Did you know the average retiree pays almost $10,000 per year in taxes.
What those people don’t know, is there’s a special loophole that helps them put that money back in their pockets where it belongs.
This is 100% legal and something you should be implementing today…
The loophole I’m talking about is the 702(j) plan.
If used correctly, this plan can keep your retirement entirely tax free!
So, what exactly is this secret 702(j) plan?
Well, contrary to popular belief, it’s not actually a retirement plan at all.
It’s a permanent life insurance policy that contains a loophole so you can use it like a retirement plan.
That’s probably one of the reasons you’ve never been offered this plan when considering your retirement with your fund manager.
Right now, you’re probably wondering why I’m suggesting life insurance instead of a 401(k) or a Roth IRA…
It’s simple: why would you want to pay up to $10,000 a year in taxes with a 401(k)/Roth IRA when you can use your life insurance policy to fund your retirement completely tax free?
The reason the 702(j) plan can be used to fund your retirement is because you can take out tax-free policy loans.
Not only that, but the beneficiary of your 702(j) plan receives the funds tax free.
Compare that to a 401(k).
When you take a loan out of your 401(k), you pay interest rates which become much higher the longer you take to pay your loan off, and you have to pay the income tax on any money you loan.
Your money would then also be taxed when you withdraw it in retirement.
So, you’re taxed on that same money twice.
Again, a 702(j) plan allows you to borrow money tax and interest free, AND there’s no income tax to be paid when your beneficiary receives it.
A Roth IRA is similar to a 401(k) in the sense that you’d be taxed twice. Only with this, you’re taxed on the initial contribution instead of the final withdrawal, but you’ll also be taxed on any money you loan from a Roth IRA account.
Another upside to the secret 702(j) plan is that your loan withdrawals don’t count towards your taxable income.
For instance, if you make $38,000 a year, you’re in the 12% federal tax bracket.
Let’s say you withdraw $5,000 from your 401(k). That $5,000 bumps you up into the 22% federal tax bracket.
A $5,000 loan withdrawal from a 702(j) won’t count toward your income and will keep you in that 12% federal tax bracket.
So, not only is the 702(j) withdrawal tax-free, but it also saves you from paying extra tax on your overall income.
Now, of course these 702(j) plans aren’t for everybody, but the most important thing is that you explore it as an option when considering your retirement.
