The Pitch
The basic pitch behind section 79 plans is the opportunity to buy cash value life insurance using pre-tax dollars. The returns on cash value life insurance tend to be low, but if you could buy them with pre-tax dollars and borrow money from them tax-free but not interest free, the after-tax returns start to look a lot more attractive. The insurance agents sells it like this:
How would you like a retirement plan where you get:
1) An upfront tax deduction
2) Tax-protected growth,
3) Tax-free income in retirement, and
4) Don’t have to pay for an employee match into the plan?
