5 Essentials For a Better Retirement: #4 "Easy Access to Savings"
TES Loans make it easy to use the savings accumulated in your plan.
Up to 90% of the cash value in Tax-Exempt Savings may be borrowed at any time and for any purpose. You can now bank on yourself and save the time, stress and hassle of having to qualify and get approval for a personal or commercial loan.
Quick and Painless Loan Requests
Unlike loan applications, a TES loan request is a one page document that takes a few minutes to fill out. It can be done over the phone, by email or regular mail and your money will normally be in-hand within 7 business days! And there’s never an approval needed for either the loan amount or the reason for the loan!
Loans Increase Earnings Potential
When money is borrowed or withdrawn from a 401k or other savings plans, the account value goes down. Not so with a TES loan because the borrowed money does not come out of the TES contract value but from the company underwriting these contracts! All loan amounts are then added to the TES accumulation value each year causing it to increase throughout retirement. The indexed growth earned each year is then credited to this ever increasing account value thereby creating additional earnings for the TES contract.
Flexible Loan Repayments
You get to choose how and when to repay your TES loan! Repayment of all loans prior to retirement is always recommended to maximize TES retirement income.
TES Savings Loans Can Earn Interest!
In an up-trending market, a TES loan can earn “index interest” that’s higher than the interest rate charged by the lender! In a weak or declining market, a “guaranteed fixed interest rate” can be selected which approximates the cost of the loan, making the TES loan a “wash” or no cost loan. Currently, there is no other loan in the market place that allows the borrower to choose between earning “net interest” on their loans or paying “zero net interest” on their loans!
Potential Uses for TES Loans:
Tax-Exempt Income: Fixed or increasing payments, no pay cuts due to market losses, lasts a lifetime.
Bank on Yourself: Starting or operating a small business, major purchases, down payments, tuition.
Emergency Fund: Unexpected hospital & doctor expenses, natural disasters, job layoff or loss.
Diversification of Assets: Real Estate, precious metals, farm land, other alternative investments.
Borrowing from a 401k - Know the rules, restrictions and Penalties
Years ago, I learned that only 40% of my savings could be borrowed from my 401k and the loan had to be paid back within 5 years to avoid a penalty. My company also prohibited contributions to my 401k until the loan was repaid so I lost my company match too! And if I left my job for any reason, the loan had to be repaid within 90 days or it would be treated as taxable income and I’d be charged an additional 10% penalty. Contact your company 401k plan administrator to find out how their loans work. There may be better ways to get the money you need.
If there really is a loan that can pay you interest and gives you a lifetime of tax-exempt income, wouldn’t it be worth a few minutes to check it out? Schedule a screen share on your home or office computer and see for yourself!
Next post we will be conclusing our series on the "5 Essentials for a Better Retirement" with Essential #5, "Extra Benefits". Don't miss it!