A proper Qualified Retirement Plan allows the person to save thousands and thousands of dollars over the years, but most importantly to protect the funds inside of the plan in the event of personal bankruptcy or lawsuits of any kind. There is a very low chance of someone being able to legally penetrate the plan as long as it is property structured. Retirement Plans exists for nearly 5 decades.
Learn how to accelerate your financial status that will help you secure your financial future forever. It is wise to move your money sitting in your current traditional Retirement 401K Plan, Rogu IRA, into a qualified retirement Plan for the following reasons:
- Retirement plans are not new and have been available for nearly five decades. All the rules are written in an IRS code.
- There are no management or administrative fees.
- US Government provides a financial credit for setting one up.
- A qualified retirement plan gives you a superior asset protection, protecting your valuable assets in your QRP. No one can touch your QRP not a creditor, bankruptcy or even the IRS simply because it is against the law. Your investments are fully protected and completely untouchable. Unlike other traditional retirement plans that are always at risk and unprotected. We are not aware of any other legal entity providing better protection. When set up correctly, no one will be able to get your money in your plan.
- You and only you control the money in your plan. You also determine which bank you want to use and which investment you want to have.
- You have the ability to leverage real-estate inside of your qualified retirement plan with no tax consequences which is impossible in IRA.
- Your qualified retirement plan gives you complete flexibility on the type of assets you have inside of your retirement plan. Tax liens, tax deeds, bonds, real-estate, gold, mutual funds and many others.
- Full flexibility on how much money you can contribute to your plan from 0 up to 55,000 dollars annually (without tax consequence). Traditional retirement plans allow you to put 5,000 dollars. Anything over 5,000 you have to pay tax on, which means you are allowed to put up to 10 times more into your qualified retirement plan.
- You have complete and immediate access to your retirement money for investment purposes. You do not need permission from outside trustees or approval from the administrator on what type of investment you want to make. In some cases, you will also need an approval which is not the case here.
- You can borrow the money from your retirement ran with no tax consequence, essentially you are acting as your own bank which is impossible with the IRA.
These are some of the benefits you will enjoy by having a qualified retirement plan.
Traditional retirement plans such as IRAs, 401K, 403B self-directed IRA, and many others prevent people to build their financial feature due to many existing restrictions. You can have an existing traditional retirement plan, however, if you are building a financial feature, it is cost prohibited to use IRA on due to a large number of fees preventing us to invest in tax liens or any other types of investments.
As you can see, a proper retirement plan is crucial for your current and future financial success. IRA is not a Qualified Retirement plan, a QRP will need to be set up correctly.
True financial freedom.
Let’s review an example of taxable and non-taxable events.
Taxable Event:
Type of Investment: Tax Lien Certificate
Investment amount $40,000
18% return
After 20 years your account is worth 1.1 million dollars.
Non-Taxable Event:
The same investment will result your account to be at 429,000 dollars after 20 years. You would lose 665,000 dollars if you invested in a traditional IRA account.
By having a correct Qualified Retirement Account, you were able to put over 600,000 dollars in to your pocket. The choice is yours; you may either keep the money or pay it to the IRS.
You determine what type of financial control you want to have toward your financial independence. Having a QRP will ultimately create your financial independence.
You can control your own financial freedom.
Example: Â 401 K QRP.
You have $100,000 in your QRP.
Purchase a TD property for $70,000.
Rehab Cost $30,000.
FMV after rehab is $200,000.
After selling the property, the profit of 100K goes right back into your QRP. What goes out must go back in. Since the money is in your QRP, there is NO tax consequence.
If you would have made this investment in your traditional IRA, you would not be managing it, you would have to pay management fees, administrator fees, approval or disapproval and other cost associated with this transaction. It is also important to note that some plans do not even allow such a real-estate transaction. By having your own QRP, you will never experience approval or disapproval and will not have to pay any fees since you are your own admin and trustee. You are in full control of your plan and any investment inside of it. Such plans allow your account to accelerate very quickly with high degree of safety.
