LASER Funds Could Be Your Best Retirement Vehicle – Why Are They Tax-free?


What if you could use a retirement vehicle that freed you from the tax trap millions of Americans are in with their 401(k)s and IRAs? 

What if you could contribute after-tax dollars? 

What if your money could grow, or accumulate, tax-free? 

What if you could take money out for retirement, for your kids’ education, for business investments, or more—without early withdrawal penalties, completely tax-free? And when your time comes, what if your money could blossom in value and transfer to your heirs income tax-free?

LASER funds

For over 45 years I’ve been dedicated to helping people minimize taxes and empower their financial futures. In that time I’ve learned how to utilize sections of the Internal Revenue Code—sections that have been around for over 100 years—to empower Americans to do all of the above.

Technically, this financial vehicle is simply a properly structured max-funded tax-advantaged insurance policy. As you’ve probably heard, I call it The LASER Fund. The term is based on the LASER acronym I use that stands for “liquid assets safely earning returns.” These terms are significant, because when you’re looking for strong financial vehicles, you want those that score well on the LASER Test, meeting as much of the criteria as possible for: 

  • Liquidity – Liquidity is the ability to access your money when you need it—ideally, with an electronic funds transfer or a phone call.
  • Safety – Safety refers to the safety of the institution your money is with, as well as the safety of your principal. Think of post-9/11 and the Great Recession—when the markets tanked, millions of Americans lost up to 40% of their money in traditional retirement vehicles, twice. With the latest market volatility stemming from the pandemic and an anticipated recession or depression on the way, we could see disastrous market losses again. Through strategies like indexing, your money could be protected from market losses. Whatever you set aside, and whatever you gain, you don’t want to lose. You want it to become newly protected principal. (Most advisors have no clue how to help their clients do this.)
  • Rates of return that are predictable – While there are few guarantees when it comes to rates of return, ideally you want historically predictable rates of return, and if possible a 0% floor to protect you when the markets head south. 
  • Tax advantages – Uncle Sam can take a serious toll on your financial future, so ultimately you want to use financial vehicles that can minimize taxes and help you get the most out of your hard-earned money.

So what makes The LASER Fund tax-free? I’m going to share with you three sections of the Internal Revenue Code that make it possible.


This code indicates that any money that you accumulate inside of an insurance contract can accumulate tax-free. 

Now what’s the best type of insurance for your retirement? 

While you have options, I prefer a Universal Life insurance contract. Here’s why: It can be structured with the least amount of insurance the IRS will let you get away with, made possible with these tax citations: TEFRA (passed in 1982) and DEFRA (passed in 1984). (Sounds like a lot of complexity, right? If you’re curious to know more, I explain all of this in-depth in my book, The LASER Fund, Chapter 7.) 

Why is it tax-free? It’s actually in the government’s best interest to encourage Americans to utilize tools like this to take ownership of their future. Because it’s a life insurance contract, if I die sooner than later, the money in my policy will blossom in value and transfer as an income tax-free death benefit. 

My widow, my orphans will not be relying on the government; they don’t have to be a drain on society. On the other hand, if I live for a long time and use the money for tax-free retirement income, I’m likewise taking pressure off the government, providing for myself. The government is essentially giving us tax incentives to be self-reliant.


This code allows you to access your money tax-free. I’ve had clients who have retired at age 35, and they have had tax-free income of up to $100,000 a year, even if they live to be 100 years old. In this way, The LASER Fund knocks the socks off of a traditional IRA or 401(k) that is only tax-deferred. 

SECTION 101[a]

This code makes it possible for your money to transfer to your heirs tax-free as a death benefit. It can be a powerful boon to your loved ones. For example, if I died right now, every $1 million in my LASER Funds would increase to $2.5 million and transfer tax-free under section 101a of the Internal Revenue Code.

These three sections of the Internal Revenue Code have been around for over 100 years. It’s safe to bet they will remain a sacred cow for the government, because they empower Americans to take care of themselves. 

Bottom line: With these tax citations you can accumulate money totally tax-free like I have for over 45 years. There are years where my LASER Funds have earned 11%; years like 2017 where I earned 25%; and other years where I’ve made 16%. 

When the market has experienced down years, I did not make anything, but most important, I didn’t lose a dime of my principal due to market volatility, thanks to indexing.

LASER fund

Hear Doug talk about related concepts in his YouTube insights:

What Is Indexing As It Relates To Investing Money?
What Are TEFRA And DEFRA Tax Citations?

Get a FREE copy of Doug’s book, The LASER Fund.

Disclaimer: With any mention of The LASER Fund, maximum-funded tax-advantaged insurance contracts, or related financial vehicles, let it be noted that life insurance policies are not investments and, accordingly, should not be purchased as an investment. The content contained in this post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Many traditional retirement vehicles involve risk, and the value of your investment will fluctuate over time and you may gain or lose money.

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