THE NO-COMPROMISE RETIREMENT PLAN • 65
I won’t go much deeper into loans (I could write a whole book on those alone!), but it’s enough to say that most IUL policies have an option to access your funds with minimal or no net interest charged. The end result is the same: IUL policies deliver checks with income you can spend, just like pulling funds from your 401(k) or IRA. But with IUL, you won’t owe any taxes on that check. Your Money, Undiscounted Now you know how you access funds from an IUL policy. But that’s not the exciting part about loans. I was reminded of the value of IUL loans by one of my clients, Daniel. Daniel had a brokerage account through his bank, and in 2009 he and his wife decided to buy a condo in Florida. He needed to use some of the funds in his brokerage account, but when he went to withdraw them, he was met with a dilemma: The market was down dramatically as the housing bubble burst. He could access his money, but it was discounted around seventy-five cents on the dollar. That means his account had lost about a quarter of its value, and any money he pulled out was now “costing” him more than it would have a year earlier. Daniel began to understand the impact of market-value adjustment. If you have a stock worth $60 a share today, you can sell it for $60. But if the value of that stock drops to $30, you now have two options: Wait for the value to grow to $60 again, or sell it at $30 for a 50 percent market value adjustment. If you need $60 from your stock account today, you’d have to sell two shares of stock rather than one. This is what occurs every time you withdraw money from your IRA or 401(k): You withdraw funds at the current value of your account. For people like Daniel who need funds when the market
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