This is a sacred tax-free cash cow. In this episode, I'm going to address the
question "Why is a max-funded IUL, indexed universal life tax-free?" You're going to
understand why this is so powerful. And it's been protected in the Internal
Revenue Code for more than a century.
So, my name is Doug Andrew. I'm here in my radio studio. I've been a financial
strategist for more than 45 years. But I've been blessed to have a national
broadcast radio show now for the last 11 years. And so, this is my studio where
every week I address questions that people have. If you're on this YouTube
channel, you know perhaps that I answer a specific question every single day that
has been asked at 30 to 300 times a month for the last several months. So,
thank you for joining me. And in this particular episode, I'm going to answer a
question that has been asking me thousands of times. "Why is max-funded IUL,
indexed universal life tax-free? I mean is this a loophole? I mean, when the IRS,
when Congress finds out about this, they're going to close up that loophole." No,
they know very well what they're doing. It's been like a sacred cash cow for as
long as the Internal Revenue Code has been around. So, let me share with you
3 sections of the code as we currently have them that is sort of
grandfathered protected the money that grows inside of an insurance policy. So,
it's tax-free. And it also allows you to access the money tax-free and when you
ultimately pass away, it blossoms in value, increases in value and transfers
income tax free. And it's because people are taking ownership of their own future.
Taking pressure off of the government to provide benefits or take care of them or
their widow or their orphans. They may leave behind if they die sooner than
later. And so, no, it's not some tax loophole. It's actually a sacred cow. And
I'm going to explain to you the 3 sections of the code that have been
providing this incredible opportunity now for more than 100 years. So, as
a financial strategist, helping people plan for their retirement
for 4 ½ decades, I've noticed a lot of people are under the
understanding that, "Well, I've been told to put money
into the company's 401K or an IRA. And they did that sort of following the herd.
Everybody does that, right?" Thinking that they would be in a lower tax bracket
when they retired. But lo and behold when they retired, they weren't in a lower tax-
bracket. Why is that? It's because when people save for their future, oft times,
they're going down the highway (so to speak) trying to achieve their
destination of financial independence with one foot on the gas pedal but the
other foot was on the brake pedal. And they didn't know they were doing that. So,
they're deferring their tax on those I raised of 401Ks until they retire.
Because they thought they would be in the lower bracket. But they're not. And
it's mainly because they sort of killed their tax deductions with the other foot
on the brake pedal all throughout their lifetime. They pay off their house so
they no longer have that mortgage interest deduction. They're not
contributing money to IRAs and 401Ks after retirement. So, you don't have that
deduction. Your kids are gone. So, you don't have that deduction. Or if they're
not gone, you can't deduct them anymore, okay? And Congress keeps raising taxes
because of irresponsible government spending, the printing of money. And so
most Americans when I ask them, "How many of you think that future taxes are going
to be lower?" Nothing but crickets. "How many think they're going to be the same?"
Oh, a few people raise their hands. But when I ask, "How many of you think taxes
will likely be higher in the future?" And the vast majority of people raise their
hands. And then I go, "So, why are you postponing, deferring paying tax?
Procrastinating and accumulating your money tax deferred to some big amount?
Future perceived unknown advantage and then withdraw your money down the road
when you're convinced taxes will be higher in the future, that doesn't make
sense." And they go, "Yeah. what's up?" And so, that's when I introduced to them the
concept that it would be far better to pay tax on the contributions they're
making, okay? Contribute money to an account with after-tax dollars. And
people say, "Well, like a Roth?" Well, yeah. A Roth is okay. But
too many strings attached because they limit you on how much money you can put
into a Roth. How fast, how much, when you can tap into it. You have to wait 5
years until you're 59 ½. I don't like all those strings attached. So, I can
have all the benefits of a Roth and 4 additional benefits with a max-funded
IUL. Because in the Internal Revenue Code, it's the only vehicle and that for over
a century allows you to accumulate your money with interest
totally tax-free under Section 72(E) of the Internal Revenue Code. For over 100
years, under Section 7702, it's the only vehicle that then allows you to access
that money tax-free the smart way. And I've been able to earn average rates of
return between 8 and 10 percent tax-free. So, every million that I
accumulate by the time I retire can generate 80 to 100 thousand
dollars a year of tax-free income. And that income is tax-free under Section
7702. Now, ultimately when I pass away because none of us are getting out of
here alive. I don't mean this room. Out of his life, okay? So, when we ultimately die,
the reason why I like max funded IUL is because it blossoms in value and
transfers tax-free. When I say blossom, that means increase. If I died right now
at my current age of 68, every million that I would have in a Laser Fund would
blossom to about 2.5 million instantly and transfer income tax-free
to my wife, to my kids, to a church of charity the Boy Scouts the Red Cross or
whoever I leave it behind to. So, there's nothing else in the Internal Revenue
Code that does that. So, that's sections 72(E), 7702 and 101(A) of the Internal
Revenue Code. I've been teaching these sections of the code to CPAs and tax
attorneys, financial advisors in advance continuing education for decades. You
wouldn't believe how many times they come and they sit down and they go, "Well,
I've heard of the those. But I guess I never really understood them. I wasn't
required to understand these when I got my LLM degree." What's that? That's a
master's in taxation. They weren't required to learn about
these? That's why it's advanced continuing education, they're learning
about this after they became a CPA. After they got them their master's in taxation.
