Prepared for James White · Confidential
A way to move your retirement savings out of a tax trap and into an account you control, where the income comes out tax free and your family is protected along the way.
Where the money sits today
Your $785,000 has done its job growing, but it carries three pressures that never go away as long as it stays where it is.
Every withdrawal in retirement is fully taxable as ordinary income. At a 32% bracket, nearly a third of each check goes to the IRS.
Starting in your seventies the government forces taxable distributions whether you need the income or not. You lose control of the timing.
Under current law, the heirs who inherit this IRA must drain it within ten years and pay income tax on every dollar. The tax problem passes to your family.
The goal is simple: move this money from uncontrolled and at risk to controlled and safe.
How the rescue works
We reposition the IRA over five years into an indexed universal life policy. The clever part is the middle step: the policy itself lends you the cash to cover the tax, so you are not writing checks to the IRS out of pocket.
$157,000 a year flows from your IRA into the policy, from age 48 through 52.
Each move triggers about 42% in tax and penalty. A policy loan of $65,940 pays it, so nothing comes from your savings.
Once repositioned, the policy pays you tax free income for retirement, every year from 65 to 90.
The 42% reflects a 32% income tax plus the 10% early distribution penalty on each $157,000 moved. Because the loan is internal to the policy, your out of pocket cost for the tax is effectively zero.
The repositioning years
Here is exactly what happens during the move. Money comes out of the IRA into the policy, and the policy loan quietly settles the tax the following year.
| Age | Into policy | Tax & penalty (paid by policy loan) | Status |
|---|---|---|---|
| 48 | $157,000 | — | Year 1 in |
| 49 | $157,000 | $65,940 | Loan covers tax |
| 50 | $157,000 | $65,940 | Loan covers tax |
| 51 | $157,000 | $65,940 | Loan covers tax |
| 52 | $157,000 | $65,940 | Loan covers tax |
| 53 | — | $65,940 | Final tax settled |
| Total | $785,000 | $329,700 | Repositioned |
$785,000 moved out of the tax exposed IRA. The entire $329,700 tax and penalty cost is carried inside the policy, not paid from your pocket.
The retirement payoff
The honest comparison
We gave the IRA every advantage: a steady 7.6% every year, no down markets ever, and a comfortable 4% withdrawal. Even under those ideal conditions, here is how the income and the taxes compare.
After tax dollars in your pocket from age 65 onward. Same idea, one is taxed, one is not.
Beyond the numbers
The income comparison is only part of the picture. The policy comes with protections an IRA was never built to provide.
Income tax free protection for your family from day one, not just whatever the account has grown to.
Access up to $500,000 of the death benefit while living for a qualifying chronic or terminal illness.
Indexed growth participates in up years and is shielded from down years. A bad market cannot reduce your value.
No required minimum distributions. You decide when and how much to take, on your own timeline.
Cash value life insurance carries meaningful protection from creditors, varying by state.
Your family inherits the death benefit tax free, instead of a fully taxable IRA they must drain in ten years.
The protection that starts immediately
The IRA only gives your family whatever it has grown to. The policy delivers a full, tax free death benefit from the very first year. If you passed at 55, the difference is stark.
In the early years the policy protects more, and what it protects arrives tax free. The strategy is self completing: if life is cut short, your family is covered in full.
The whole picture
| What matters to you | IRA Rescue | Leave in IRA |
|---|---|---|
| Retirement income tax treatment | Tax free | Fully taxable |
| Spendable income each year | $101,522 | $74,173 |
| Lifetime taxes you and family pay | $329,700 | $3,694,796 |
| Protected from market downturns | Yes, 0% floor | No |
| Death benefit if you pass early | Up to $2.05M | Account only |
| Living benefits if you get sick | Up to $500,000 | None |
| Required minimum distributions | None | Forced at 73+ |
| Tax owed by your heirs | $0 | Up to 32%+ |
| Largest theoretical balance, ideal markets | Lower | Higher |