Life insurance premiums are paid with money you've already paid tax on, so you can't send premium straight from a 401(k) or IRA without taking a taxable withdrawal. But if most of your savings sit in retirement accounts, there are ways to use that money to start a policy without cashing it out. I recorded a video on funding a policy with retirement money for people in exactly that spot, and there are four ways to do it.
The first is a 401(k) loan, if your plan allows one. You can usually borrow up to half of your vested balance or $50,000, whichever is less. Your vested balance is the part of the account that's fully yours. You pay the loan back through payroll within five years. You pay interest at a rate the plan sets, often the prime rate plus a point, and it goes back into your own account. The cost is that the borrowed money is out of the market while the loan is open. You could miss a jump in your investments, or dodge a drop. With a policy, the 401(k) loan pays the first premium. Once the cash value is available, usually 10 to 15 days later, you borrow most of it back from the policy and repay most of the 401(k) loan. On the designs I build, that's about 80% to 85% of a first-year premium. The rest goes back through payroll within a year. A 401(k) loan comes due if you leave your job, so read 401(k) loan or policy loan before you start one.
The second is a solo 401(k), which is for self-employed people with no employees other than a spouse. It can give you checkbook control, which means you manage the plan's account yourself, so you can make the loan to yourself the same way. Business owners have one more option. An employer contribution to the company 401(k) can generally be made as late as the business's tax filing deadline. That means the money can pass through a policy first and come back out as a policy loan in time to make the contribution. The contribution still gets made, and the policy has been funded, with a loan against it that you pay back over time. Ask your CPA how the timing works for your plan.
The third is the IRA rollover window. You can take money out of an IRA and put it back within 60 days, and the IRS treats it as if it never left. You can do that once in any 12-month period, which means one rollover like this a year across all your IRAs. So you withdraw from the IRA, fund the policy, borrow from the policy once the cash value is there, and put the money back into the IRA before day 60. In a first year, you can probably borrow back 80% to 85% of what you put in. Whatever doesn't make it back into the IRA within 60 days is taxable, plus a 10% penalty if you're under 59½, unless you cover the gap with other money. Withholding can trip you up, too. The IRA may hold back tax from the withdrawal unless you tell it not to. You'd then have to replace that amount from other money to put the full amount back. A 401(k) paid out to you this way has 20% withheld automatically, which makes it harder.
The fourth is a 72(t) plan, also called substantially equal periodic payments. You set up a series of yearly payouts from an IRA based on your life expectancy, using one of the IRS's approved methods. That avoids the 10% early withdrawal penalty, and you use the payments for premium. The payments are still taxable income. And you have to keep taking them on the schedule you chose for five years or until 59½, whichever is longer. Change the schedule early and the penalty comes back on every payment you've taken, plus interest. Don't start one without a CPA.
People go to this trouble because money in a 401(k) passes to your family as taxable income. Routed through a policy first, the same dollars can carry a death benefit several times larger, and the death benefit generally passes free of income tax. A policy loan reduces the cash value and death benefit until it's paid back.
I'm a licensed insurance broker, not a CPA or a tax attorney, and plan rules vary.
Before you move anything, check every IRA you own, at every custodian, for a withdrawal you put back in during the past 12 months. If there was one, the 60-day window isn't open to you yet.