7702 Plan (Life Insurance Retirement Plan) in New Hampshire: Complete Guide for New Hampshire Residents
A retirement funding strategy using cash-value life insurance structured under IRC Section 7702, designed to provide tax-free income in retirement through policy loans.
Why 7702 Plan (Life Insurance Retirement Plan) Makes Sense for New Hampshire Residents
New Hampshire's elimination of its interest and dividends tax as of 2025 makes it a fully no-income-tax state. 7702 plan distributions face no state income tax. A 7702 plan - structured life insurance under IRS Code Section 7702 - provides tax-free accumulation and distribution regardless of state income tax rates.
New Hampshire Tax Advantage: In New Hampshire, 7702 plan distributions via policy loans are not counted as taxable income at the state level, which compounds the federal tax advantage.
What Is 7702 Plan (Life Insurance Retirement Plan)?
Key Benefits
- Tax-free income via policy loans in retirement
- No contribution limits
- No income limits
- No required minimum distributions
- Tax-deferred accumulation
- Death benefit provides legacy wealth
- Protection from creditors in many states
- No impact on Social Security taxation calculations
Best For
- High earners who have maxed out qualified plans
- Self-employed business owners
- Those seeking supplemental retirement income with no RMDs
- People who want to keep retirement income off tax returns
- Those concerned about future tax increases on qualified accounts
7702 Plan (Life Insurance Retirement Plan) vs Alternatives: At a Glance
| Feature | 7702 Plan | Traditional 401(k) | Roth IRA |
|---|---|---|---|
| Contribution Limit | Unlimited (MEC limits apply) | $23,500/yr | $7,000/yr |
| Income Limits | None | None | Yes (phase-out $146K+) |
| Early Access (before 59.5) | None (via loans) | 10% penalty | Contributions only |
| Required Minimum Distributions | None | Yes, at age 73 | No |
| Tax on Withdrawals | Tax-free via loans | Fully taxable | Tax-free |
| Death Benefit | Yes | No | No |
Legal Basis: IRS Code Section
Section 7702
After-tax premium payments. Tax-deferred cash value growth. Tax-free policy loans in retirement. Tax-free death benefit to beneficiaries.
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