From Yahoo Finance: 2025-04-12 18:01:00

Financial advisors are using a little-known trick to reduce taxes on 401(k) distributions after retirement: variable life insurance. These policies tie long-term investments to market interest rates, providing investment opportunities, insurance coverage, and tax breaks. The tax benefits are derived from an IRS loophole in section 7702 of the tax code, allowing tax-deferred growth on after-tax contributions. Investors can access cash value tax-free, potentially reducing taxable income and providing tax-free retirement income. However, careful planning and consideration are necessary, as these policies require long-term commitments and careful management. It is advised to consult with licensed advisors or brokers before making any investment decisions.



Read more at Yahoo Finance: This Secret IRS Loophole Helps You Reduce Your Retirement Taxes