Distributions: Tax-free or Tax-preferred
These investment accounts include:
- Tax-exempt bonds
- Roth IRAs
- Non-MEC permanent life insurance
With such investments, you only pay tax on your money once, not twice or more.
There are important differences between the taxation of life insurance and Roth IRA and tax exempt bonds - life insurance is best utilized when there is a need for the death benefit protection and the life insurance is purchased either as a supplement to an existing Roth IRA account or when you are unable to contribute to a Roth IRA.