Calculator · For Tax-Free Retirement Planning

The §7702 math,
modeled against your numbers

A properly structured §7702 contract, what we call a Tax-Free Retirement Account (TFRA), produces tax-deferred accumulation and tax-free retirement income. This calculator estimates what your funding profile could produce, and compares it against the same contributions to a taxable brokerage.

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Your inputs

Your funding profile

Most §7702 structures fit clients age 35-55. Outside that range, alternative vehicles may be more appropriate.
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Annual amount you'd commit to the policy. Most TFRA structures fund for 7-15 years.
How many years of premium contributions. After this, the policy is paid up.
Age you'd begin taking policy-loan distributions.

Illustrative projection

What this structure could produce

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Approximate cash value at distribution start

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Estimated tax-free annual policy-loan distribution (20-year drawdown)

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Versus equivalent funding to a taxable brokerage (20-year cumulative after-tax)

These figures are estimates using simplified §7702 mechanics. Actual policy performance depends on carrier selection, crediting method, policy design, and market conditions over the holding period.

The strategy MicroTax actually applies

How a properly designed §7702 differs from a generic IUL

The estimate above uses simplified mechanics. The actual difference between an effective §7702 TFRA and a poorly-designed one is roughly 30-40% of accumulated cash value, which means the same premium can produce dramatically different outcomes depending on policy design.

The design variables MicroTax specialists tune for each client situation include: death-benefit-to-premium ratio at the legal §7702 minimum (maximizing cash accumulation), crediting method selection (volatility-controlled indexed vs. participating whole-life), policy expense load (carrier selection matters enormously), and distribution-phase loan structure.

This is what the phrase "IRS §7702 specialist" means operationally, a person whose job is to know which structure produces which outcome for which client, not a generalist who sells one product. See the flagship TFRA explainer for the fuller technical picture.

Assumptions in this calculation

  • Net crediting rate of 6% inside the policy, after policy costs. Actual carrier returns vary by crediting method, cap rate, and market conditions.
  • Front-loaded policy costs absorb roughly 18% of the first three years of premium. Mature policies have much lower cost drag.
  • Distribution phase uses a 20-year annuitization model. Real policy-loan flexibility allows variable distributions.
  • Brokerage comparison assumes 6% gross return with effective long-term capital gains tax drag of 18% on distributions.
  • Excludes state taxes, NIIT, AMT, estate-tax treatment of policy proceeds, and any policy underwriting limitations.
  • Real outcomes require carrier illustrations, underwriting approval, and policy design by a §7702 specialist.

This is illustrative, not advice. The figures above are estimates based on simplified federal assumptions. They do not constitute tax advice, financial advice, or a guaranteed projection of outcomes. Personal tax situations involve state taxes, NIIT, AMT, phase-outs, specific deductions, and many other factors not modeled here. Before making any tax-driven financial decision, consult a qualified tax advisor.

Get the real number

A calculator estimates. An advisor delivers

A simplified §7702 projection is useful as a sense-check. The real number depends on carrier selection, crediting method, and policy-design choices that aren't visible in a calculator. In a 30-minute conversation we can tell you whether a TFRA fits your situation, and if so, what the realistic carrier-quoted illustration looks like.

Book a Free Strategy Session The flagship TFRA explainer