Asked by mkmimi  |  Submitted February 09, 2016

What is a 702(j) retirement plan and how could it benefit me?

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  Answers  |  1

February 09, 2016

A 702j retirement plan is a retirement strategy that uses a life insurance contract to fund retirement. These are also sometimes referred to as Life Insurance Retirement Plans (LIRP) or Modified Endowment Contracts. The benefits tend to favor high net worth individuals who are attempting to lower their tax liability. Basically, an investor overfunds a life insurance contract and then begins taking income from the contract’s cash value at a reduced tax rate or in some cases tax free. These plans are defined by IRS Code 7702.

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