Internal Revenue Code Section 7702 - Life Insurance Retirement Plan

Life Insurance Retirement Plan (LIRP),
under Internal Revenue Code Section 7702

The Situation

Will you have enough retirement income?

If you’ve caught yourself wondering whether or not you will have enough income at retirement to continue your current standard of living, you are not alone. In fact, having enough retirement income is one of the leading concerns facing Americans today.

Due to the limits on contributions for qualified plans and social security benefits, individuals earning high incomes may find that a diminishing percentage of their current compensation can be replaced at retirement through these two sources. In fact, as the chart below illustrates, as the annual income of an individual in a 401(k) plan increases, the percentage of compensation replaced by both the 401(k) plan and social security actually decreases.

Annual Compensation Replacement Example

Compensation	$50,000	$70,000	$100,000	$150,000	$200,000	$250,000
401(k) plan deposit 10% of compensation¹	$5,000	$7,000	$10,000	$15,000	$15,500	$15,500
401(k) plan income²beginning at age 67	$17,148	$24,012	$34,307	$51,467	$53,183	$53,183
Social Security,³ beginning at age 67	$19,764	$23,424	$27,588	$28,644	$28,644	$28,644
Total Retirement Income	$36,912	$47,436	$61,895	$80,111	$81,827	$81,827
% of compensation	73.8%	67.8%	61.9%	53.4%	40.9%	32.7%

As you can see, the higher your earned income, the more you suffer from reverse discrimination due to limitations on qualified plans and capped social security retirement benefits.

There are solutions, one of which is the Life Insurance Retirement Plan, or LIRP.

Notes & Disclosures


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