A highly compensated partner in a successful private equity firm realized he was unable to adequately save for his retirement using his 401(k) alone.
BEJS created a supplemental, tax-advantaged policy that allowed him to contribute over five times the amount he was limited to in his qualified plan. While the contributions were after-tax, growth in the policy was tax-deferred, and policy distributions were received tax-free. The partner could allocate values amongst a number of different asset classes and could re-allocate without paying taxes. In addition, the policy’s values were afforded creditor protection in the event of bankruptcy or some other unforeseen lawsuit. Finally, the policy’s death benefit was sufficient to complete much of his family’s retirement needs if he died before funding of the policy was complete.
The partner now has a portable, tax-advantaged vehicle in which to supplement his retirement savings that is not encumbered by qualified plan doctrine limiting the amount of his contributions and the timing of his distributions.