However, unless the L.I.R.P. is structured correctly, the expenses can overwhelm the growth inside the accumulation account.
In order to maximize the impact of the L.I.R.P. strategy, a client must purchase the minimum insurance required while contributing the maximum amount allowed under IRS guidelines.
⇒ If properly structured, the expenses within the plan can cost as little as 1% of the annual account balance over the life of the program.4 That’s less than the average annual expenses in the typical 401(k).5
4 – An equity indexed-based L.I.R.P., at preferred rates, using a minimum non-MEC face amount of $173,161, an increasing death benefit option, a $10,000 annual premium for 15 years, and an 8% rate of growth, has an internal rate of return in year 25 of 6.99%, or average annual fees of 1.01%.
5 – 2012 0131 – ThinkAdvisor.com – How to Take Advantage of New 401(k) Fee Disclosures (U.S. News & World Report), By Staff Writer – [link]
2012 0130 – U.S. News & World Report – How to Take Advantage of New 401(k) Fee Disclosures: Workers can use this fee information to build a bigger nest egg and maybe even retire sooner, By Emily Brandon – [link]