Reading Roth IRA Alternative | High earners have options for saving for retirement, but income limits mean direct contributions to Roth IRAs generally aren’t among them. This is unfortunate because Roth IRAs offer tax-free earnings growth and withdrawals in retirement — a strong advantage in an economic climate where income tax rates are likely to increase in coming years.

That doesn’t mean you don’t have other options for making your retirement savings plan more tax efficient.

What is a good Reading Roth IRA alternative?

There are very few ways to get tax-free income at retirement. If you’re looking for a Reading Roth IRA alternative, another way is municipal bonds, but you run the risk of losing your money or you’ll get low returns. An excellent way to receive tax-free income is through a policy loan on a life insurance policy, specifically an Indexed Universal Life insurance policy offered by National Agents Alliance.

What is Indexed Universal Life Insurance?

Indexed Universal Life insurance is a permanent life insurance policy that has a “living” benefit in the form of a cash value, in addition to a death benefit that is paid at death. The cash value in your policy earns interest based on either a fixed interest rate, an interest rate that is based on the increase in an equity or bond index or a combination of both. What makes Indexed Universal Life insurance unique is the ability to earn interest based on the movement of an external index (like the S&P 500®). With indexed based interest, you are likely to earn higher interest over time than with a fixed interest rate.

Indexed Universal Life insurance is a great tool for retirement savings because you are able to take advantage of a portion of the gains in the market when an index rises without having to take any of the risk when an index decreases. In other words, your money is at NO market risk! If the index goes down in any given year, you are guaranteed that your cash value will not decrease due to that market loss.

Not only are you able to save money for retirement through the cash value in your Indexed Universal Life insurance policy, if you were to die prematurely, your loved ones will receive the death benefit of the insurance policy federal income tax free. This is where an IUL really is a great Roth IRA alternative. You don’t even have to go through probate.

Why is Tax-Free Retirement using Indexed Universal Life insurance so important?

You can access the money in your cash value through policy loans & that income is federal income tax free! As mentioned earlier, life insurance is one of the very few ways to get access to your money tax free. And, the policy loan (and loan interest, if any) does not have to be paid back as long as the policy remains in force! If the policy loan is not repaid, any unpaid loan balance will be deducted from the death benefit & the remaining death benefit will be paid to your beneficiary when you pass away.

And let’s face it, income tax rates are likely to increase in the future. You can also protect your retirement income savings from decreasing due to potential future income tax rate increases. You don’t have to worry about future income tax rates because your income will be tax-free!