Try two winning tax strategies with a life insurance product.

Want to make a grown man cry?

Tell him that all those beautiful dollars in his qualified plans — profit-sharing, 401(k), IRA and the like — are worth only 27 to 30 cents after taxes. Sorry, but it’s true.

The IRS hits you with two taxes: income tax (up to 40 percent or more, including state and federal) and estate tax (up to 55 percent using 2011 rates). Then, depending on where you live, your city, county or state gets a piece of the action.

Outrageous!

The first order of business is to get a fix on how much of your plan money is destined to wind up in some tax collector’s pocket. A call to your plan adviser is all it takes.

Just to get some numbers on the table, suppose you have $1 million in all your plans combined and the estimated tax burden is $730,000. Only $270,000 goes to you and your family. Ouch!

Can anything be done about it? Yes. But you must be proactive.

There are many strategies, but let’s take a look at the two most common: the junk-money strategy and the subtrust strategy.

Both are very complex and need an expert to cover all the details. Yet the wonderful benefits are easy to understand and attain. Think of it as enjoying the ride when you drive a car, but not knowing how to build one.

Both strategies use a common denominator: a life insurance product (usually second-to-die). The eventual proceeds of the life insurance, say $1 million, go to your family free of the income tax and estate tax. Simply put, you have turned $270,000 of after-tax value into $1 million tax-free.

There’s usually still plenty of money left in the plan. For example, as I write this, the cost of a second-to-die policy for a husband and wife, both age 65, is only in the $15,000-per-year range. You must get your own quote.

The junk-money strategy starts by using your plan dollars to buy an annuity — a tax-free transaction. A portion of the annuity is used to pay the life insurance premium.

The subtrust is created as part of your qualified plan (actually the current plan — usually a 401(k) plan or a profit-sharing plan — is amended or a new plan is created). Then your plan trustee transfers the necessary premium dollars to the trustee of your subtrust to pay the policy cost.

As far as I know, there is nothing better in the tax law than these two strategies to snatch a tax victory out of the snarling jaws of a sure defeat. If you have $350,000 or more in your qualified plans — rollover IRA, traditional IRA, 401(k), profit-sharing and the like — you owe it to yourself and your family to look into both strategies.

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