2000–2003 or 2008–2009? 2. Management fees can wipe out 30 to 40% of a retirement account. One must also calculate the compounding results of how much a small fee really costs over time. 3. Qualified plans are tax-deferred, but does a person know what tax bracket he/she will be in at retirement? What will the personal federal and state income taxes be at your ideal retirement date? No one knows! 4. A lack of liquidity can present a real problem in times of stress.
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