Why Does the IRS Require 5 Years of Funding to Qualify for Tax-free Income?

Each day, Doug Andrew posts an in-depth answer to a specific financial question on his 3 Dimensional Wealth YouTube channel. Recently he was asked, “Why does it take 5 years of funding to qualify for tax-free retirement income?” The people asking this question are often professionals like CPAs and tax attorneys.

They want to better understand why the IRS has such a requirement.

This is where Doug is quick to point out that IRAs and 401(k)s are tax-deferred rather than tax-free. This means that most people are simply putting off the taxes that the IRS wants until a later time when they hope to have some perceived advantage. But what if there was a better way to accumulate and grow your money tax-free, perfectly in harmony with existing IRS code?


  • Is it really possible to accumulate your money toward any long term goal, such as retirement, totally tax-free? Doug lays out the ways that you can not only accumulate your money tax-free but access it tax-free as well.
  • What was the brainchild of E.F. Hutton back in the 1980s that opened the door to this kind of tax-free savings? Learn the history of the Maximum Funded Tax Advantaged (MFTA) vehicle that became Indexed Universal Life insurance(IUL).
  • What are the differences between living benefits and a death benefit when it comes to life insurance? Doug explains the fundamental difference between universal and whole life insurance.
  • Why is it so essential that your retirement savings be able to generate tax-free income without depleting your principal? If you’ve ever worried about the possibility of outliving your nest egg, Doug has a solution.
  • How does indexing provide this vehicle the ability to enjoy gains during those times the market is growing yet not lose money during market volatility? Doug shares the answer to how you can sleep soundly at night regardless of what’s happening in the market.
  • Why are investments always taxable but savings vehicles like an IUL aren’t? Doug explains the relevant sections of IRS code which have existed for over a century.
  • And much, much more…

Start by visiting with a IUL Specialist today.

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment.

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