Have you ever heard about, or read about “Secure Act” passed by Congress in 2019? Do you know it ruined retirement plans for millions of people? Wondering if you’re affected? Yeah, I was too.

When Congress passed the SECURE ACT in 2019, in part, it achieved the exact opposite of providing security to anyone. But, what it DID do for sure, was ruin the security many people were counting on for building their own retirement plans. I bet you’re wondering how…

What’s a Stretch IRA?

Ever heard of the “Stretch IRA” rules? Well, if you haven’t, you should read up. You can get more information on it here.

The damage the Secure Act does is make inherited IRA money highly taxable because your beneficiaries MUST withdraw all of the IRA money (and subsequently pay taxes on it) within 10 years of inheriting it.

Why? The government wants the tax revenue of course. They realized that there was a juicy loophole in the tax code and decided to close it. And because of that, now beneficiaries cannot stretch out inherited IRA withdrawals over their lifetime (or not at all) and minimize the tax burden by taking smaller amounts over a longer period of time which also allows the account to continue to grow in value, tax-deferred.

Now, that’s not possible anymore unless you’re one of a select few people who are what’s called “eligible designated beneficiaries” or EDBs for short. And most people are NOT qualified EDBs.

Why You Should Care About The Elimination of the Stretch IRA

Now, I know what you’re thinking. What do I care? I’ll be dead! Let my kids work for their money and worry about their own taxes! Well, you might be one of the current retirees or pre-retirees who are about to inherit your parent’s IRA money. So you should really pay attention to this.

Take a look at this blurb from a page from Ed Slott, who is one of the most well-respected retirement experts, authors and speakers here in the US. In his new book, “The Retirement Timebomb” Ed explains why permanent life insurance (also known as whole life insurance) is now the best vehicle in an estate plan for passing on your money in a tax-minimizing way.

While IRAs may be moving to the trash heap for estate planning, life insurance gets bumped up TO THE TOP OF THE LIST of tools for creating your perfect estate plan.

Ed Slott, Retirement Expert, Author and Speaker.

What Retirement Experts Recommend to Avoid the Hefty Taxes on Inherited IRAs

That’s right – according to Ed, smart retirement planners are now calling permanent life insurance/whole life insurance “the new stretch IRA.” And he’s the bonafide expert, and worth listening to.

If you haven’t read Ed’s new book “The Retirement Savings Time Bomb” you should, it’s full of great advice on how to you can build an iron-clad retirement plan for yourself and leave your beneficiaries a tax-free fortune. And, if you buy Ed’s book for Kindle, you can get the audio version for just a little more, and toggle easily between reading and listening. Audio books are a great way to make the best of time driving, mowing the lawn or doing any other activity that you wish could be more productive than it is!

So what does the average person do now? How can you protect the IRA you might inherit, and then protect the IRA money your beneficiaries will inherit one day?

BUY A GREAT WHOLE-LIFE INSURANCE POLICY NOW

AND BUY IT FROM A GREAT COMPANY. A company with a long history of paying dividends to it’s policyholders. I bet you didn’t know that existed either — a life insurance company that pays dividends. How SWEET is that?! And, it just gets better.

Cheap is exactly that — cheap. If you’re shopping for rock-bottom prices, then you often get what you pay for. And that’s true for life insurance as well. You want the best policy, with the best company, and you want to get your whole life policies as young as possible. Yes, they are more expensive than term life insurance, but you don’t have to die to get access to that money. How great is that? Life insurance that pays you while you’re still alive. And, it pays out a hefty death benefit (TAX FREE*) to your beneficiaries upon your passing.

*Of course we have to add the footnote there – if your estate exceeds the estate tax exemption amount (currently about $11,000,000) then you may have a tax obligation on some or all of the money over that amount.

But for most people, the life insurance money will come to them totally tax-free. So why not consider moving some of your money into permanent/whole life insurance now and save on taxes later? It’s a very sensible thing to do.

Want to know how YOU can take advantage of all the benefits of a permanent/whole life insurance policy? Schedule a free consultation and tax assessment with us today!