IUL Vs Roth IRA Vs 401K and IRA

Would you like to learn the differences between IUL vs Roth IRA vs 401K and IRA?

IUL’s, Roth IRA’s, 401 K’s, IRA’s and other qualified accounts provide a way to save for your retirement. There are major differences about them. Differences about how money are deposited in them, if they are pre tax or after tax, if the gains are tax free or tax deferred, when you have access to your accumulated cash value without a penalty, if you are obligated to take money out after a certain age and the amount that you can contribute to your account.

There are a lot of other retirement accounts that work very similar to these accounts:

Solo401K , 403B, 457 B that work mostly like a 401K

Self Directed IRA, Simple IRA, SEP IRA that are very similar to a regular IRA

Taxation

The rules (laws) governing these investments are as follows: 401K’s are in the tax code 401K hence the name vs Indexed Universal Life insurance that are in the insurance law 7702, hence some people call an IUL a 7702. This is one of the differences. One is in the tax code while the other is in insurance law.

   All of the money invested in the 401 K’s and IRA’s are money that you will subtract from your annual income for taxation purposes.  They are tax deferred. You will not pay taxes on them in the contribution phase but you will pay taxes on the money that you will withdraw out of it in the retirement phase. You will pay taxes on the contribution and the gain. The problem is that nobody knows at what rate you will be taxed when you pull the money out of a 401K or an IRA.

   In IUL’s and Roth IRA’s, you will invest with money that have been taxed already, hence you will have a tax free retirement. All of the money grows tax free in your cash value account.

Distribution

   In some 401K you might have an employer matching contribution up to a certain amount. I would say take advantage of that. It is like getting an immediate 100% return on your money.

   In 401K, IRA or Roth IRA if you want to withdraw money out until before you are 59 ½ years of age you will be penalized 10% on top of the income tax that you will have to pay.

   In an IUL you can get a 0% loan against the cash value anytime you want as long as there is enough money accumulated.

Contribution

   In some 401K you might have an employer matching contribution up to a certain amount. I would say take advantage of that. It is like getting an immediate 100% return on your money.

   In 401K the maximum contribution to a retirement plan is $19,500 per year.

   In an IRA the maximum contribution is $6000 or $7000 if you are 50 or older.

   For a Roth IRA the maximum contribution is $6000 or $7000 if you are 50 or older.

   In an IUL you can contribute as much as you want as long as there is a correlation between the amount you contribute and the amount of the death benefit you have in the policy. If you deposit too much money your death benefit will have to be adjusted higher too.

  If you would like to learn more about how an Index Universal Life Insurance works and if it is a good product for you, click here 

   If you would like to learn about the principles of finance and how to retire wealthy, join our hour and a half webinar – How To WIn At The Game Of Money.

   If you would like to receive a Financial Needs Analysis to see where you are and to set a financial goal for you and your family, click here.

   If you would like to set a FREE ½ hour consultation, check my calendar and set an appointment.

   For any questions, contact us

Hegemon Group International, LLC. (HGI) is a marketing company offering a vast array of products and services through a network of independent affiliates. HGI does not provide insurance products, real estate, legal or tax advice. In the USA, insurance products offered through Hegemon Financial Group, LLC (HFG); and in California, insurance products offered through Hegemon Insurance Solutions, LLC (California License #0I0198) – collectively HFG. HFG is licensed in all states and the District of Columbia, except Massachusetts. In Canada, insurance products offered through Hegemon Group International of Canada ULC in the provinces in which it is licensed.

Florin Chris Uta is an independent associate of HGI.

© 2020 Hegemon Group International, LLC
Contact 

Home   Our Services   About Us    Webinar   Our Team    Blog