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Leveraged Retirement Plans

leveraged retirement plans

The challenges that successful business owners face with traditional retirement plan vehicles such as 401ks, IRAs, Defined Benefit Pension Plans, etc. are very consistent:

  1. Contribution limits – $18k per year base 401k limit, etc prevents ability to save enough to create an adequate retirement nest-egg.
  2. Age restrictions – ERISA rules tend to prevent access to the assets pre-age 59.5 and force fully taxable withdrawals by the year you turn age 70.5.
  3. Pre-tax contributions provide a tax deduction on the front end, but also create a tax bomb in retirement, with every dollar accumulated being taxable as ordinary income.
  4. Market Risk – Many business owners, especially those within 10 years of retirement, prefer avoiding unnecessary market risks.

Our leveraged retirement plans eliminate these issues by avoiding ERISA regulations altogether.

  1. Contribution limits – None.
  2. Age restrictions – None.
  3. Post-tax contributions via a scalable interest-only corporate loan, which can create a tax deduction for your business. Both the accumulation and withdrawal phases can be tax-free.
  4. Market Risk – Our LRP structure is specifically designed to avoid risk of market losses. Guaranteed.

401k vs LRP Case Study

401k Leveraged Retirement Plan
Annual Contribution $18,000 $18,000
Contributions to LRP (via commercial loan) N/A $400,000
20 Year Value at 7.1% annual growth $771,605 $1,038,771
Taxation at 35% $270,062 N/A
Total 20 Year Value $501,543 $1,038,771
Annual After-Tax Income Years 21-50 $35,108 $90,942

Using the same net dollars as a standard 401k contribution, you’re able to use commercial loan dollars to leverage a retirement plan on steroids.

Leveraged Retirement Plans are multi-faceted and may be used for the following financial and legacy planning strategies:

  • Wealth Transfer: Transfer large amounts of wealth to your heirs or charitable foundation utilizing the most powerful and cost effective manner while guaranteeing the results.
  • Estate Plan: Engage in estate planning utilizing the benefits of your business to achieve the most cost effective trust planning.
  • Qualified Plan Rescue: By redirecting participating funds, the opportunity exists to generate a structure that results in tax-free distributions that may be applied against taxes due on distributions out of a qualified plan.
  • Business Exit Planning: With the ability of the front loading to be assumed, it may provide massive benefit to the business seller and buyer at sale.
  • Key-man & Buy-Sell Planning: With the insurance contained within the structure, it can be used as a wealth accumulation medium and address insurance needs simultaneously.

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