Second Example: What if they could withdraw $24,000 of fully taxable income over and above your $32,000 of Social Security, and still pay no income tax? That would cause $4,000 of the couple’s Social Security to be taxable. Added to the $24,000 of fully taxable income they withdrew, that adds up to $28,000. The standard deduction is $28,700, that would eliminate the income tax. That means they could reallocate $24,000 annually with no income tax liability. What could they do to benefit their family with $24,000 more available yearly because of the rule of 49-10? Third Example: Let’s say they need $40,000 per year to live. Doesn’t that still leave $9,000 per year that can be withdrawn? If the tax on the $49,000 is $2,055, doesn’t that leave a net $7,000 that can be reallocated annually to a cash-value life insurance policy? At the end of 10 years, wouldn’t they have transferred $70,000 of forever-taxable money to almost $70,000 of never-taxable money they could use any way they choose without income tax liability? Here’s the best part: let’s say that the $7,000 per year buys $140,000 of face amount life insurance. If the effective tax on that additional $9,000 is 4.2 percent or $378 per year or in 20 years $7,560, wouldn’t the death benefit reimburse the family for the income taxes they paid while they were alive? Doesn’t that mean that they have figured out how to get all their gains out of qualified and non-qualified money without paying one cent of tax out of their own pocket? Fourth Example: Now let’s say a family requires $47,000 per year to maintain their standard of living. Are they taking advantage of the rule of 49-10? If they have $100,000 of $150,000 in an IRA or 401(k), when the husband-and- wife die, the children could easily pay $30,000 to $50,000 in taxes if the money is taken in a lump sum. If they withdraw the difference between $49,000 and the $47,000 they are living on, the effective tax on that extra $2,000 would be $84. That $2,000 annually could buy $30,000 to $50,000 face amount life insurance policy, and they wouldn’t even be spending the money. They would be transferring the money from their left pocket
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