Tax-Free Retirement Income (IRC §7702)

Tax-Free Retirement Income (IRC §7702) is a strategy that allows access to life insurance cash value in retirement on a generally tax-advantaged basis.

What is Tax-Free Retirement Income (IRC §7702)?

Tax-Free Retirement Income (IRC §7702) refers to accessing cash value from a properly structured life insurance policy in a way that is generally income tax-free under U.S. tax law, specifically Internal Revenue Code Section 7702.

Under IRC §7702, a life insurance policy must meet certain requirements to be treated as life insurance for tax purposes. When structured correctly, the policy builds cash value over time, and policyholders can later access that cash value through policy loans or withdrawals that are typically not treated as taxable income (as long as the policy remains in force and is not overdrawn).

In simple terms, it is a strategy where life insurance is used as a supplemental retirement income source, allowing policyholders to potentially receive income without triggering immediate income taxes.

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