Whether you've had an insurance salesman aggressively pitch you a 702(j) "retirement plan" or you've read information about it online, you may still be wondering what it is. A 702(j) plan is not a retirement plan, even though that's how it's marketed. It is actually a life insurance policy.
The name 702(j) plan comes from Section 7702 of the Internal Revenue Code, which regulates life insurance. The companies that market 702(j) plans want you to think of a 702(j) account the same way you think about other retirement plans, such 401(k) plans, 457s, individual retirement accounts, 403(b) plans and thrift savings plans. But it's important to understand the distinction: 702(j) plans are permanent life insurance policies, while the others are actual retirement accounts. If you visit the Internal Revenue Service website, you can view all the retirement plan options and learn more about what's included in every plan.