Rich Person's Roth IRA

July 03, 2023

Happy 4th of July.

Roth IRA

A Roth IRA is one of the best ways to minimize taxes. Many people earn too much to qualify for a Roth IRA. Not long ago, an alternative for high earners to minimize taxes while maximizing income came up that’s known as the Rich Person’s Roth.”

Despite the nickname, the “Rich Person’s Roth” isn’t a retirement account at all. Instead, it’s a cash value life insurance policy that offers tax-free earnings on investments as well as tax-free withdrawals. 

In certain cases, it’s possible to use the cash value of these policies to create a guaranteed stream of income, possibly for the rest of your life. 

Depending on how the policy is set up, you may be able to contribute an endless amount of money each year, which will not only grow tax-free, but will also be tax-free upon withdrawal. That means your tax bracket won’t be affected. 

Since the core product behind the “Rich Person’s Roth” is still a life insurance policy, your overall health matters. The worse your health is, the higher the cost of the life insurance will be. People in poor health may not be the best candidates for this strategy as they may end up underwater on the cost of the policy. 

Another consideration is the interest rate the insurance company charges on withdrawals from the policy. In order to get your money from the policy, you must take a loan against the death benefit from the insurance company, which will most likely charge you interest. Policies with zero net loans credit your interest payments as if the funds are still held in the policy. This acts almost like a wash on your interest costs. 

High earners aren’t the only people who can benefit from the “Rich Person’s Roth.” It will consist of older workers in good health who are trying to play catch-up on their retirement savings. It will also be those who are already hitting annual contribution maximums in other retirement savings vehicles could also benefit.


The Rich Person’s Roth concept is a life insurance productthat utilizes Internal Revenue Code 72E, 7702, and 101A for contributions into an asset class, with Market Downside Protection and allowing for Tax-Free distributions.

A Participant funds the program using Post Tax Dollars. We then leverage an Index such as the S&P 500 for returns, however the plan removes the risk of losing money through negative market performance via a guaranteed 0% floor crediting rate.


As an Example if the Market has a performance of -8%, the plan will reflect 0% therefore there

is NO LOSS to the Asset through market underperformance. Thereby locking in basis and gains

year over year.


Upon distribution the basis and gains are available to the Participant as Tax Free.


Flexible contributions (no minimums for participation).

No penalties for distributions before age 59.5*.

Protection and lock-in of gains every year.

Plan assets fully protected from creditors and/or lawsuits.

Guaranteed Tax-Free income and protection.


*Please contact a specialist for details