Subscribe Today: The tax free paradigm essentially says there is an ideal …

3 replies
  1. Joshua Thompson
    Joshua Thompson says:

    Hey, I just opened your book today and nearly halfway done, its a good read!
    The only thing I'm confused about is this, is a LIRP an actual account or is it a general phrase that includes term-life insurance and or whole life insurance ect.?

  2. Jason Buckman
    Jason Buckman says:

    A LIRP isn't a tax free account. It's tax-deferred, but because there was no tax deduction on the money going in you aren't taxed again on that. It's only the tax basis that's tax free, not the growth.

    A unique feature of a LIRP vs a non-deductible IRA or an annuity, is that when done right the distributions are FIFO rather than pro-rata, meaning what you take out first is your basis, which is tax-free becauase you already paid taxes on that.

    Taking a loan out from it isn't tax-free income either. It's not income. It's a loan. Loans are always tax-free because they aren't income. That's not unique to a LIRP.


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