As advisors who work with many business owners, we often hear the same frustration: “I’ve saved diligently in my retirement accounts, but now I’m concerned about the taxes both for me and my children who will inherit these accounts.” It’s a valid concern. Traditional IRAs and 401(k)s are great for accumulating wealth, but they can create tax challenges down the road. Every distribution is taxable, Required Minimum Distributions (RMDs) force you to take money out whether you need it or not, and your beneficiaries will inherit these tax obligations.

If you’re feeling limited by traditional retirement planning advice, we want you to know there may be other options worth exploring.

A Strategic Approach to Consider

What if there was a way to potentially:

• Reduce your future taxable retirement distributions
• Create tax-free benefits for your family
• Access your retirement funds more flexibly
• Add insurance products for retirement or your beneficiaries

We’ve found that by thinking strategically about how retirement assets are positioned, there may be opportunities to create more tax-efficient outcomes for both you and your beneficiaries. This is where a strategic distribution solution using a profit-sharing plan comes in.

How Does This Strategy Work?

Consider this example:

A business owner came to us with about $1 million in IRAs. He was concerned about future RMDs and the tax burden his children would inherit. His current advisor at the time told him there was nothing they could do about it.

As holistic advisors, we looked at his complete financial picture and identified an opportunity others had missed.

We showed him a different approach:

1. First, we set up a qualified profit-sharing plan for his business
2. Then, we developed a long-term strategy to systematically move portions of his IRA funds into this plan
3. Inside the plan, we used these funds to purchase life insurance
4. This strategy created several tax advantages:
   • Eliminate his future RMD burden
   • Provided tax-free benefits for his family
   • Created more flexible access to his retirement funds
   • Added valuable protection features

Important Note: This is just one client’s experience and may not be appropriate for each client. Each business owner’s situation is unique, and results can vary based on individual circumstances, tax laws, and other factors. Life insurance and profit-sharing plans must be carefully structured to comply with IRS regulations, and not all situations will qualify for this strategy.

Want to learn more about this approach?

If you’re wondering whether a qualified distribution solution might align with your retirement goals, let’s have a conversation. Schedule a complimentary consultation with our caring team of advisors.

Why This Strategy Can Be So Powerful

The key is understanding that you will pay no tax when moving funds from your IRA to purchase life insurance in the profit-sharing plan. Plus, you gain additional benefits like:

• Tax-free death benefit for your family
• Potential long-term care protection
• More control over your retirement distributions
• Simplified estate planning

So, Should You Consider a Qualified Distribution Solution?

Of course, this strategy isn’t right for everyone. It works best for business owners who:

• Have significant IRA or 401(k) balances
• Are concerned about future taxes on retirement distributions
• Want to maximize their legacy for beneficiaries
• Value flexibility in their retirement planning

Each situation is unique, and proper structuring is crucial for this strategy to work effectively. That’s why it’s important to work with advisors who understand both the opportunities and requirements of this approach.

Next Steps

Would you like to explore whether this strategy might make sense for your situation? Our team at Intelliplan Financial would be happy to review your specific circumstances and help you understand if this could be a fit for your retirement planning goals. Schedule a free, no-obligation call with our team to find out.

Disclosure: Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC-registered investment adviser.  Registration as an investment adviser does not imply a certain level of skill or training. Intelliplan Financial and PCA are separate, non-affiliated entities. PCA does not provide tax or legal advice. Insurance services offered through Intelliplan Financial are not affiliated with PCA.