How To Protect Your Recent Stock Market Profits

Since November of 2016 the stock market has hit record high after record high which has created an estimated 3 trillion of additional wealth for stock holders.  If you own stocks or mutual funds your money should have done well and had nice gains.

The next question is how much longer will it last?  Will it come back down to where it was?  If it comes back down might it even go down more?  The answer to all of those is NOBODY KNOWS!  People have been trying to time the stock market for generations and very few have been successful.

Do you want to give your stock market gains back during the next downturn?  Do you want to lose money when it goes back south of where it started its upward trend?  Would you like to keep your gains but not give up the possibility of future upturns?

You can reallocate some of your stocks and mutual funds into programs that protect your new found gains while allowing you to participate in future gains should they continue.  This can be done with the use of a solid fixed indexed annuity.

When you purchase a fixed indexed annuity your money will track one of various indexes (actual index depends on the product and company  chosen by you and your adviser) with the protection against any market downturns that may occur.  If you purchase an annuity and the index you track goes up over the next year or two your money will grow along with that index (actual growth rates vary greatly based on the product chosen) but if that index goes down during the same period your cash won’t go down because of that market and index loss.

You’ll need to know some terms and ask some questions about your potential investment. Here are some to consider but not an exhaustive list:

  • Will your potential gains have a “cap” on them? Meaning your gains could be limited regardless of how the actual index performs.
  • If your index potential is “uncapped” what will be the “spread” between how the index actually performs and how much your cash actually be credited?”
  • What will your participation rate be on the index? Meaning if the index goes up 10% will you get full credit or 30% of the gain? 50 or 60% of the gain? Will you get full 100% credit?
  • Will there be any fees associated with the Fixed Indexed annuity you choose? If so, what do you get in exchange for any possible fees?  Is there value in the fees or is it just taking money out of your pocket without giving any fair value in return?
  • Do you want a lifetime income rider? For a fee many of these products will provide a rider that says they will pay you a certain percentage every month for the rest of your life no matter how long you live.  So you would be guaranteed the income from the money even if eventually the money in the account is actually spent through.  What is that fee for the rider?
  • How long of an early withdrawal period does the product have? This is a program for longer term money that you don’t mind letting alone and in the program for 5 to 10 years.

These annuities qualify for a tax and penalty free roll over from IRA’s old 401k’s or any other qualified account you may own.  If you have an active 401k, 403b and like accounts, there might be some restrictions on moving the money placed on the account by your current plan administrator.  Your IRA’s could be rolled over (either all or In part) to a solid fixed indexed annuity with no issues.

Remember this is one of the 3 major types of annuities.  In addition to the Fixed indexed annuity there are also variable annuities and fixed annuities.  The fixed annuity gives a guaranteed rate of return with no risk of loss but the upside is usually on the low side.  Could be a great fit for people who like CD’s and very safe products with a guaranteed rate of growth that happens no matter what happens in any market.

A variable annuity can basically give you high rates of return but are also subject to some loss (some have floors on the loss and many do not) and are usually subject to more fees than the other types of annuities due to their active trading and money movement.

In closing, a solid Fixed indexed annuity offer strong growth with the protections of no downside risk.  If you would like more training on this particular program, feel free to visit www.perpetualpensions.com and watch the video halfway down the page.  No charge and its only 20 minutes long.

John Jamieson is a national wealth strategist and 2 time #1 Bestselling author.  He is a frequent guest on national radio shows and a contributor to some of the biggest online financial websites and magazines in the country.  He operates a national firm that focuses on showing people how to create Wealth Without Stocks or Mutual Funds.  You may contact him through his site at www.wealthwithoutstocks.com

What is a Restricted Property Trust?

Big Tax Deductions and a Secure Retirement for Business Owners using a Restricted Property Trust

How successful business owners are putting more money away for Retirement than they ever could with a Traditional Retirement Account

Trusts as a wealth building and wealth preservation tool have been around for centuries.  Every specific trust has a specific purpose for why it is set up and how it is utilized.  There is one that is designed for high income business owners to be able to put away more money for retirement than they possibly could with a traditional retirement plan.  This trust will also allow the business owner to do this on a tax deductible basis.

This also allows the business owner to legally “discriminate” against their current employees or co owners so if they choose; the owner can be the only one who participates in the plan.  This is very different from traditional retirement accounts where most full time employees must be given the opportunity to participate in the retirement plan.

