Were You Told to Rollover Your 401(k) Into an Indexed Universal Life Policy?
If a financial advisor, insurance agent, or retirement planner recommended that you roll over your 401(k) into an Indexed Universal Life (IUL) policy, it may have sounded like a smart tax move. But for thousands of retirees and professionals across the country, these rollovers have turned into financial disasters.
With nearly a decade of focused experience in IUL litigation, Robert Rikard and the team at RP Legal LLC have helped hundreds of clients nationwide recover losses from IUL policies sold under false or misleading pretenses. The firm has taken on some of the largest insurance companies in the industry and won, including a major courtroom victory against one of the top IUL product providers in the country.
The Rollover Pitch: What You May Have Heard
These rollovers are rarely presented as what they are—the liquidation of your qualified retirement account to fund a indexed universal life insurance policy. Instead, they’re pitched as advanced financial strategies that allow you to:
- “Create tax-free retirement income”
- “Eliminate required minimum distributions (RMDs)”
- “Leave a tax-free death benefit for your heirs”
- “Get market upside without market risk”
- “Shield your assets from future taxes”
The process almost always starts with an IRA rollover or lump-sum transfer from a 401(k), followed by funding an IUL policy over a short period of time. Some promoters even recommend premium financing loans to enhance the plan. On paper, it looks like you’re getting insurance, tax-free income, and market participation in one package.
But the paper doesn’t show the whole story.
What Actually Happens When You Rollover Into an IUL
You Pay Taxes Immediately
Rolling over a 401(k) into an IUL requires taking a taxable distribution from your retirement account. That means you may face a significant tax bill up front, especially if the policy is funded over just a few years.
You Lose the Benefits of a Qualified Plan
401(k)s and IRAs offer statutory protections and tax-deferral benefits. Once you liquidate the account to fund an IUL, you lose those protections in exchange for a policy with no guaranteed returns, rising insurance costs, and loan-based income projections.
Your Income Is Based on Policy Loans
The “tax-free income” touted by agents is almost always based on borrowing from your policy’s cash value. But those loans accrue interest, reduce your available cash value, and can eventually cause the policy to implode if performance lags.
The Sales Illustration Assumes Unrealistic Conditions
Illustrations that show double-digit income from year 10 to year 30 depend on:
- Fixed or rising cap rates
- Consistent market gains
- No missed premium payments
- Low insurance costs over decades
These illustrations are not guarantees. They are projections based on best-case scenarios, often manipulated to make the policy appear safer and more profitable than it is.
The Hidden Risks of IUL Rollovers
If you were advised to roll over your 401(k) into an IUL, ask yourself:
- Did the advisor disclose the immediate tax consequences?
- Were you told that all income was based on non-guaranteed policy loans?
- Did the plan depend on just a few years of premium payments, with a promise that the policy would then “pay for itself”?
- Was there any explanation of what would happen if interest rates rose, cap rates fell, or the market underperformed?
If you answered yes to these questions—or worse, if you were never told the risks at all—you may have been misled.
RP Legal LLC Leads the Nation in IUL Rollover Litigation
RP Legal LLC has built one of the only national litigation platforms dedicated entirely to Indexed Universal Life recovery. The firm has brought claims against insurance carriers, financial advisors, marketing organizations, and premium finance lenders who pushed IUL policies as retirement plans.
With hundreds of cases filed and resolved, including against some of the largest insurers in the industry, RP Legal LLC understands the precise mechanisms behind these products, how they were sold, and why they fail. The firm’s litigation strategy draws on deep technical knowledge of IUL structures and the deceptive sales narratives used to move retirement assets into them.
You May Have a Claim for Recovery
If your 401(k) rollover was used to fund an IUL policy and that decision was based on:
- Misrepresentations about taxes or performance,
- Unrealistic income projections,
- A promise that premiums would stop after just a few years,
- Or undisclosed risks associated with policy loans,
You may have a valid legal claim to recover your losses.
What You Can Do Today
- Request a Case Review – We will examine your IUL policy, review your original rollover documents, and assess whether your advisor or insurer failed to disclose material risks.
- Explore Your Legal Options – Our litigation team will walk you through potential claims for rescission, damages, or other legal remedies.
- Protect What You Have Left – If your policy is already underperforming or headed toward lapse, we can help you understand your exit options while preserving your rights.
- Don’t Let a Retirement Rollover Ruin Your Future – IULs are complex insurance products, not retirement plans. When sold in place of traditional 401(k) rollovers, they expose clients to a web of risk, fees, and false promises. If you were told this was a safer, smarter, or tax-free solution, you deserve answers.
RP Legal LLC is leading the fight to hold the IUL industry accountable—and to help you recover what you were promised.
Call (803) 805-7546 or complete the confidential review form to get started today.