RMDs and Taxation: IUL vs. 401(k) in Retirement One disadvantage of a 401(k) is the required minimum distribution (RMD) rule, which forces retirees to withdraw a portion of their account annually after age 73, regardless of financial needs. These withdrawals are taxed as ordinary income, potentially increasing overall tax liability. An index universal life insurance policy, however, ... https://www.federalpensionadvisors.com/post/iul-vs-401k