GoldenTrust Insurance

Tax-free Retirement Plans

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What if you could:

  • Provide an income tax-free death benefit for the people who depend on you
  • Defer taxes as your accumulated cash value grows, and
  • Potentially access that cash value using income tax-free policy loans and withdrawals, to use for retirement income or other needs

Strategies to Save For Retirement

  • After Tax Strategy – when you set aside a portion of your after-tax income into an account earmarked for retirement. Taxes are paid annually on any earnings. An example of this type of savings is a Certificate of Deposit.
  • Tax-Deferred Strategy – when you set aside a portion of your after-tax income for retirement, earnings on the account grow tax-deferred. When retirement income is taken, taxes are due on the tax-deferred gain. A Non-Deductible IRA or an annuity is an example of this type of savings.
  • Pre-Tax Strategy – might include an Employer-sponsored qualified plan, like a 401(k) plan. You don’t pay current taxes on contributions made to the plan and earnings grow tax-deferred. Later when you take retirement income the benefits are income taxable.
  • Tax-Free Strategy – is similar to the Tax-Deferred Strategy: you set aside a portion of your after-tax income, and earnings grow tax-deferred. Retirement income is received income tax-free. A Roth IRA is an example of this type of savings. Another type of financial vehicle is permanent life insurance.

Let’s take a closer look at tax-free retirement strategies.

  • Roth IRAs: Good choice……if you qualify. In order to contribute to a Roth IRA your adjusted gross income must be below a certain threshold. In 2011, contributions are limited to $5,000 per person unless you’re 50 or older and then you can contribute an extra $1,000 as a catch-up provision.
  • What are your options if you don’t qualify for a Roth IRA, or if you want to contribute more?
  • Permanent Life Insurance: The primary purposes for purchasing permanent life insurance is for the death benefit protection that it provides. However, permanent life insurance offers the ability to build up tax-deferred cash value that can be accessed during your lifetime to generate a stream of retirement income – potentially income tax-free.

It may be that a combination of the two works best for you.

  • If you meet the income eligibility requirements for a Roth IRA but want to set aside more than the contribution limits allow and you have a need for protection, you may want to do both a Roth IRA and Permanent Insurance. Contribute the maximum you can under the Roth and then apply the excess amount to your life insurance coverage.

Open Enrollment

for Health Insurance

November 1st - December 15th