Roth IRA vs. 7702 Plan (IUL): Which Retirement Strategy is right for you?

When planning for retirement, many investors default to familiar tools like the Roth IRA.

However, higher-income individuals and business owners are increasingly exploring 7702

Plans, often structured using Indexed Universal Life (IUL) insurance, as a complementary or

alternative strategy.

Both vehicles offer tax advantages, but they function very differently. Understanding their

strengths, limitations, and ideal use cases is critical to making an informed retirement

decision.

What Is a Roth IRA?

A Roth IRA is an individual retirement account funded with after-tax dollars. Qualified

withdrawals in retirement including investment growth are tax-free.

Pros of a Roth IRA

• Tax-free growth and withdrawals

• Simple and transparent

• No required minimum distributions

• Favorable estate planning treatment

Cons of a Roth IRA

• Income limits for eligibility

• Annual contribution caps

• Full market risk exposure

• No insurance or income guarantees

What Is a 7702 Plan (IUL)?

A 7702 Plan is a life insurance policy structured under IRS Code Section 7702, commonly

using Indexed Universal Life. When properly designed, it can function as a tax-advantaged

retirement income strategy.

Pros of a 7702 Plan (IUL)

• Tax-deferred growth and tax-free policy loans

• No income or contribution limits

• Downside market protection

• Built-in death benefit

• Flexible retirement income planning

Cons of a 7702 Plan (IUL)

• Not ideal for short-term use

• More complex design and management

• Insurance costs and policy charges

• Requires disciplined funding

Which Strategy Is Better?

In practice, many individuals benefit from using both. A Roth IRA provides a strong

foundation, while a 7702 Plan can supplement retirement income, manage taxes, and

support legacy goals.

No two retirement plans should look the same.

If you are a high-income earner, business owner, or professional concerned about taxes,

market volatility, or outliving your income, it may be time to explore advanced retirement

strategies.

Schedule a retirement strategy consultation today to determine whether a Roth IRA, a 7702

Plan, or a coordinated approach makes the most sense for your long-term goals.

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