Discover the Superior Tax Benefits of Indexed Universal Life
When planning your retirement, understanding the tax advantages of your investment choices is essential.
Here's how IUL outshines 401(k) in tax efficiency and flexibility.
1. Tax-Free Growth Potential
- IUL: Your cash value grows tax-deferred, and withdrawals can be structured as loans, making them tax-free under IRS guidelines.
- 401(k): Contributions grow tax-deferred, but withdrawals in retirement are taxed as ordinary income.
2. Tax-Free Distributions
- IUL: Enjoy tax-free income during retirement with properly structured loans from your policy’s cash value.
- 401(k): Every dollar withdrawn is subject to income tax, potentially pushing you into a higher tax bracket.
3. No Required Minimum Distributions (RMDs)
- IUL: No government-mandated withdrawals, giving you full control over your retirement income.
- 401(k): RMDs start at age 73, forcing withdrawals even if you don’t need the money.
4. Flexible Contributions
- IUL: Contributions are flexible and not limited by annual IRS caps, allowing you to save more tax-advantaged wealth.
- 401(k): Contributions are capped annually, limiting your ability to maximize tax-advantaged savings.
5. Tax-Free Legacy Transfer
- IUL: The death benefit is passed to your beneficiaries tax-free, making it a powerful wealth transfer tool.
- 401(k): Inherited funds are taxed as income to your heirs, reducing their overall value.
Who Should Consider IUL?
IUL is ideal for individuals looking for:
- Tax-free retirement income
- Wealth preservation and transfer
- Flexibility and control over contributions and distributions
Complement or Replace Your 401(k) with IUL
While a 401(k) may have its place in your retirement strategy, an IUL provides unmatched tax advantages, flexibility, and legacy planning.