Taxes are one of our biggest concerns,

Tax-Free Retirement

Taxes are one of our biggest concerns, a huge issue that most people are dealing with today and which need to be dealt with by your heirs after your death. No one knows how much we will be paying for our taxes in the future. We do know that taxes right now are at one of the lowest rates in history, that these favorable tax rates will not last forever, and that our powerful country is deep in debt. Everyone knows this situation is going to get much worse before we and our children have to start paying for these disturbing circumstances.

What is the best solution for taxpayers today? Pay your taxes now when taxes are low, stop contributing to deferred-tax accounts, and start tax-free accounts like a Roth IRA or Index Universal Life Insurance (IUL) immediately.

Universal Life Insurance is the only investment that is IRS-approved where your money can earn the returns of a stock market index, lock-in all of your annual gains, and never lose a dime when the market has a negative annual performance. On top of that, any withdrawals you make are all tax-free. Without a doubt, this is a one-of-a-kind retirement investment opportunity.

Unlike a traditional IRA, a Roth IRA uses after-tax dollars. Roth is an individual retirement account that is not taxed upon distribution. Qualified withdrawals from the Roth IRA plan are tax-free, and the growth in the account is also tax-free. There are no age limits with a Roth IRA as long as you claim income.

Roth IRA or IUL have no minimum required distributions at 72, so you have complete flexibility with how and when you withdraw your money during retirement. Even better distributions dont add to your annual income. These products could reduce the possibility of having to pay taxes on Social Security benefits, or premium surcharges for Medicare Part B and Part D.

These are just a few reasons why Roth IRAs and IULs are so popular. Both are recommended by advisors and conversions are attractive for individuals who want to reduce their tax liability when they are in retirement. Both products appeal to older and wealthier people who want their heirs to inherit a legacy that’s tax-free.

Roth IRAs are considered a poor man’s account because it has limits on how much a person can invest annually. Annual income limits are $6,000 per year per person (if youre under age 50) or $7,000 (if youre above age 50) per year. A high-income earner who wants to contribute a large sum of money into a tax-free retirement account are limited with Roth IRAs. For them, IULs should be a better fit.

Roth Conversions

With a Roth conversion, investors are able to transfer money out of a traditional IRA, pay taxes on the funds at ordinary federal and state rates, and then move the money into the Roth. Once the money is in the Roth, it will grow tax-free. To avoid a 10% penalty after converting the account, the money must remain in the Roth IRA for five years before taking a tax-free distribution. If you’re at least age 59 1/2 when you make the withdrawal, you won’t pay the 10% early withdrawal even if it’s a conversion.

There are presently no limits on the number of Roth conversions or on the dollar amounts you may convert. If you wish, you can convert from multiple accounts and you are also permitted to convert a traditional IRA at any age. The converted balance will be calculated as part of your annual income and taxed appropriately. Once the transfer is complete and the funds are deposited into your new Roth IRA, the funds grow tax-free.

Roth conversions are very popular and many people are taking advantage of the current low tax rate, choosing to pay taxes on their funds now. Even with all the benefits, a Roth conversion is still a major decision. Some of the factors to consider are the current income tax rate, your anticipated income tax rate in the future, the new Secure Act changes, and your need for long term care benefits. It’s also important to make sure you can afford to pay the taxes the conversion will create. The chart below compares both products, showing their differences

Differences between an IUL and a Roth IRA


What is the best option… a Roth IRA or an IUL? We now have an opportunity to learn about both as after-tax investment products suitable for your retirement funding.  We all have different financial circumstances and needs, so determining which product is best for you depends on your personal situation.  A person should always consider all their options and seek professional advice from an independent agent. Remember, both of these are products are great and serve different purposes.  We can help you find the perfect investment to safeguard your financial future

What should I do?

Call us for a free illustration and see a comparison of different products.  Let us show you how a Roth and the Index Universal Life Insurance (IUL) are consider the best choices for a tax-free retirement.  We can answer your questions, and give you information about how to enroll. Call us or fill out the request form.