Penalty for liquidating ira account
Let’s look at his 13 benefits of using whole life insurance to pay for college: 1) Tax-deferral – Where’s the tax deferral?
There is none other than the very minor effect of the cash value not being taxed as it grows.
6) Convert term-life insurance costs – Uhhh….yes, if you have a huge whole life policy you don’t need a huge term life policy so you can save those costs. That’s something you get out of a 529 that you don’t get out of a whole life policy unless you cancel the policy, which comes with its own tax consequences not found in a 529.The author cautions against using tax-advantaged college savings plans like 529s and ESAs because they have “the same drawbacks as other tax-advantaged plans,” like, you know, compound interest, tax-free growth, and tax-free withdrawals.He then goes on to say that these plans “have only one use” and that tying your money up to pay for your kid’s college leads to many unspecified “lost opportunities and costs.” Then he suggests that instead of asking how you can pay for college, you should be asking how you can pay for college, get all your money back, and guarantee your children’s education even if you “become disabled or die, the market declines, interest rates drop, [you] get sued, or college costs skyrocket?You didn’t realize there were disadvantages, did you?He separates the infamous compound-interest-demonstrating “mountain chart” into 3 phases- accumulation, growth and “take-off” and attempts to get the reader to believe that compound interest somehow works differently the first 10 years than in years 20-30 and complains that this is somehow a dangerous situation and compound interest is only helpful after decades.