Reliant Life Shares, anyone familiar with these?

Forum|Forum|5 years ago
February 11, 2021
15 replies
38 views

Had a client come in last night, told me "We forgot to tell you, we've been putting money in our IRA each year, we didnt know this would be a deduction."

They pull out the 5498s and I dont see any IRA contributions, just the FMV of the account that has sat at 60K for the past 5 years.

Then they pull out this list of payments they thought were being made to the IRA in all these weird amounts, multiple times per year.

I ask him how he came up with these dollar amounts and he says "that's what they told me to pay, me and a bunch of other investors are putting this money into our IRAs that are paying the premiums on life insurance contracts for people that are old and when they die, we get a payoff, so far nobody has died, but these people are all really old so Im sure money will be coming in soon"

Im sure his take on this isnt quite right...so far theyve paid over 22K to this "investment" in the past 5 years, but I dont see anything reflected in this IRA account.

Is this legit?

ProSeries Professional

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IRonMaN

Level 15

"me and a bunch of other investors are putting this money into our IRAs that are paying the premiums on life insurance contracts for people that are old and when they die, we get a payoff"

I assume they are going that route after they closed down the horse racetrack where their IRA dollars used to go?

Slava Ukraini!

T

TaxGuyBill

It definitely does not seem like it is an IRA.

As far as if it is a legitimate investment or not, maybe? Hypothetically, it might be possible for a company to pay the person covered by life-insurance to be the beneficiary and take over the payments. Then when the person dies, the 'company' (and investors like your client) would receive the life insurance proceeds.

However, it sound unusual enough that it would scare me, and I would advise your client to do further research on this 'investment' opportunity. The fact that your client thinks this is an IRA when there is no documentation of such indicates to me that either (a) your client is not too familiar with what is going on or (b) something seems really wrong.

But from what YOU need to do for the tax return, there is no indication it is part of an IRA.

IRonMaN

Level 15

From the company's website:

What is a Life Settlement?

A life settlement is the purchase of an existing life insurance policy, by a third-party investor, for less than the face value but more than cash surrender value of the policy. Originally designed for institutional or corporate investors, the life settlement market is now available to individual investors by way of fractional life shares. This investment class has no correlation to stock or financial markets, oil prices, interest rates, or other common risk factors that most investments are associated with and often suffer from. Investing in life settlements can offer outstanding returns, while minimizing risk.

Slava Ukraini!

T

TaxGuyBill

Yeah, I just Googled it too, and the website looks like it could be legitimate.

But without 5498s, it doesn't seem to be in an IRA. Unless maybe your client is doing a self-directed IRA and completely screwing it up?

What is a Life Settlement?

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