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.
Permalink Submitted by Al Fry on Tue, 2008-07-15 23:03
No problem. The LI should probably be owned by an ILIT or adult children to keep it out of the insured’s estate.