IUL vs 401(k)
Quick answer
A 401(k) offers tax-deferred investing and often an employer match, but withdrawals are taxed and exposed to market losses. An IUL adds a death benefit, a 0% floor and tax-free policy loans, but has insurance costs and caps. Most people should capture the 401(k) match first, then consider IUL as a supplement.
| IUL | 401(k) | |
|---|---|---|
| Contribution limits | None (IRS MEC rules) | Annual IRS limit |
| Market losses | 0% floor | Full exposure |
| Withdrawals | Tax-free loans | Taxed as income |
| Death benefit | Yes | No |
| Employer match | No | Often |
Who benefits most from IUL alongside a 401(k)?
High earners who max out retirement accounts and want tax diversification, downside protection and a death benefit.
Frequently asked questions
Can I roll a 401(k) into an IUL?
Not directly without taxes. Annuities accept tax-free rollovers; IUL is funded with after-tax dollars.
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