Taxes, the Successful Business Owner & Life Insurance

Taxes, the successful business owner, and life insurance

Article Highlights

  • For successful business owners paying hefty personal income taxes, there are alternatives that can take as much as $100,000 or more of your income tax bill and redirect it into qualified retirement funds.
  • For high wage earners, these plans can help create a tax advantaged supplement to qualified plans with few limits on the amount assigned to the plan.
  • These plans incorporate specialized life insurance, designed for the specific goal of helping to create sizable retirement savings.
  • Additionally, these plans provide the ease of mind of knowing that those who rely on you have a plan in case the worst happens.

This is not your grandfather’s insurance.

Taxes. This time of year creates an annually recurring heartburn for successful business owners and high wage earners.

For many, paying taxes is the single highest cost of doing business. It hurts. Many look for ways to offset taxes and put away something for retirement. There are some options, like 401k plans, but these offer very limited benefits to business owners.

For business owners paying hefty personal income taxes, there are alternatives that can take as much as $100,000 or more of your income tax bill and turn it into qualified retirement funds.

Yes, life insurance is involved, but as the title suggests, this isn’t your grandfather’s life insurance. These plans incorporate specialized life insurance, designed for the specific goal of helping to create sizable retirement savings. There is a process of discovery and design involved, so you need an experienced life insurance agent to work with you and your team (lawyers and accountants) to make sure the plan will be successful.

Another benefit of leveraging life insurance is creating a better retirement nest egg outside the qualified plan arena. High-income earners struggle to find ways to put money aside for retirement in a tax efficient way. The traditional plans—IRAS, Roth IRAs, 401k plans and the like—were constructed to allow middle class earners to put something away on a tax favored basis. But the caps placed on the amounts a person can put away, in addition to the income restrictions, make those plans too small to properly support a high income earner’s lifestyle during retirement. Add to that the fact that life expectancy has extended as much as 20 years longer than when some of these plans were first developed, and you can see the potential shortfall that confronts this group.

These plans offer tax advantages, few limits on the amounts put aside, and the ease of mind of knowing that those who rely on you have a plan in case the worst happens.

Properly designed life insurance policies can profoundly impact the level of retirement savings for business owners and high-income earners. However, it is important for them to understand all the facts about putting a plan into action. That’s why you need to add an experienced life insurance agent to the professional team. At Latorre Insurance, we have the ability and experience to work with the rest of your team to create the right plan and funding amount to fill the retirement funding gap.

These plans can be initiated now to help offset taxes for 2017. For high wage earners, these plans can help create a tax advantaged supplement to qualified plans with few limits on the amount assigned to the plan.

Give us a call or send us a note. Let’s discuss ways to help you have a better retirement.


 

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Richard Latorre is President of Latorre Insurance, a full-service, independent insurance brokerage in North Carolina. Since June of 2003, his agency and its team of property, liability, health and life insurance agents and customer service representatives have served the insurance needs of thousands of clients in both North Carolina and South Carolina.