Some observers have said this option also works well for foreign investors and even tax-exempt institutions that can still find themselves hit with a tax bill for income unrelated to their primary purpose.
The PPVA tool isn’t without other complications. “It is almost impossible to talk about PPVA without talking about private placement life insurance (PPLI),” Cordasco said. “PPLI is the life insurance version, so it’s more complicated, more expensive and requires a higher investment. As both variable annuities and life insurance have a place in someone’s financial profile, so do private placement vehicles.
“Again, since the barriers to entry are relatively high, these vehicles are usually only available to high-net-worth individuals,” he added.