The name of this trust is a “Restricted Property Trust” and is a very powerful tool for the right business owner.  It basically works like this:

  • A successful business owner is allowed to fund from $50,000 (minimum) to millions of dollars per year for at least 5 years into a restricted property trust. We will use $100,000 contributions for our examples
  • Most of this contribution will be tax deductible to the business owner because of the nature of the Restricted Property Trust
  • That contribution will be used to fund a Whole life insurance policy creating cash value and an instant death benefit for the business owner’s estate. If the business owner should die during the initial 5 year period (or subsequent 5 year blocks of time in which the trust operates 10,15, or 20 years) the death benefit finishes off the funding of the trust commitment and the balance of the death benefit  goes to the business owners family
  • The business owner makes a firm commitment to fund the trust for those 5 years with $100,000 per year and if the business owner fails to make that contribution they forfeit all previous contributions to a charity. This creates a chance of loss necessary to make most of these contributions tax deductible.  Needless to say the business owner who sets this up is confident in their income for the trust period and/or they have significant assets in other places they could easily draw on to make these contributions.
  • Depending on the situation about $70,000 of the $100,000 contribution will be tax deductible every year the contribution is made into the trust. Over 10 years this would create $700,000 worth of tax deductions directly off of your businesses income putting hundreds of thousands of dollars in your bank account (depending on your effective tax rate)
  • Also at the end of the 10 years (in this example) you will have more money in your plan in the form of cash value than you put into the plan. Let’s assume you have put in $1,000,000 into the plan over 10 years, you now might have $1,200,000 in cash value inside the plan and the life insurance policy.  The trust is dissolved and you now own the life policy personally along with all the cash and death benefit.  You have also pocketed hundreds of thousands in dollars of cash that you would have paid to Uncle Sam without this unique and powerful structure.

There are some taxes to be paid out of the cash value at the end but the balance of the cash value is all tax free and can be an entirely new tax free income stream for the business owner.

This is not simply a deferred comp plan or is it a traditional retirement account.  It is much more high level than either one of those programs.  Now let’s answer some of the most common questions we receive about this program.

Q: I already have other retirement accounts I am funding, can I still fund this trust in addition to my other accounts?

A: Yes you can.

Q: Can I be a partial owner of my business with partners?  If yes, do my partners have to participate in the program as well?

A: Yes you can be a partial owner of the business and no your partners don’t have to agree to the plan (but don’t be surprised if they want to set this up for themselves as well) and your employees do not share in this benefit at all

Q: How much money do I have to make to be able to qualify for this trust?

A: There is not a specific income level but the minimum contribution to the trust is $50,000 annually for 5 year increments.

Q: if I have the resources can I put in $300,000 or even more a year into the program?

A: Yes, but that contribution amount will be dictated by how much your business is worth and how much of a death benefit the business owner can qualify for based on that business value.

Q: What happens if I can’t make the contribution during that 5 year term?

A: You contributions will be forfeited to a qualified charity

Q:  Why is life insurance a part of this plan?

A: For various tax and trust reasons a properly structured whole life policy is a must for this program to be implemented

Q: If I should die during one of the 5 year trust periods, who gets the death benefit from the life insurance policy?

A: Your estate collects the death benefit during the trust periods and after the trust periods when you take control of the policy after the trust is dissolved

Q: Can I have access to the cash value in the life policy during the trust period?

A: No there is no access to the cash value during the trust period.

Q: I am a salaried employee who makes big income but am issued just a W2 at the end of the year.  Do I qualify to participate in this program?

A: Unfortunately this type of trust is just for business owners or partial business owners.  It is possible to receive a W2 as a salary and own the business as well.  You must own a part of the business to be eligible to participate in this plan.

Q: Because life insurance is included in this plan do I have to qualify physically as well as financially for this program?

A: Yes there will be a physical required to qualify for the underlying life insurance policy.  Most people who use this program are in their 50’s or 60’s and the vast majority get approved physically for the policy.

In closing, a restricted property trust can be a great benefit for the right established business owner with disposable income and/or other assets they can draw upon to fund the trust.  It is not meant for spotty incomes or low asset business owners.  If the business owner is stable and confident in their ability to fund the trust during the trust periods it can be a great tool.

If you would like more information on this program, please visit www.perpetualinsurance.com for a brief presentation and the information on how you can set up a personal consultation to see if this is a fit for your business.

 

The Hidden Secrets of a 401k

I want to share with you items to consider before investing in a 401k.  Some of those items are the tax ramifications and the control over your money you will be forfeiting.  Uncle Sam makes the decisions on when you can access your money without penalty, what the penalty is for early withdrawals, the taxes you pay, the required minimum distribution (RMD) amount, when you must begin to take the RMD and more… Watch my short presentation below for more information and view a full expo by both Frontline and 60 Minutes.