It is rather shocking to realize that you could create an income plan for your retirement that could significantly reduce or eliminate altogether your RMDs (required minimum distributions). Reducing RMDs can impact Social Security benefit taxation by lowering the income includable in the provisional income test, sometimes lowering the threshold a full “tier.” Employers have an opportunity to select a variety of ERISA plans for themselves as well as their employees. One plan often overlooked is a profit sharing plan. Its ability to use cash value life insurance is unique and it can be converted almost tax-free. If the life insurance policy is a non-modified endowment contract held in the profit sharing plan, an economic benefit will be annually assessed and trigger a relatively small ordinary income tax event each year it’s in the plan. Generally speaking, the money must be staged into the life insurance policy 3 years or more to comply with the TAMRA regulations. When you purchase the life insurance from the profit sharing plan for its market value, generally the cash surrender value; you access the cash values of the policy via loans tax-free. Cash value life insurance uses collateralized loans from the policy to generate   Read more…