Tax Efficient Private Credit Investing

Key Takeaways

Despite significant benefits, tax-sensitive high-net-worth investors have been hesitant to fully embrace direct lending strategies due to perceived tax inefficiencies.

Investors who are sensitive to taxes can enhance their after-tax returns by investing through tax-deferred IRAs or Roth IRAs.

When retirement accounts are not an option, tax-sensitive investors with long-term investment horizons can still capture similar return benefits by investing through a private placement life insurance (PPLI) policy or private placement variable annuity (PPVA) contract.

Hesitant to embrace direct lending due to perceived tax inefficiencies? Discover how key insurance vehicles can help enhance after-tax returns. 

Author
Robert Dietz, CFA
National Director, Tax Research—Investment & Wealth Strategies

The views expressed herein do not constitute, and should not be considered to be, legal or tax advice. The tax rules are complicated, and their impact on a particular individual may differ depending on the individual’s specific circumstances. Please consult with your legal or tax advisor regarding your specific situation.

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