The IUL has become more and more a tool that helps most any consumer save for their future, provide a nice legacy for your family, and have a nice tax-free retirement bucket. The Roth IRA is certainly more known than the IUL, however, the tax-free IUL is in many ways more versatile, with less restrictions and a massive wealth building tool. Here’s how to add a tax-free, penalty-free product to your retirement portfolio.
The power of the IUL is a type of permanent life insurance offering a death benefit, as well as an interest-bearing cash accumulation component. So here are the reasons it makes great tax sense; like a Roth IRA a consumer uses “after-tax” funds to fund the IUL and that means when you need to withdraw money those funds come out “tax-free”.
In addition, the IUL account values grow tax-deferred, and benefit from triple compounding: investors earn interest on the principal, interest on the interest, and interest on money which would otherwise have been paid in taxes on the interest.
Other huge benefits: There are no annual limits to the amount of money a plan holder can contribute to an IUL on an annual basis. And there are no IRS penalties for accessing monies you have in the plan, regardless of the plan holder’s age. The account can be accessed at any time, for any reason, without tax or penalty…The investor controls the amount of money that goes in and when and what amount can be taken out.
Photo Credit Clemens Van Lay
Photo Credit Sandy Millar