In Roth IRA’s, which are also tax-free, there are government restrictions that prevent people from adding more than $6,500.00 per year ($7,500 if over 50), which keeps you from building a large nest egg for retirement. Also, there are limits in how much you can earn in order to have access to tax-free growth. Lastly, there are limits to when you access your money (59 ½ years old), or if you do access it, there are penalties and fees involved. The Roth IUL has none of those limitations.
The Roth IUL duplicates the tax-free aspect of the Roth IRA, but goes much further for people who want to build a large nest egg without all of the limitations. You can open a Roth IUL without any top end income restrictions, no age restrictions on removing money and best of all, no limits to the amount contributions when we set up your account. You can start at an affordable amount when you are younger and increase your contributions as you age and get closer to retirement. Plus, you can add lump sum amounts to maximize your earning potential.
Frequently Asked Questions
Most (nearly all) retirement plans such as 457B’s, 401K’s, IRA’s, 403B’s…even Social Security, are “taxable” which means you are taxed at the prevailing (current) tax rate, as you receive the money. Just like as you work now and your wages are taxed, so are retirement accounts. Tax-free Roth IRA’s and Tax-free Roth IUL’s are free from taxes, meaning the money receive is net, after tax and is not reportable as income. This can save the average taxpayer as much as 20% to 25% each year on taxes.
Yes, you can have both and the limits from your Roth IRA do not affect how much you can put into your Roth IUL, and the reverse is true as well.
Accounts that are “indexed” are not invested in the stock market, but instead only copy the gains of the stock market, but NOT the losses. You are protected against market downturns of any kind.
William Roth, the Senator from Delaware (1971 – 2001) who was the namesake of the Roth IRA, is the inspiration behind the Tax Free Roth IUL. Our agency, Life Legends adopted the name “Roth IUL” as a description of the tax-free aspect of the Roth IUL. If you click on this link (link to Roth IRA vs Roth IUL) for a full comparison. But, both allow you to remove money in retirement Tax-Free.
IUL is the abbreviation for Indexed Universal Life. When something is Indexed, it means that it follows a certain kind of strategy (S&P 500, or Bloomberg… or some other earning strategy) and it mirrors the activity of how it performs in the market. Universal Life is a permanent cash value life insurance plan that includes “living benefits” as well. It is through this component of the Roth IUL, that allows it be tax-free income.
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