What is Tax-Free Retirement?
The earlier you begin planning and investing for your future, the more time you have to accumulate funds and maximize your tax savings.
Planning for retirement can be overwhelming, especially when it comes to taxes.

A tax-free retirement account or TFRA normally refers to permanent cash-value insurance policies that offer risk protection and tax benefits to individuals. A TFRA retirement account is not a qualified plan, so it doesn’t follow the same rules as a 401(k). But it can offer both tax benefits and risk protection for investors. Breaking down how a tax-free retirement account works can help you to decide if this strategy may be right for you.
What Is a Tax-Free Retirement Account (TFRA)?
Tax-free retirement accounts can be an indexed universal life insurance policy, variable life policy or a whole life insurance policy. They are covered under Section 7702 of the Internal Revenue Code that is designed to provide tax-free income for retirement. As such, you might hear a TFRA described as a Section 7702 plan.
Financial advisors and wealth managers can market these plans to investors who are looking for an alternative way to save for retirement, beyond a 401(k), pension or individual retirement account (IRA). But it’s important to understand that technically, they’re not retirement accounts at all. Instead, these are qualified life insurance contracts that can be used to generate tax-free income for retirement.
An Indexed Universal Life (IUL) insurance policy can be a powerful wealth accumulation vehicle that comes with unique tax advantages, empowering you to create a retirement income that's free from the burden of taxes.
What Are the Benefits of IUL Policies in Retirement
When properly structured, an indexed universal life insurance policy can have significant benefits for you in retirement.
ONE of the most compelling advantages of Tax-Free Retirement with IUL is the ability to generate a tax-free income stream during your retirement years. As you contribute to your policy, the cash value grows on a tax-deferred basis. When it's time to withdraw funds, you can access them without incurring any tax liabilities, allowing you to maximize your retirement income and keep more of your hard-earned money in your pocket.
Since the cash value inside indexed universal life insurance grows tax-deferred, and you can borrow against your cash value and pay a zero capital gains tax, IUL policies represent a great potential solution for many retirees.
The benefits associated with tax-deferred growth and tax-free access to your cash value means you can use the funds for a new car, home, or your children’s education. Therefore, using an indexed universal life insurance policy in retirement can be a safety net against raising taxes or market volatility. At the very least, a properly structured and funded product provides you additional options when it comes to retirement income.
We will be going into more detail about this topic in the next few weeks. If you would like a personalized review... That can be arranged as well or reach out to your financial professional.