RMD & Life Insurance

I have a client who is interested in using RMD’s to purchase a life insurance policy. I recall reading somewhere that it may considered a prohibited transaction by the IRS and result in the IRA being fully taxable. I know an IRA can clearly not own life insurance but thought that RMD’s were OK. Looking for confirmation.



No problem. The LI should probably be owned by an ILIT or adult children to keep it out of the insured’s estate.



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