How to keep more of what you’ve worked years to achieve.
Who deserves the fruits of your efforts: Uncle Sam or your children?

Most business owners we meet rely on 401(k) plans, SEPs and IRAs to fund their retirement. When we ask why, the most common answer is, “For the tax savings.” What a lot of people don’t realize is that when they put money in an SEP or 401(k) account, they’re not avoiding taxes. They’re merely postponing taxes to a later date. Money in a qualified plan grows tax-DEFERRED. Not tax FREE. That’s a tremendous distinction. Tax deferred means you have to pay the bill later.


As your retirement savings grows, the tax liability grows right alongside it. So if you get a $5,000 tax deduction this year, you’ll not only have the taxes you would have paid this year due, but you’ll also have a tax bill due on the growth come withdrawal time.


People counter with, “But I’ll be in a lower tax bracket.” Given what’s going on in the economy, do you expect taxes to be higher or lower? Most experts expect taxes to be higher — much higher. The US Government is awash in debt. We have a 76 trillion dollar debt. And they want to spend more. States are awash in red ink; several are on the verge of bankruptcy. Social Security—if it’s not on its deathbed, it’s certainly checked into the hospital!


That means business owners are postponing their tax bill to a time when tax rates are likely to be higher. In the 1960’s and 70’s, the top marginal tax rate was 70%. Could we go back to that? Let’s hope not. Regardless of what tax rates turn out to be, we think it’s too risky to count on tax rates staying where they are. We believe a reasonable person can’t do retirement planning without thinking through the taxes that are going to be due when you start taking the money out. We teach our clients about strategies where their retirement money can grow tax deferred, and they can get access to it tax-free when it comes time to take it out.


These alternatives allow you the same advantages of 401(k) and IRAs, but without the limitations and restrictions that many people don’t like about qualified plans. In other words you can get tax-deferred growth with no contribution limits and access to your money whenever you want – free of taxes.


The provisions that make it possible for you to access your retirement savings tax-free have been around for decades. The people who have been taking advantage of this are wealthy individuals and Fortune 500 executives. These are the folks who can afford expensive tax attorneys and advisors to make it happen. But the fact is, you don’t have to be a multi-millionaire to do this.


Here are just some of the benefits that are possible:

  1. No minimum age or income requirements
  2. No contribution limits – unlike 401(k)s or IRAs, you can put away as much as you want into these plans
  3. No mandatory distributions – you can take money out at any age without penalty – and you do not have to take mandatory distributions starting at age 70 1/2; you’re in complete control
  4. Protection against market loss – the plan contractually guarantees that your account value will never have a negative return due to market losses
  5. Tax-deferred growth
  6. Tax-free access to your money
  7. Does not create taxation of Social Security benefits

Contact us to learn more. We have a free book that describes all these benefits in detail.


There are pros and cons to every financial strategy, so contact us for more details and information.