TFRA - Life Insurance 

With a rising debt load in the United States and historically low tax rates, it lends to the possibility that we will see an increase in income tax rates in the future. 

This puts  investors, who only use tax deductible retirement vehicles for retirement funding, at great risk of paying higher income tax rates during their retirement years. 

The trillion-dollar question (this could be quite literal) is… Do you want to risk paying higher taxes during retirement?

While it may be the right choice for some, is using a tax deductible retirement vehicle like an IRA or 401(k) the best option for your retirement? With a tax deductible account, you receive a tax deduction now, but is it really a tax deduction, or is it just a tax deferral? It’s at least worth looking into when looking at a Tax Free Retirement Account and review all your options.

Do you really save money by deferring your taxes, or do you just defer them and pay them at a higher rate?  If you believe tax rates will be higher than they are today because of a growing national debt, un-funded Social Security and Medicare liabilities, and an increase in other entitlement programs, then the need for a tax-free account is more crucial than ever before.

TFRA or Tax Free Retirement Account through Life Policies can be purchased in one of four categories. The two categories most advantageous for investors are either Whole Life or Equity Indexed Universal Life. Whole Life is based on the current interest rates, and gives a guaranteed rate of return. This can be useful in knowing exactly how much money one will have accumulated in 20 years, but it is also the most rigid and the most expensive of all the options.

Equity Indexed Universal life insurance has two options for investing. The investor can choose annually either the fixed interest rate option, or follow a specific index, such as the S&P 500.

When the investor chooses to follow an index, their account will participate in the gains of that index, yet when the index falls, the investor will never lose any money. Universal Life is one of the most affordable and flexible policies available. The income potential from these types of policies is greater than Whole Life policies.

Tax-free income is generated from these strategies by obtaining loans on the policy’s cash value accumulation. These types of loans work similarly to home equity loans in the sense that the investor does not pay income tax on the money borrowed. Thus the Annual Income creates the retirement Tax Free. Unlike a home equity loan though, the investor does not have to pay back the loan balance. This is pertinent to tax codes 7702 and 72(e).

The value is traded from the normal type of Retirement account that is taxable or taxed deferred to the tax free retirement.

The need to start diversifying away from taxes is now and with the national debt continuing to grow, social programs in jeopardy and all time low tax rates, taxes will need to go up to pay down the national debt. 

Tax deferred programs are helping Uncle Sam’s retirement and hurting an investors net spendable dollar during retirement years. 

All investors want more disposable income. This can be accomplished by cutting the IRS out of your retirement.

And the one way to get ahead is through properly executing a Tax Free Retirement, it's simple, your putting more money into your pocket in retirement and less into Uncle Sam's.

If you are considering Retirement Planning, call for a free consultation today.