The plan also allows you to leverage your money in QRP.
Example:
$100,000 investment amount.
$70,000 purchase price.
$30,000 rehab cost.
In this example, we will only use $50,000 of our retirement money. The remaining $20,000 will come from the bank. $30,000 (rehab money) will also come from the bank.
In this example, we use $50,000 of our own money and 50K retirement money.
If you did this deal in a self-directed IRA according to the tax code there would be a tax consequence for the 50K the bank put into this transaction. Since this transaction was done in our Qualified Retirement Plan there is NO Tax consequence. To verify, if you do this in your qualified retirement plan where you are your own admin and trustee, there would be No Tax consequence. You can pay tax on $50,000 profit or you do not have to pay tax on $100,000 profit. The choice is yours.
It is critical to understand how to properly leverage your investment transactions with your QRP not to make it a taxable event. With no tax consequence you keep doubling your investment power into the future which is not possible in a self-directed IRA.
Someone may ask, why hasn’t my financial advisor, CPA or stockbroker told me about this? Why are they always recommending Self Directed IRA’s instead of a qualified retirement plan? It is simple, there is nothing for them. There is no commission fee no management fee and no administration fees for them if you have your own Qualified Retirement Plan. They know, that they cannot make any money on these types of transactions. You have an option to look out for what is in your best interest, not theirs.
If you make an investment in any type of mutual funds, they offer, they make money. If you make an investment in your own QRP where you are your own admin and your trustee; they do not make any money. There are no financial incentives for them to recommend this type of plan which kind of contradicts the facts because they should recommend what is in YOUR best interest.
Most if not all financial institutions will charge management fees even though they do not advertise it. If you find a qualified retirement plan that charges very little, you will be limited to what you can invest in which takes away the flexibility of freely investing in tax liens, tax deeds, gold and many other investment transactions. In other words, you will ONLY be able to invest in what they are offering.
As of September 2012, the Labor Department issued a new mandate dictating that all administrators and trustees MUST disclose their hidden fees. Experts estimates that they are over 23 billion dollars of these fees that will now be disclosed. With a QRP you will have no such a fee because it is against the law to charge yourself a fee. How significantly does this impact your financial future?
The question you have to ask yourself is: How does this investment benefit me?
US Government gives incentives for you set setup a QRP because there is no money in it for them which is why they pay a portion of what you pay to create this QRP.
Currently, you can contribute up-to 55,000 dollars per person into your new QRP.
If you have a bad year, you can contribute 0, and if you have a great year, you can contribute no more than 55,000 dollars (per person). The amount of money is much higher for people with high salaries. Remember, your spouse and kids are also allowed to create these qualified retirement plans which may easily double or triple the amount of money in your QRP.
Another fact is to recognize is in the following: In order for you to put money into your new Retirement Plan, it has to come from one of the two sources.
New Money – money earned from your business – net active profit.
Existing Money – can be money that you can transfer from another (any kind) of existing retirement Plan you currently have.
Example: If you currently have another plan with 400,000 dollars, you may roll over the money into your new QRP and start using it for investment purposes.
There are also a lot of other benefits having a QRP, such as the ability to borrow money from your plan with no penalty. You simply set up a reasonable interest rate and act as your own bank. You can use the money without paying penalties and other fees.
- You can use the money for any real-estate transaction with No Tax consequence which greatly influences your probability.
- Qualified retirement plans offer a superior protection which means no-one will be able to touch your money inside of the plan, not even creditors or IRS. If god forbid something tragic happens, you will need to file for a bankruptcy, the money in your plan is protected and they will not be able to touch it. Otherwise, it would be against the law.
- You can hold life Insurance in a qualified retirement plan and you cannot do this in a traditional IRA.
- You are your own admin and trustee; writing your own checks essentially and acting as your own bank.
- You can put up to 19,000 dollars into a QRP per year as of 2019.
- With a QRP, you can catch up 5 times faster compared to the traditional IRA.
For those of you interested, Proper’s close mentors can assist our clients in setting up such plans. We will gladly help.