How the Infinite Abundance Program Compares to IRA & 401(k) Retirement Accounts
Financial Reason's Infinite Abundance Program is literally America's #1 legal tax shelter. It's an insurance contract that allows you to both invest your money without having to pay taxes on its growth and also to use it when you need it without having to pay taxes on the money you use. That means you can put your money away, earn interest, earn interest on your interest, and share very little, if anything, with the government. And, you can leave it to your heirs without subjecting it to income tax. So no taxes while it is accumulating, no taxes while you are distributing it, and no income taxes when the death benefit gets passed to your heirs.
Those are not the only distinctions between the Infinite Abundance Program and government-regulated vehicles like IRAs and 401(k)s. Unlike the more traditional retirement accounts, they grow without any stock-market risk while still offering competitive growth. And, they don't impose penalties for using the money before age a minimum age, don't require withdrawal beginning at a maximum age, and comes with a death benefit beyond the cash-value that is permanent and guaranteed (unlike term insurance that expires after a certain time or universal policies in which the premiums explode as you get older).
Another benefit, is the coverage for terminal illness care and chronic-care expenses from the death benefit. Because the death benefit is guaranteed, you can in qualified instances access a part of the death benefit to pay for assisted living or terminal illness expenses while you're still alive. And, in all cases, the increased cash-values generated by the Infinite Abundance Program provide more resources for covering unplanned expenses.
Your Infinite Abundance Program is funded with after-tax dollars, like a Roth IRA, so instead of writing off your premium contributions like you would with an IRA or 401(k), you are going to lose the immediate but small tax advantage of a qualified account in exchange for large and long-term tax benefits.
Like any other life-insurance product, your overall health is a factor in qualifying, so not everyone will qualify. But then again, you can be the owner of the contract but not the insured, so you can still use this strategy if you have an insurable interest in someone who is insurable—like a spouse, child, or key employee.
Financial Reason’s Infinite Abundance Program is a New Way to Own an Old Product
For a long time, life insurance was used almost exclusively for insuring a life and was designed to provide for the survivors by replacing the income of the deceased breadwinner. With cash-value, whole life insurance, the insured is not only buying a death benefit, but also accumulating a cash reserve—something the insured can use while they are still alive, like an emergency fund or retirement account. But because whole life insurance contracts have huge tax benefits over other more traditional investment vehicles, savvy investors have started using it as a way to invest money rather than just insuring a life.
​
Whereas a typical whole-life insurance contract has most of the premium being paid to purchase to the death benefit and a smaller portion being put into the cash-value account, the Infinite Abundance Program does the reverse: it puts far more premium toward the cash-value and less towards the death benefit. That way, your money is being invested rather than just set aside for your heirs. But because it is still an insurance contract, it has the same tax protections as any other insurance contract.
The Tax Benefits
To understand the advantages of the Infinite Abundance Program, let’s learn some simple terminology. There are three stages of wealth accumulation. First is the accumulation stage, where you are earning money and putting it away into some investment vehicle. Next is the distribution stage, where you are reaping what you’ve sown and able to pull money out of the investment vehicle. And finally, there is the wealth transfer stage, which is when you pass on what’s left of your accumulation to your heirs.
During the accumulation stage of a typical retirement account, the government entices you to put your money away into a 401k, IRA, or other qualified account by offering to reduce your taxable income by the amounts you put into those accounts, and in exchange, the government won’t charge taxes on the amounts in the account until you take money out of the account at the distribution stage, which you have to do on the government’s terms. But what does that really mean? The average American pays at a tax rate of about 12.5%. So for the average American, what the government is really offering is the following:
Accumulation Stage
For every $1,000 you put into a qualified account, you will save $125 in taxes for that year. And, there are limits to what you can contribute (up to $6,000 max per year for IRAs and $19,000 for 401ks in 2019).
The money you put away in these accounts will be invested and will presumably grow.
But, you bear all the risk associated with the investment. If the economy tanks, and the value of your account gets cut in half, those are 100% your losses.
