Here on the blog we like to touch on some of the strategies that we help professionals and business owners navigate the treacherous waters of tax efficient retirement planning. One of the main strategies we talk about here and on the MBK Beat podcast is converting an IRA or Roth IRA into an Index Universal Life Insurance plan. This is something we will touch on in the first episode of our Case Example series on the MBK Beat, but for today, we wanted to just touch on a few high level points to help demonstrate why you or someone you know may go down this road.
Tax-Deferred to Tax-Free
Converting retirement funds from a tax-deferred status to a tax-free status is nothing new. More and more people over the last 10 years or so have explored new options when realizing deferring taxes may not always be in their best interest. Many folks have heard about converting from a traditional IRA to a Roth IRA, in an effort to make the best decision for retirement. Today funds from a growing number of IRAs are being placed in Indexed Universal Life (IUL) insurance policies. WHY?
A Few Reasons
The power of indexing to grow funds securely and tax-free income through policy loans are 2 big ones. Another big reason is you have access to funds, with NO MARKET-VALUE ADJUSTMENT. We will talk about this at length on our podcast so stay tuned. Finally, a legacy or death benefit for heirs is included in the plan, providing your family and loved ones with a death benefit, which IRA and Roth do not.
Why Not?
Like any financial strategy, not every strategy is right for every person. This type of arrangement is designated for high earners. Proper structuring of the strategy is also necessary, you need someone who really knows what they are doing. If you don’t have the right person, you may get roped into a vendor or plan that THEY want you to do, rather than something like this. When a client has been properly qualified and an IUL policy has been structured properly, and IRA-to-IUL conversion strategy can be very successful.
Stay tuned to the blog and also the MBK Beat Podcast where you can find very deep informative breakdowns of many of our planning strategies. We give you great insight into how these work, and our next series we are developing is focused on breaking them down using real life John Doe examples to help demonstrate in greater detail the immense power of these campaigns. Thanks folks! Let’s talk soon!