Tax Advantaged Insurance Life Insurance Plans

Through the use of special tax-advantaged life insurance programs, certain types of pension, and other IRS approved programs which are offered through our organization,  it is possible for an individual to enjoy the following advantages:

• Tax deductible life insurance premiums.
• Place up to $1,000,000 into your pension plan and deduct the contribution on your business tax return.
• Own life insurance policies purchased with pre-taxed dollars outside of your estate.
• Create a tax-free retirement income from untaxed dollars that are held in qualified (IRA, 401(k), 403b, Keogh) plans.
• Move your life insurance outside of your taxable estate.
• Fund a buy/sell agreement with life insurance purchased with tax deductible dollars.
• Form a separate bargaining unit for your employees which can allow the executive group to have a different benefit plan then the employees. such as a 412(i) Plan and still comply with ERISA.

412(i) Pension Plans provide business owner-employees and key employees with the opportunity to place significantly larger sums (by 3 to 6 times) into insurance based pension programs than are allowed under traditional defined benefit programs.  The participant may both deposit larger sums and may choose specially designed insurance products.   These policies may subsequently be transferred into a Family Limited Liability Company (FLLC), Family Limited Partnership (FLP) or Irrevocable Life Insurance Trust (ILIT), and therefore outside of the client’s taxable estate.  Alternatively, the client may purchase the policy, retain it personally and subsequently generate a tax-free retirement income from the cash values that are within the policy.

The chart below illustrates the power of a 412(i) plan:

For qualified organizations, we are able to arrange financing for the amounts placed into the 412(i) plan.   The result is an increase in cash flow for the organization in approximately the amount of the tax reduction gained by entering into the program.

The plan limits and operations are based upon the calculations of a top actuarial firm, and the organization for whose employees the plan is drawn will receive a letter ruling from IRS approving the plan as it is drawn.   

419 A(f)(6) Plans are powerful programs that allow the owner-employee or key employees to pay substantial benefit amounts into a specific insurance based plan.   The benefit of these plans can far exceed the benefit of traditional plans and allow, through the structure of the program, for the insurance policies that are purchased in the plan to be purchased with tax-deductible dollars.   These plans are under a continuing review by Congress and there may be changes made to the structure in the near future.   However, these reviews are motivated by Congress’ desire to correct excesses, not to discontinue a valuable program.  These plans may be structured and operated in such a manner that the insurance policies covering the business owners/key employees may ultimately be used to fund a buy-sell agreement (with pre-tax dollars).

Community Supporting Organizations present more tax-advantageous solutions than private foundations, dynasty trusts and the charitable remainder trust family.   Although not based upon new legislation, these organizations are not well known to many planners, despite their superiority to other available choices.   We have included in this site a special manual intended to familiarize the reader with the power of these organizations and the planning opportunities which they present.   It is important to note that these organizations may be organized to support domestic and foreign public charities.

Income and Estate Tax Reduction Plans are available through specially designed insurance plans that can overcome the tax difficulties presented by substantial and over-funded qualified plans (IRA, 401(k), 403b, Keogh).  These tax reduction plans are available through our offices.  The plans cause excess funds to be absorbed into the insurance policy before the policy is purchased out into a FLLC, FLP, ILIT, or retained by the individual and subsequently used to provide a tax-free retirement income from the cash values within the policies.

 Offshore Insurance Programs present individuals and businesses with tax efficient financial and estate planning opportunities that are not available through domestic insurance programs.   Typical programs include Life, Medical Malpractice, Loss of Income, Legal Costs, Disability and a broad range of business coverages.  Offshore insurance plans offer expanded flexibility through the separated accounts, utilize world-class insurance providers and funds managers, and generally offer more efficient financial and asset protection programs than may be had domestically.  

• Offshore variable universal life insurance programs allow the ownership of real property and various types of financial contracts in the separated accounts, after minimum funding requirements are met.

• Medical Malpractice, Prior Acts, Loss of Income, Legal Costs, Disability plans through offshore captive insurance programs are available for individuals and for groups and clinics.

Very significant estate and income tax planning opportunities are available through offshore insurance programs.   These programs

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The plans and strategies outlined above are typical of the power of the tax-advantaged insurance programs, and the asset protection and financial strategies that are available through the expertise of Creative Asset Protection Strategies, Inc.   We also utilize the power of ESOPs, FLP/ESOPs, limited partnerships, limited liability companies, irrevocable life insurance trusts, Sub-Chapter S corporations, dynasty trusts, wealth replacement trusts and the charitable remainder trust family.

For more information about any of the above programs, or for a program designed for your situation, please contact us directly.