If you are in search of methods to scale back your taxes in retirement, you may need to take into account buying life insurance coverage. While it isn’t a tactic that many individuals take into consideration, tax consultants say it could actually present a tax-efficient retirement stream.
So, what kind of coverage do you have to take into account? Our Retirement Daily’s Robert Powell caught up with Jeffrey Levine, CPA and tax professional from Buckingham Strategic Wealth Partners, for some recommendation.
Recommended Read: Is Your Life Insurance Taxable?
Watch the video interview above, or learn the video transcript under.
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Quotes| Can Life Insurance Help Mitigate Taxes in Retirement?
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Video Transcript| Jeffrey Levine, CPA and Tax Expert, Buckingham Strategic Wealth
Robert Powell: How can life insurance coverage assist mitigate taxes in retirement? Well right here to speak with us about that’s Jeffrey Levine from Buckingham Strategic Wealth. Jeffrey, welcome.
Jeffrey Levine: It’s good to be with you, Bob.
Robert Powell: So it is most likely not a tactic that many individuals take into consideration, however you should utilize life insurance coverage.
Jeffrey Levine: Yeah, completely. I’d say that from a tax code perspective, there are actually two ways in which life insurance coverage might be able to assist somebody create a tax-efficient retirement stream. The first is, relying upon the kind of coverage, some insurance policies permit money to construct up contained in the coverage.
So along with, as an instance, the demise profit part if somebody passes away, in addition they have a financial savings account, if you’ll, contained in the coverage. And these financial savings account buildings throughout the life insurance coverage coverage will be structured in a manner that may permit tax-free loans or tax-free withdrawals. So each of these might create an environment friendly technique of accessing {dollars} throughout the life insurance coverage coverage that can be utilized for any functions, retirement or in any other case.
The different manner life insurance coverage can be utilized with respect to a retirement earnings stream is just by its initially designed mechanism, proper? When somebody dies, life insurance coverage pays a demise profit. And so in case you have a married couple they usually every have life insurance coverage, properly, when the primary partner dies, the second partner will be capable to use the proceeds from that coverage, that are paid tax-free. Life insurance coverage advantages are tax-free. So that surviving partner, I ought to say, would obtain a tax-free inflow of money that they might use to assist the rest of their very own retirement.
Editor’s Note: The content material was reviewed for tax accuracy by a TurboTax CPA knowledgeable.
Zach Faulds contributed to the writing of this text and produced the video and/or the graphics related to it.
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