How many times have we heard a client, lead or prospect complain about their RMDs? Many times they ask us if there is any way around paying these RMDs and most of the time we throw up our shoulders and say “It’s uncle sam, and he wants his piece.”  The truth is we should using this opportunity to help our clients move their money from it’s current taxable location to a tax-free lump sum position for their beneficiaries.  Let’s thank about this for a second. What is our client really saying? He is saying that he does not like taxes.   He is ALSO saying that he does not need this money and he doesn’t want this money.  What can we do for him? One option is to take the RMD money, have the client save what is needed for taxes and use the rest to fund a life insurance policy that will provide a lump sum tax-free benefit for his beneficiaries.  We can also take this idea one step further.  We can annutize his qualified money over 10 years and fund the life insurance to create even a bigger death benefit.  Of course, there are a few flaws with this idea and you will need to discuss the positives and negatives with your client before moving forward.

Two big items to think about:

1) is your client healthy enough to be underwritten for life insurance

2) Can you show your client that the extra tax burden now is worth it to create this legacy for his beneficiaries.

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Life Insurance | Death Benefit

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