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President Obama recently unveiled his proposed budget for 2015 and it isn’t pretty for those of us with retirement accounts.

The president’s plan would limit the tax benefits for many 401(k) and IRA holders. It would also place a cap on the amount that Americans can accumulate within their retirement plans.

Under Obama’s proposed budget, the overall amount that could be held in tax-deferred accounts would be capped at $3.4 million. In addition, tax deductions for plans like IRAs and 401(k)’s would be limited to 28% of income.

Furthermore, the president’s 2015 budget calls for Roth IRAs to follow the same “required minimum distribution” (RMD) rules as other retirement accounts. What this means is that you would have to start taking mandatory distributions from your Roth IRA when you turn 70½, just as you currently must do with a traditional IRA and other retirement accounts. Since having no RMD is a big reason many people are in Roth IRAs, the impact of such a change would be significant.

Keep in mind that these are proposals. In gridlocked Washington D.C., you can never count on any proposal becoming law. But the fact that these changes are on the table at all should give retirement account holders pause.

Retirement investors sock money into conventional plans such as 401(k)’s and IRAs based on the expectation that the advantages they offer won’t disappear or be diluted. But if those advantages can be changed with the stroke of a pen in Washington, it means we can’t rely on some of our main vehicles for retirement planning.

The good news? There are alternatives to the government-controlled menu of investment options out there. Many of our clients have decided that a strategy using indexed universal life insurance is an attractive and effective way to save for retirement without being subject to the government’s whims or potential market loss.

The strategy, which we call the “Private Vault,” allows for accelerated funding of a specially designed insurance policy in order to create a large cash value. That cash value then serves as retirement savings. The universal life insurance policy at the center of the strategy allows policyholders to earn two streams of income: one that is fixed and guaranteed, and another that is based on the performance of the market. Policyholders can allocate their cash value between these two investment accounts in order to invest as conservatively or aggressively as they wish.

The money used to fund the policy is not tax deductible. However, as with a Roth IRA, it grows tax-free and is ultimately distributed to the beneficiary free from additional tax. But the Private Vault strategy is very different from a Roth IRA. A big reason: Unlike retirement plans that penalize you for “early distributions,” you have access to the wealth within the Private Vault.

Not only can the insurance policy be used to fund your retirement, but you can take loans from the insurance company while you are waiting for retirement. The loans, taken against the cash value in your policy, can be used to finance cars, houses, college, or even business equipment. And you can do so without paying the fees and jumping through the hoops that banks require. You must repay the loans, of course, but the icing on the cake is that even while a loan is outstanding, you can continue to accumulate growth on the cash value within your policy.

The Private Vault strategy, when properly executed, allows us to break free from banks and other financial intermediaries in order to compound our wealth more quickly and enjoy financial independence.

Some are resistant to using life insurance for retirement savings because contributions are not tax deductible. However, it may be wise to pay taxes at the current rates rather than hoping they’re not higher down the road. In any event, I can demonstrate that the wealth you accumulate in a Private Vault can far outweigh the tax savings of using a conventional plan.

With what the government is considering now, this may leave you wondering what the future holds. Can’t the government just legislate new rules that will one day make these insurance-based solutions less attractive? The answer has come from our courts: life insurance policies are private contracts, meaning they are beyond the reach of legislators looking for ways to take more of your money in the form of taxes.

I believe that, given the uncertainty over tax rates and tax laws, a conversation about alternatives to plans such as IRAs and 401(k)’s is well worth your time. Please contact me if you would like to discuss this topic further.