IRC §7702A · 7-Pay Test

MEC Avoidance Calculator

Fund too fast and your life insurance becomes a MEC. Loans and withdrawals get taxed like an annuity. Death benefit still tax-free.

Annual premium paid

Death benefit (face amount)

Insured age at issue

Years premium will be paid

Estimated cash value at year 7

Anticipated withdrawal before age 59.5?

7-Pay Test Result

7-pay premium limit (estimate)

Cumulative premiums (7 yrs)

7-pay test status

If MEC: gain taxed as ordinary

If MEC + early withdrawal: 10% penalty

Non-MEC tax treatment

FIFO basis

§7702A 7-pay test: cumulative premiums cannot exceed the sum of the net level premiums for paid-up status in 7 years. MEC status is irreversible once triggered.

Talk to a preparer about your policy structure

Estimate. Actual 7-pay premium is calculated by the insurance carrier using mortality tables, cash value corridor, and rider charges. Always confirm with the carrier illustration. Educational tool, not legal advice. Call 689-331-5723 or email info@zerofusstaxes.com.