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Some of the Most Offensive Advice Given in MF101
Comes from the Chapters on Free Yourself
From the IRA and 401(k) Trap and
Solve Your IRA/401(k) Dilemma

2) Discontinuing funding of your qualified plans in favor of cash value life insurance.

When you look at the real world math of this, the answer is not so clear cut. It will depend on many factors including the tax bracket you are in and your age.

It is true that funding a high quality low expense cash value life insurance policy instead of funding a qualified plan can work out better for some readers then funding a qualified plan.

The general rule of thumb is that the higher tax-bracket you are in and the younger you are, the more it will make sense to fund cash value life insurance after-tax instead of a tax-deductible qualified plan.

The one caveat to this general rule of thumb is a Roth IRA or Roth 401(k). Using either is very similar to funding cash value life insurance if you assume similar rates of return.

The point with this web-site is to motivate readers to think critically when reading get rich quick books by any author. Most are not all they are cracked up to be and MF101 specifically has so many fundamental math flaws that it can not be relied upon as an authoritative writing on the subject of building wealth through Equity Harvesting.

You may have heard the statement: If it doesn't smell right there is something wrong with it? It's sort of a gut reaction to something when you first look at it.

Just think about removing money from a plan (IRA/401(k)/403(b)) where the money is growing tax deferred and then have a life insurance agent tell you based on the teachings of MF101 that you should take the money out (in lump sum possibly), pay immediate taxes on that money, and then reposition it into a cash value life insurance policy (which somehow is going to create more retirement income for you).

Does that make sense? It shouldn't as the numbers do not support it due to the costs of insurance and the taxes due to reposition the money. Don't fall prey to this sales pitch.

Summary on IRA/401(k)/403(b) Rescue

It doesn't work unless you use very unrealistic numbers.

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