401K Loan to Charity

[Guest John P.]

I am in a position to make a charitable donation. The charity has spoken to me about my IRA (self-directed) loaning the charity money who, in turn, will purchase a life insurance policy on my life with some or all of the death benefit proceeds going to the charity.

IF this is legal, it makes sense to me in my situation. Some of my questions are:

1) Does the charity have to pay my plan on-going interest?

2) Can the charity provide a balloon interest payment upon receipt of death benefits?

3) Can my IRA receive a portion of the death benefit (e.g., 2 million dollar death benefit....can my IRA upon my death receive, as an example, $700,000 with the remaining $1.3 million going to the charity?

4) Is this legal? It appears that it is, but my CPA is not familiar with this type of arrangement.

Ideally, I would like to do this AND have an agreement in place that my IRA would receive the initial premium (to fund the policy that is being loaned) back and a certain amount of the death benefit as an investment return. But can the charity do this OR do they HAVE to pay me interest during the period of time the loan is in force?

I am sure that I am missing a bunch of questions, but some general guidance is appreciated. If legal, this is something that I would seriously like to consider as it still provides a benefit back to my heirs but provides a real benefit back to the charity.

Thank you all so much. Also, I am assuming that if this CAN be done from an IRA, it could also be done from a 401K (I am self-employed)?

John