Why? My heavens, this is one of the most incredible tools that I have ever used
to help people retire. So, when people ask why is max funded IUL tax-free, it's very
simple. It sort of been grandfathered that way protected as a sacred cow in
the Internal Revenue Code for more than 100 years. Because every time
Congress has wanted to maybe reassess, "Should we start taxing these?" It's not a
tax loophole. They know what they're doing. But if they get hard up for money.
The tax revenuer sometimes say, "Let's go pluck that sacred plum over there.
Those tax-free insurance policies." Well, every time they've studied that, they
realize, "That's not going to come out ahead for them." Because if they take it
away by taxing it, they might get a short-term little windfall of tax
revenue. Within the long run, the government will shell out far more money
to the people they took it away from. Why would you penalize and take away from a
widow or orphans when you left behind insurance proceeds for example to make
sure that they didn't become a drain on society that they were self-reliant. Why
would you penalize people for trying to be self-reliant or financially
independent? And so, life insurance has been a sacred cow for years whether it's
for death benefit that's tax free or for living benefits. Because if I can sock
away money and every million generates 80 to 100 thousand a year of
tax-free income, and that's far better than I relying on Social Security or the
government to take care of me I'm actually benefitting America.
I'm helping America. And so it's not like this, "Oh, you are using a tax loophole.
You're not paying your fair share." Actually, I'm doing more for America by
being self-reliant financially independent and not draining the
resources that government to provide for people who would not save.
That's what social security was really all about. To provide income from people
who did not save or refused to save. They were always spending throughout their
lifetime. This is one of the reasons why I love max-funded IUL. It's sort of this
sacred cow every time they've even been tempted to change the tax laws. They've
said "Leave it alone. It will cost us more than it makes us." So, let me give you the
takeaways from this episode. So, max-funded IUL, indexed universal life is an
instrument that if you use it for a living
tax-free income producing vehicle, then I can prove in other episode, subscribers
to this channel watch several different episodes to understand how this will
knock the socks off of a traditional IRA or 401K. You'll have more income by as
much as 50 to a 100 percent more. 80,000 of income instead of the
industry standard of a 40,000 on every million dollars. It's totally
tax-free. If I live to be 120, it does not deplete principal. And
it's afforded under those three sections of the Internal Revenue Code that I
taught you. Section 72(E), accumulate your money tax-free. Section 7702, access your
money totally tax-free. The smart way. And when
you ultimately die, it blossoms in value and transfers to those who you leave it
to totally tax-free. Nothing else does that. If you comply with three tax
citations TEFRA, DEFRA and TAMRA, these are tax citations. If you do that
correctly and you fund it properly, it will be a superior vehicle. And it's not
some dream or tax loophole. And so, if you're curious, you can search on this
channel for answers to questions about TEFRA, DEFRA and TAMRA. But I'll tell you
what. I have my most recent bestselling book. It's The Laser Fund. It's actually
two books in one. This aside is 200 pages, 14 chapter.
There's all kinds of charts and graphs explaining why this works.
The Laser Fund is what I call a max-funded IUL. This side is 12 chapters that
contains 62 actual client stories and examples. If you want to use your right
brain and your left brain, I would recommend you read both of these books.
300 pages. Now, I'll buy the book. I want to gift this to you free. You just go to
laserfund.com. Pay $5.95 shipping and handling. And I'll fire one out to you.
And you'll have options to even get the audio version of the digital version and
10 master classes if you want. But this is the beginning step to empowering
yourself to accumulate access and transfer your money
totally income tax-free.