Tax Season is Here!

Josh VerHoeve

By: Josh VerHoeve, VP - Annuity & Life Insurance at Asset Marketing Systems

Originally Written: April 2nd, 2019
Updated: April 4th, 2024

It’s that time of year again — TAX season. As many of you are working with clients, you may have gotten comments about tax refunds being less than expected. After all, taxes were reduced, and deductions increased, so shouldn’t refunds be larger? Well, tax refunds are down 13% on average this year.

Conventional financial wisdom from many CPAs and financial planners advise clients to stash more away into tax-deferred accounts like IRAs and 401(k)s to solve an immediate tax issue, sometimes ignoring what those same tax savings today will cost in the future. Perhaps we need to see tax rates go back to 80+% like they were sixty years ago before people start saving for retirement differently.

We are currently over $34.5 trillion in debt. A pretty interesting website along with videos depicting that debt can be found at To give us perspective, we have doubled our national debt in just the last ten years, and have tripled it in the last fifteen years. In the year I was born, 1982, we were just under $1 trillion of debt, and we are now nearly 35 times that amount! Plain and simple, taxes have to go up at some point, and we might all agree that they’re not only on sale today, but actually predictable right now.

A typical 50-year-old saving for a retirement age of 67 will gamble with 401(k) contributions in hopes that the tax rate is lower in twenty years when they access the cash. Of course, one of the unique investments that works unlike anything else is cash value life insurance. We can pay that tax now, and take it tax-free at retirement. While IUL is an amazing product, the IUL industry is spinning right now. We had a major regulation put into place about three years ago requiring us to show clients specific RORs and specific loan arbitrage. At first glance, these regulations made sense. They made sense to me and everyone else who thought a 10% ROR on an IUL illustration was absurd. However, the regulation Actuarial Guideline 49 (AG49) has had the opposite effect.

Insurance carriers are simply revising products to illustrate at 6-7% which seems reasonable, but they have added crediting bonuses and increased fees. Don’t get me wrong, crediting bonuses are great, but it’s starting to get out of hand. To pay for many of these bonuses, fees, and costs on IUL have nearly doubled and tripled.

Asset’s life team will work diligently to keep you informed as this happens. We’re committed to vetting out products thoroughly before recommending them to you. Life insurance is a long-term commitment, sometimes as long as 30, 40 or even 50+ years. For this reason, it’s vitally important to make sure the products we recommend are not just the best today or a year from now, but even more important that they stand the test of time. Allianz, National Life Group, and Minnesota Life have been core carriers for us on the IUL side, and they have all held true to their promises. You won’t get a product recommendation from Asset because the cap is high today when we know that same cap rate is just as important year after year. The Asset life team spends a tremendous amount of time understanding carrier pricing and product development to assure the best solutions.

Back to taxes…have you used the Planning Compass with a client before? Do you know what the Planning Compass is? This tool compares all of the statistics discussed above to determine which product makes the best sense to use when saving for retirement. It’s a dynamic calculator that compares cash value life insurance with tax-deferred accounts. Start by filling out the Request Form then call our life team to schedule a thirty-minute phone/web call with us to show you the power of this tool.

There is over $11.5 trillion in IRA assets in the United States, and when I speak with advisors, they all tend to agree with me that taxes are on sale and the future holds tax increases. If we can agree on that, how about we all do our clients a favor and take some of that $11.5 trillion in IRA assets and convert them to a Roth IRA. Contact our annuity team at 888-303-8755 to tell you about Fixed Indexed Annuities that work well with Roth conversions! If you have not registered for our upcoming Sales & Networking event, please make sure to do so! We will have multiple annuity and life product breakout sessions for you to learn about these and so many more strategies.

Taxes are inevitable, so let’s do all we can to protect the retirement incomes of our clients from them!

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