Jared Marceaux Insurance Agent

IUL and Your 401(k): Better Together

Many people think they have to choose between a 401(k) and an Indexed Universal Life (IUL) policy. For the right person, the two can work side by side and give you tax advantages at different points in your life.

Your 401(k): tax savings today

• Contributions are usually made before taxes, lowering your taxable income now.
• Many employers match contributions, which is free money worth capturing first.
• Withdrawals in retirement are taxed as ordinary income, and required minimum distributions start in your 70s.

An IUL: tax advantages later, plus protection

• Premiums are paid with after-tax dollars.
• Cash value can grow tax-deferred, linked to a market index, with a 0% floor so index losses aren't credited to your cash value (caps, participation rates, and fees apply).
• You can access cash value through policy loans and withdrawals, which are generally income-tax-free when the policy is properly structured and kept in force.
• The death benefit is generally income-tax-free to your beneficiaries, and living-benefit riders may help with chronic, critical, or terminal illness.
• No contribution limits set by the IRS like a 401(k), and no required minimum distributions.

Using both

• Contribute enough to your 401(k) to get the full employer match.
• Use an IUL as an additional bucket for tax-advantaged income and life insurance protection.
• In retirement, drawing from both a taxable bucket (401(k)) and a tax-advantaged bucket (IUL) can give you more control over your yearly tax bill.

Want to see how this could fit your situation? Request a free, no-obligation review.

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Disclaimer: Indexed universal life insurance is a life insurance product, not an investment or a retirement plan, and it is not a replacement for an employer-sponsored plan. Policy loans and withdrawals reduce cash value and death benefit and may cause the policy to lapse, which could result in taxes owed. Guarantees are based on the claims-paying ability of the issuing insurance company. Jared Marceaux does not give tax or legal advice; consult a qualified tax professional about your situation.