78 • MARTIN H. RUBY
taxes, and die before I earned back the taxes I paid? After all, if I withdrew $500,000 from my IRA, I would only net about $375,000 after taxes to put in my Roth IRA. With IUL, that’s not a concern; I have a death benefit that would more than make my heirs whole if for some reason I die too soon. Likewise, if I converted my IRA to a Roth all in one year, I would probably put myself in a higher tax bracket the year I con- verted the funds. But tax law requires premium payments for tax- free IUL to be spread out over several years; I’m withdrawing 20 percent of the account each year for the next five years. This spreads out the tax impact and lets me maintain my current tax bracket. Sometimes, I refer to this strategy as a Roth conversion on ster- oids: Like a Roth conversion, I’ve converted my tax-deferred as- sets into tax-free funds. But, rather than putting my money in a Roth IRA, which has the same conflicts of growth vs. security and income vs. legacy, I’ve put my funds into a vehicle that eliminates those conflicts, too. By now, you know I’m an actuary and numbers drive my deci- sions. So, here’s what my wife and I have gained by using IUL for a portion of our retirement savings, according to my calculations: • We’re saving hundreds of thousands of dollars in taxes from our retirement funds. • We’re increasing the amount of after-tax income we can access in retirement. • We’re eliminating market volatility from impacting our savings. Do those sound like three benefits you want in retirement, too? Now you know how to get them.
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