Sentences with phrase «loan tax bomb»

Nonetheless, to the extent that the policy can remain in force until death, the life insurance loan tax bomb is at least potentially avoidable, though of course in many situations it may have been preferable to just not take out the loan in the first place!

Another scenario that can trigger a «surprise» life insurance loan tax bomb is where the policy is using to as a «retirement income» vehicle, either through a version of the «Bank On Yourself» strategy, or simply by taking ongoing loans against the policy to supplement retirement cash flows, and the loans grow too quickly and cause the policy to lapse.

Fortunately, the «good» news is that the policy loan tax bomb can be avoided by actually holding the life insurance policy until death — allowing the loan to be repaid from the tax - free death benefit, instead of the (taxable) surrender of the policy.

An important caveat of the potential danger of the life insurance loan tax bomb is that it doesn't matter how the loan accrued in the first place.

Here's how to avoid an unexpected student loan tax bomb.

Not exact matches

According to Jacob Gershman's article in the Wall Street Journal, some will have to get ready for a hefty tax bomb once their federal student loans are forgiven starting in 2032.

Specifically, [a «tax bomb» is] set to go off in 2032, the first year when the loans qualify for debt forgiveness.

Right now, the loan forgiveness that PSLF provides does not come with a tax - bomb on the back end.

This «tax bomb» occurs because in the end, even if all of a policy's cash value is used to repay a life insurance loan, it doesn't change the fact that if the policy had a taxable gain, the taxes are still due on the gain itself!