Distribution Stage
Then, when you’re 59 ½, you can begin taking the money out, at which time you’ll pay taxes on all the money as ordinary income. But, if you withdraw any of the money before you’re 59½, you’ll pay a stiff penalty (10%) plus taxes on the withdrawal. Plus, you pay taxes on the complete withdrawal, including the principal you invested and all the earnings.
If you want to keep the money in the account past 59½, to maximize the growth, you can. But, at age 70½, you have to start taking money out of the account whether you want to or not, and at that point, it counts as income and is fully taxed.
Transfer Stage
If you die while there is still money in the account, then the account gets passed on to your heirs.
But, that amount is included in your taxable estate and the heirs will have to pay income tax on any money withdrawn from the account.
Now let’s consider how the Infinite Abundance Account work in a similar scenario:
Accumulation Stage
With the Infinite Abundance Account, you pay taxes first. Then you pay your premiums. That means for every $1,000 the average American puts into the insurance contract, they will have already paid $125 in taxes. And with few exceptions, those are the only taxes they or their heirs will ever have to pay related to this account.
Unlike a qualified account, you are not limited to $6,000 or $19,000 per year in investments. As long as there is insurable interest, the sky’s the limit.
And whereas a qualified account invested in the stock market comes with economic risk, insurance contracts are guaranteed against loss. No matter how poorly the economy is doing, you’ll have a guaranteed minimum return on your initial Infinite Abundance Account investment plus non-guaranteed dividends for a total of about 5%. As your Cash-Value continues grow and collateralize borrowing to pay future year premiums, the value of your program begins to explode as do your internal rates of return on initial capital invested. Tax free returns in the +/- 15% range can be expected for individuals and +/- 20% can be expected for business owners (ask us to see our "Business within a Business" strategy).
Distribution Stage
Whereas the distribution stage of a qualified account does not begin until age 59½ (without incurring steep penalties), and must occur by age 70½, the distribution stage of an insurance contract is infinitely flexible. This is one of the reasons we also refer to our Infinite Abundance Program as the Flex Method.
At any time—starting from the day after you make your first premium payment up until your death—you can access the cash value of your account. That’s any time, for any purpose, in any amount (up to the accumulated cash value, which includes principal, interest, and dividends). No early-withdrawal penalties. No required minimum distributions. Nothing but freedom and flexibility. And all tax free.
Once the Infinite Abundance Program amplification kicks in and grows the cash-value, Financial Reason will help you to establish a line of credit (LOC) with our banking partners. Your LOC account will include a checkbook providing instance access to your cash-value, as simple as writing a check. As always, we borrow against cash-value rather than withdraw funds directly, in order to keep your cash-value compounding at a higher rate and to keep the IRS away. By establishing this LOC, similar to a HELOC (Home Equity Line of Credit), you have quicker and less expensive access to your cash-values.
Transfer Stage
By the time you retire and are living off of the wealth accumulated over the accumulation stage, you are probably going to be very grateful you put your money into the Infinite Abundance Program rather a qualified account. And despite all the advantages we have covered so far, it’s during the transfer stage that the Program really shines.
Both the qualified accounts and the insurance contract have accounts with cash value that have accumulated over time. But the insurance contract comes with much more, including a death benefit. A death benefit that will typically far exceed the amount you’ve paid into the account.
How Do I Go About Setting Up an Account?
Send us a note, we'll schedule a call.
Typically with life insurance, the insurance agent will first determine how much life insurance you need. The agent will undertake an analysis that includes how much your heirs depend on your income, and how much they would need in a lump-sum to replace your income. The cash-value of the account will be an afterthought. Done this way, the insurance agent gets much bigger commissions as most of the commissions are calculated from the policy premiums paid toward the death benefit.
With the Infinite Abundance Program™, we instead begin by calculating your approximate insurable interest based on your earnings and net worth. Then, taking into account your financial situation, including available funds, expectations for future cash needs and retirement income, age and health status, we write the contract to optimize the financial benefits of your Infinite Abundance Program™ to best meet your needs. This way, most of your money goes to you; fees and commissions are minimized; and because it’s still an insurance contract, you get all the tax benefits discussed above.