Leon Mehl

While many people use their IRA to supplement retirement many times waiting until age 70 1/2 (at which point the mandatory required minimum distribution rules apply), some people have chosen to take a portion of their IRA and fund an IRA-based, long-term care policy. As an example, we will use Tim, age 60, recently widowed and retired. While he feels very secure about his retirement income, his main concern is longterm care. By taking advantage of a tax-free, trustee-to-trustee transfer, Tim is able to reposition $175,000 of his $500,000 IRA account as premium for a 10-pay whole life insurance policy with an accelerated death benefit for qualifying long-term care expenses. Should Tim ever need long-term care, this type of policy can provide a monthly benefit of $9,572 that can be used to pay for home healthcare, assisted living, adult day care or even skilled nursing facility care. Additionally, if he has not begun to use the long-term care benefit prior to his death, his children will receive a tax-free death benefit of $239,289.