Frequently Asked Questions (FAQ’s)



  1. The Tax-Free Retirement Plan sounds and looks like a Roth IRA.  What are the differences?

Not everyone is eligible for a Roth IRA.  The amount you can contribute is phased out for single people making between $110,000 and $125,000 and married people filing jointly between $173,000 and $183,000. Almost everyone is eligible for the tax-free retirement plan.

For those eligible for a Roth IRA, contributions are limited to $5,000 per year, $6,000 if over 50.

You could contribute $100,000 even $1,000,000 per year to the Tax-Free Retirement Plan.  There are some technical limitations.  You cannot contribute $100,000 or $1,000,000 in a single one time lump-sum.  The contributions have to meet certain test, and you would have to contribute over 4 years to meet the test.  Otherwise if you don’t meet the test, the withdrawals would be taxed like an annuity or IRA.

2. What if I am not insurable?

A second to die policy with your spouse or child could work.  You could also own a policy insuring a spouse, child or key employee. The goal is to maximize living benefits (cash value) and minimize death benefits.  Life insurance is the best tax shelter available.  We have just enough insurance to qualify as a life insurance contract.  The insurance wrap provides the tax shelter and tax-free growth.

3. Am I too old for the insurance?  Won’t it cost too much?

Age is usually not a problem.  You could also own a policy insuring someone else, so long as there is an insurable interest.  The key is how long you can defer withdrawals.  The longer you can wait, the more powerful the tax-free compounding becomes.

Generally life insurance costs more the older you are.  But with the tax-free retirement plan, the key concept is you are charged insurance premiums on the amount the insurance company is at risk.  This is the difference between the face amount of the insurance policy and the cash surrender value.  This spread is much greater for a young person than an older person.  So you pay for more insurance when you are younger when it costs less, and less insurance when you are older and it costs more.  You’ll find the costs of the insurance is a lot less than the taxes avoided.  Also a second to die policy could lower the insurance costs.

4. Are there early withdrawal penalties like an IRA?

No, if you take tax-free policy loans.  The proceeds are not taxable, unless you cancel the policy.  If you do, then all the previous withdrawals above the premiums paid becomes taxable, and subject to the 10% early withdrawal penalties for people under age 59 ½.  The insurance company will warn you not to let this happen.  They will convert to a reduced paid up policy to prevent cancellation.

5. Is their Stock market risk?  Can I lose money due to market volatility?

Your downside risk is eliminated.  You share in market upside but in none of the market losses.

During the Financial Market meltdown of 2008 and early 2009, when many people saw their IRAs, 401(k)s, 403(b)s stocks and mutual funds cut in half, none of our clients lost money in their tax-free retirement plan due to market volatility.  Their money was safe and secure, and their incomes steady and reliable.

6. Why is it necessary to get court approval on the discounted designer annuities?

The courts are looking out for the consumer.  The consumer must have a reason considered valid by the courts to assign the future payments to the investor.  Also, if you don’t get court approval, there is an excise tax that would wipe out half the discount, reducing the rate of return to unacceptable levels.  IRS form 8876.  For that reason all our structured settlement annuity assignments are court approved.  With the court approved assignment, the insurance company will send future payments directly to you.

7.  Why have I not heard about discounted designer annuities before?

It has been a closely guarded secret, known to a small group of originators, a couple of hedge-fund managers and billionaires.  The originators won’t talk to individual investors with less than $60 million a year to invest.  It is not a good use of their time.  They can call up their hedge-fund investors, and move a $50 million dollar portfolio in minutes.  They could spend an hour or more with an individual investing $50,000 to $100,000.  Their time is better spent originating.

This is a multi-billion dollar niche.  The originators want to fly under the radar.  They are making a lot of money and they want to keep it that way.

My associates and I are experienced working with high net worth individuals, executives and professional athletes.  They prefer to leave that market to us.

8.  Why hasn’t my broker ever told me about this?

He probably never heard about his.  Also, Discounted Designer Annuities are not a security and brokerage firms don’t offer them.  This is an insurance receivable, and you are benefiting from a factoring transaction. Factoring has been around for 4000 years.


These are million dollar ideas! They could add millions to your family’s life time income. Please call with any questions.

Bruce E Cox CPA

Retirement-Toolbox Inc

240 Regina Street

Philadelphia PA 19116



[email protected]



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