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VUL better if Backdoor Roth Disappears?

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  • #31
    Originally posted by Hank View Post

    Sunk cost fallacy. You haven’t invested $405K into a variable universal life policy, you’ve spent $405K on a VUL.
    Yes, sunk cost. Learn, fix if possible, and move on.
    We all make mistakes. I make more than most.

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    • #32
      I understand the sunk cost fallacy. I’m a Cubs fan and I watch them continually trots Jason Heyward out into Right Field. (That will make 3 people laugh.)

      One thing I’m hoping to discover by enlisting Mr. Hunt is to maybe see if holding it and minimally paying premiums is worth it for another 3 years until the surrender fee goes away. Or even if I should wait 3 months until I roll into a new year of the policy and the % surrender fee decreases.

      I am currently maxing all of my tax advantaged accounts (my 401K, Her 457, both Backdoor IRAs, both kids 529s), and I’m still investing a sizable amount in my taxable account every year. A $30k loss will not kill me or set my financial plan off track. I found WCI about 10 days ago. I’m trying to learn to take my finances into my own hands and out of the hands of the Advisor that sold me this VUL. I just think it’s prudent to learn when the best timing is to dump the policy. It would be easiest for me to say “screw it, it’s $30k, no big deal.” But the right thing to do is to go through the 3 in-force illustrations I requested and pay the $150 from Mr. Hunt to get his expert opinion and it compare it to what I learned myself. Starting a financial literacy journey by looking at a $30k loss, shrugging my shoulders and opening another beer seems inauspicious.

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      • #33
        Originally posted by spiritrider View Post
        A plan document can have restrictions beyond non-mandatory tax code and IRS regulation requirements, but can not contravene mandatory requirements. For example, a governmental 457b can restrict non-prohibited in-service rollovers, but all non-governmental 457b plan rollovers are prohibited. In fact, allowing such a rollover would be a serious compliance violation, subject to plan disqualification.

        A general rule is; that which is not prohibited is allowed but not required.
        Thanks @spiritrider…. Sorry to again hijack the op’s thread and head in a different direction….

        I found out today that a 457b is a non-qualified plan. I can take a distribution from the 457b, but a rollover/Roth conversion is not allowed.

        I don’t think I need to get the money out from that 457b plan, as I have almost zero concern about the safety of those funds, but this lower tax year allows me to consider either taking that 457b distribution and investing in my taxable account, or alternatively to Roth convert from a different qualified plan and then allow those funds to grow tax free in perpetuity. I think the Roth conversion makes the most sense for me, given the low risk of any future loss for the 457b funds.

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