NU Online News Service, Feb. 9, 2004, 12:33 p.m. EST – Remember that a qualified retirement plan can be an estate-planning tool.[@@]
That’s the advice that a sales expert at Manulife Financial Corp., Toronto, has for agents who are trying to persuade business owners to set up plans.
Randy Zipse, vice president of advanced markets at Manulife’s Manulife U.S.A. unit, says using distributions from a 401(k) plan or other qualified retirement plan to buy life insurance can give highly paid executives significant tax advantages.
Under this arrangement, a client uses plan proceeds to fund a wealth transfer plan inside an irrevocable life insurance trust. If properly set up, the trust is outside the individual’s taxable estate and can receive life insurance proceeds free of estate and income taxes, Zipse says. The arrangement also cuts the client’s qualified plan assets and hence the size of the taxable estate.