Pre-Retirement Then Post-Retirement Income Transition Planning

[pb4uski]

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Originally Posted by LongTerm Unfortunately my options in my 401K for bond funds are not corporate bonds but are US Government Long Term Bonds. I am concerned that this contains more risks to principle than is readily apparent so I've not allocated any of our 401K portfolio to this. Just one other point. DW and I work for the same MegaCorp (not an office romance - we met in college). Our 401K choices are therefore identical.

Perhaps you could suggest through the proper channels that a broad based bond fund or corporate bond fund be added to the choices. Certainly the provider you use must have something like that. We had Harbor Bond fund from PIMCO where I worked.

[pb4uski]

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Originally Posted by antsinfla That said, I do not advocate the use of variable annuities for several reasons, primarily the high fees and expenses. Life insurance or any type of insurance for that matter, serves a purpose only, and is not to be confused with investing. In addition I am not a great fan of "professional managers" in most asset categories. This is only my opinion from my years of experience both from within and without the financial services industry.

You may have a future here after all.

[antsinfla]

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Originally Posted by pb4uski You may have a future here after all.

Thanks for the welcome!

Previous correspondence refers - for the record: The cash value in an IUL may be taken out as withdrawals or policy loans and is regarded as tax free income. In essence, using the death benefit as a lifetime benefit - hence the use of a life (I call death) insurance contract from a retirement income planning perspective - particularly if you are in a higher tax bracket. Indeed you are partially correct "the death benefit from life insurance might be tax free" - it is.

[pb4uski]

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Originally Posted by antsinfla Thanks for the welcome! Previous correspondence refers - for the record: The cash value in an IUL may be taken out as withdrawals or policy loans and is regarded as tax free income. In essence, using the death benefit as a lifetime benefit - hence the use of a life (I call death) insurance contract from a retirement income planning perspective - particularly if you are in a higher tax bracket. Indeed you are partially correct "the death benefit from life insurance might be tax free" - it is.

As I recall, surrenders up to the amount of premiums paid is not taxable (since it is essentially a return of "principal") but surrenders in excess of premiums paid are taxable so your statement above that withdrawals are tax-free is only partially correct. You are correct that loans are not taxable. However, the post I was referring to trumpeted IUL as providing "tax-free income" and while IUL withdrawals/loans can be constructed to in effect make income/return of premium tax free upon death it isn't tax-free income like muni interest or my qualified dividends.

I'm actually totally correct on death benefits - there are cases where death benefits are not tax free (for example, stranger owned life insurance death benefits are taxable).