Can You Roll a Qualified Plan into a Life Insurance Policy?

Question of the week this week is can I roll a 401k or IRA or some type of qualified plan into a life insurance policy? The answer to that is no and you really don't want to either because if you were able to roll a qualified plan into a life insurance policy then the life insurance policy would be taxed as a qualified plan and with the growth in the life insurance policy you wouldn't want to set that type of future taxation up. But there is a way that you can get money out of your qualified plan and put it into life insurance and it's especially easy right now due to the CARES Act. The Coronavirus Aid Relief and Economic Security Act that was signed into law by the president on March 27th of this year allows you to access funds in your qualified plan before age 59 and a half without the 10% penalty. So now you can take money out of your qualified plan and use it to purchase life insurance. Of course you will have a tax when you pull the money out of the plan but that is a way that you can now access funds without that 10% penalty just a tax and get it into life insurance so that it can grow tax deferred and you won't have extra taxes on it when you go to use it in the future. So while you can't roll a qualified plan to a life insurance policy you can use money from a qualified plan to purchase a life insurance policy. If you have a qualified plan or you would like to use money from your qualified plan to purchase a life insurance policy please give our office a call we'll be more than happy to help you.