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Julian Said:

Life Insurance Tax Deductions?

We Answered:

Section 412(i) of the IRC. Split the money between an Annuity and a Life Insurance policy. Premiums are usually 100K a year minimum. Business owner sets up a 412i plan, puts qualified (pre-tax) money into the plans, writes off the premium against their income for the year, pulls the money out at retirement. Needs to be a fixed annuity and a whole life policy. Has to get a third party TPA as well. It's well worth it (for now) 412i has come under a lot of pressure lately. Don't know it's future. It's basically a fully insured pension plan that benefits the business owner.

Jacqueline Said:

Tax treatment of life insurance premium on officer's life.?

We Answered:

The premium for the first $50,000 is a fringe benefit. The rest is ordinary income.