Employers have an opportunity to select a variety of ERISA plans for themselves as well as their employees. One plan often overlooked is a profit sharing plan. Its ability to use cash value life insurance is unique and can be converted almost tax-free. If a life insurance policy is designed as a non-modified endowment contract held in the profit sharing plan, an economic benefit will be annually assessed and trigger a relatively small ordinary income tax event each year it’s in the plan. Generally speaking the money must be staged into the life insurance policy 3 years or more to comply with the TAMRA regulations. When you purchase the life insurance from the profit sharing plan for its market value, generally the cash surrender value; you access your cash values in the policy via loans tax-free. The monies used to purchase the life insurance out of the plan are now in the profit sharing plan. Those funds and any other funds in the plan can be converted to a Roth IRA over a select period of time, but that will generate taxes. So you can borrow from the life insurance policy and pay the annual taxes until the profit sharing   Read more…