12/2/2023 0 Comments Tic tok“It’s bull-, complete bull-,” said Ramit Sethi, founder of the advice empire of I Will Teach You To Be Rich. It’s not a product that is good for every situation, so people should read the details carefully and talk about the suitability of the investment with a professional who is a fiduciary - meaning the adviser is bound to work in their best interest and is not concerned about their own commission. There are also rules for access to money, and there are also tax issues. The life insurance products they promote offer get-rich-quick promises instead.īut any form of variable life insurance involves a complicated contract that comes with high fees and concerns about investment management. The videos make tax-deferred savings sound old-fashioned, slow and worthless, even though such plans are considered the cornerstone of sound retirement strategy by most experts. Congress and the IRS are also constantly changing the rules with legislation like the Secure Act and Secure 2.0, so obviously, it’s an imperfect system that can be tweaked.īut these influencers are attacking the idea of tax-deferred savings, as well as the value of consistent savings in a segregated account for retirement. Financial pros perennially debate the value of target-date funds, which are widely prevalent in 401(k)s, because of their high fees and varying strategies for investment management. There are, indeed, some legitimate concerns about 401(k) plans. The Money Mom, for instance, says, “The 59 ½ rule, I’ll just never be OK with that.” The general argument against tax-deferred savings in workplace retirement accounts is mostly about the restrictions - contribution caps limited investment choices within plans rules for accessing money before age 59 ½ ( unless qualifying for a hardship withdrawal or taking a loan) taxes on withdrawals and required minimum distributions at retirement age. “TikTok is just littered with horrendous information.” What’s so wrong with the 401(k)? “It makes you want to just slam your head into the desk,” said AJ Campo, a CPA whose firm is based in New Jersey and who participates in social media through LinkedIn, Facebook and #taxtwitter discussions. The proliferation of these messages has angered financial advisers, who say that this is bad advice and prevents the good messages to get through. These kinds of products are sold on commission, of course, and the posts about them are not always public-awareness campaigns. Another is called maximum premium indexing (MPI), which is a kind of hybrid life insurance and retirement plan that gets billed as an alternative to Roth IRAs. One of the most popular suggestions is indexed universal life (IUL), which is a kind of cash-value life insurance policy where you pay premiums to build up value based on the performance of the S&P 500 index or a similar measure. What would they rather you do? For the most part, the gist is to take any tax-deferred contributions you might make above your company’s match and put it toward variable life insurance policies of one sort or another.
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