Hi Christine, I know Dave is a well respected advisor on these boards, but I have to say I have always been told to steer clear of anything other than Term Life. Thanks... uhh, I think? Hopefully I'm not losing any respect from the lack of financial planning experience from whoever 'always' told you to steer clear of anything other than Term Life. Many people here have also "always" been told to pay off their mortgage as fast as possible, "period," regardless of the risks & harm it can create too. What many have "always" heard is not always so valid. Dave perhaps you could clarify why Universal Life is a good option in general and also specifically in this case? I have been on this site off and on for a very long time, however, I have not read that many posts on this particilar board to know your general philosophy on this. Sure. FIRST off, it is most likely the case that "everyone" who "always" advised you to avoid anything but "term" was specifically talking about buying life insurance for the purpose of the insurance DEATH benefits... not the financial planning features available within certain types of it. For the best death benefits "bang for the buck"... Term life premiums are state regulated, so for the most part you pay for the benefit coverage you get, and nothing more, regardless of the carrier (which is GOOD if what you want is a payoff at death.) Differences in term life premiums are generally quite small, and when one carrier appears to be "cheaper" per $1,000 of benefit than another (i.e. if you Google for 'cheapest term insurance' etc.) its generally because that carrier has less capital reserves to protect its policy-holders, thus less costs... and is thus more at risk of being illiquid... *OR* it fights harder NOT to pay all of the benefits expected when its policies mature, and thereby it has less costs of fulfillment. There are OTHER very important financial benefits to life insurance contracts, however, OTHER than the ultimate payoff of a death benefit at policy maturity. Congress has written legal "tax-shelter" features into the IRS code such that cash values sheltered within properly structured life insurance contracts grow and are harvestable UN-TAXED. Universal Life *IS* a term life policy (underwritten through age 100,) that offers a SEPERATE (un-comingled) cash accumulation account with the unique tax sheltered benefits only available inside cash-value life contracts. (NOTE that this is distictively different from old-fashioned "whole life" contracts that inseperably comingle insurance costs with their cash-values.) For FINANCIAL PLANNING purposes we want the maximum shelter benefits with the LEAST actual insurance coverage we can get away with (since, for this particular purpose, we don't care about death benefits.) The cash account within a Universal policy is allowed to grow tax free (no annual capital gains nor income taxes,) and is allowed to be accessed for spending tax free (via zero-interest policy "loans" which have no repayment requirement until the policy "matures"... aka when the insured dies.) Our OP is concerned about college tuition fund planning. The general strategy with college funding is to take advantage of *ALL* external funding resources (public assistance, grants, loans, and public/private scholarships) *BEFORE* dipping into the family-accumulated funds. THe catch-22 is that *MANY* external funding sources are "means tested." This means that they look at the student's fmaily's financial profile 1st... and if the family has funds in reserves, the external sources DEDUCT those from the support calculations (in essence saying "you guys drain your OWN accounts before we'll offer you any support!") Of course, this is completely contrary to the idea of rewarding those who are responsible... which is the whole point of using Universal Life insurance contracts to accumulate college tuition (and subsequently retirement funding for the parents.) Universal Life policies can also be "owned" by someone other than the person that the policy is insuring (the "insured.") The owner can be grandparents, uncles/aunts, god-parents, seperate trusts, or simply trusted friends. Because the ownership of this accumulation asset can be legally seperated from the student's family balance sheet, the student's family does NOT have to drain all of their own reserves before taking advantage of external educational support resources. PERSONALLY (and professionally,) in regards to actual death benefits... I would probably almost "always" harmonize with whoever else was "always" telling you to avoid anything other than term life. For death benefits (replacement of a parent's income for family support, most commonly,) term is generally the best way to go. For FINANCIAL PLANNING, however... age-100 term life coupled with cash values (in the form of Universal Life,) can be a very sharp strategy from both the tax-shelter perspective, and the avoidance of means-testing punishment of the more financially responsbile. Cheers, Dave Donhoff Leverage Planner

You'll probably have multiple employers over time. Set up an IRA at a good low cost broker - Vanguard, T. Rowe Price, Fidelity - and when you leave a job, roll your 401(k) monies into your IRA. Consolidation will make not only your paperwork easier to create a proper allocation mix (and annual re-allocation), it will also be a great relief to your heirs. Yes, I know you're young and healthy, but believe me, it is a LOT easier to keep the beneficiary designations updated on ONE consolidated IRA account, rather than the half-dozen assorted 401(k)s you've created after a while! Right now my nephew/niece and I are beating up on their dad (figuratively, of course!) because he has 401k funds at possibly 7 or 8 companies. I think my sister, his ex-wife, is still listed as beneficiary on most of them. Since she's got a million bucks in the bank and is semi-retired by choice, and he'd prefer the money go to his kids, it seems rather foolish to be risking letting his paperwork go - particularly since he suffered an unexpected heart attack recently! Really, you'll find life is much simpler if you consolidate your accounts. All it usually takes, once you've set up the IRA, is a phone call and a few simple pages to fill out.

"I would avoid a loan from my 401K at all costs. You pay it back with post-tax dollars so you are taxed on it twice and if you ever leave your company, or worse, get laid off, the balance is due in 60 days or so. I've seen the "taxed twice" claim about 401K loan many times, usually on the websites of big investment companies who have a stake in keeping your 401K accounts to themselves for as long as possible. It's bogus. Anyone who takes out a 401K loan will make monthly payments back into the same 401K, usually for a period of five years. Of course the payments are made with after tax dollars, but the same would be true of paying back any loan except for those tied to a mortgage, such as a HELOC. And once it's paid back, the withdrawals you take out when you finally retire will be taxed at the same rate as they would have been if you had never taken out the loan. You pay interest on the loan at a fixed rate that is set by the plan and usually lower than any rate you could get for an unsecured loan. That means the unpaid loan balance is earning returns at that fixed rate. If you happen to take out the loan at the beginning of a down market, it'll likely be earning at a better rate than the rest of your 401K, and you will actually have a larger 401K balance at the end of the loan than you would have had otherwise. In times of an up market, however, the reverse will be true. The real and best reason not to do it is if you think you might leave your employment, voluntarily or otherwise, before the end of the loan term, because you will have to pay it all back.

Thanks - but I guess I am confused again on several points. 1) I do have a separate account for a roth IRA created a few years ago. I was hoping to contribute the max $5k, to my Roth and the max $5K to a reg IRA (after tax), in addition to what i already contributed to my old 401K (which I will be rolling over into an IRA account.) Is there a limit on what the yearly total of the three account contributions can be? 2) Since I was previously putting about 30-35% of my income into my 401K in previous years, trying to get as close to the max as I could, i am worried about a big tax hit this year (6 months of full income with no 401K deductions to reduce it), so was looking for an option to reduce my tax bite. 3) If need to keep all my pre and post tax IRA records, it sounds like I will have a lot to do on retiring in 5-8 years, going thru all my old IRA records (hmmm, about 30 years worth of monthly statements from a variety of companies), I had thought this was true, but apparantly I got some bad advice from an accountant a few years ago, who assured me there was no reason to keep all my various accounts (pension and 401K rollovers, and post and pre tax iras) separate. Argh! such fun to look forward to - but I am pretty sure I saved most everything - got the cardboard boxes to prove it.