Indexed Universal Life (IUL) vs 401(k)
Compare tax-free retirement income via IUL policy loans against tax-deferred 401(k) withdrawals with employer matching.
Your Information
Timeline
Savings
401(k) IRS limit: $24,500 · IUL has no limit
IUL Parameters
401(k) Parameters
Tax Rates
Retirement Withdrawals
Take-home amount after taxes
IUL
Tax-Free Income401(k)
Employer Match401(k) provides more retirement income
$1,678,425 more (52.8%) over your retirement
Tax Savings with IUL
IUL policy loans are tax-free, potentially saving you $680,479 in taxes compared to 401(k) withdrawals over your retirement. However, 401(k) offers employer matching and lower fees.
Projections
IUL Advantages
- ✓Tax-free retirement income via policy loans
- ✓Downside protection (0% floor rate)
- ✓No RMDs required
- ✓Tax-free death benefit for beneficiaries
- ✓No contribution limits
401(k) Advantages
- ✓Employer matching (free money!)
- ✓Lower fees than IUL
- ✓Immediate tax deduction on contributions
- ✓Full market upside (no cap rate)
- ✓Simpler product structure
Year-by-Year Projection
| Age | IUL ValIUL Value | IUL TaxIUL Taxes | 401k Bal401(k) Balance | 401k Tax401(k) Taxes |
|---|---|---|---|---|
| 36 | $68,575 | -$3,600 | $72,760 | +$3,600 |
| 41 | $177,946 | -$3,600 | $212,809 | +$3,600 |
| 46 | $320,888 | -$3,600 | $409,235 | +$3,600 |
| 51 | $507,709 | -$3,600 | $684,732 | +$3,600 |
| 56 | $751,876 | -$3,600 | $1,071,131 | +$3,600 |
| 61 | $1,070,993 | -$3,600 | $1,613,076 | +$3,600 |
| 66 | $1,412,241 | $0 | $2,276,999 | -$16,923 |
| 71 | $1,545,673 | $0 | $2,751,245 | -$16,923 |
| 76 | $1,784,677 | $0 | $3,227,354 | -$29,148 |
| 81 | $2,168,386 | $0 | $3,606,836 | -$40,161 |
| 86 | $2,748,643 | $0 | $3,796,801 | -$54,723 |
| 90 | $3,399,729 | $0 | $3,714,076 | -$67,786 |
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Disclaimer: This calculator provides simplified estimates for illustrative purposes only. IUL policies vary significantly by carrier. Actual IUL performance depends on index performance, cap/floor/participation rates, cost of insurance charges, and policy structure. 401(k) returns depend on investment selection and market performance. Consult with a qualified financial professional before making investment decisions.