Restrictive Property Trust
Perhaps the time is right for a "no too sexy" corporate Business Owner benefit plan. I don't think that many would argue whether or not tax rates are going up. Does that make your qualified plan more or less attractive? Isn't the primary premise of qualified plans to defer taxes until you retire and then pay income taxes on the distributions when you are in a lower tax bracket? How many of you believe that will be true? Secondly, how attracted are you to the investments in your qualified plan has to offer? Have you had a good decade in the stock market? please stop right now and take a moment to ask yourself what the rate of return you believe is realistic in your qualified plan over the next 10, 15, or 20 years. Are you now hoping to get 5% a year?
The Restricted Property Trust, (RPT), is different.
- Unlike your qualified plan, 100% of your contribution goes to YOU and is not shared by employees.
- Assets held by the trust are positioned in one of the most stalwart investment vehicles of the past 50 plus years.
- Your business receives a 100% tax deduction for your contribution and only 30% of the contribution is taxed to you.
- The trust provides a death benefit that can be used for estate planning or buy-sell agreements.
- You choose your contribution amount based on you own planning needs, and not based on other participants.
- The asses held by the trust are protected from creditors.
- The RPT is only available to the business owners or key employees.
Does this sound too good to be true? Let me help clear that up for you. First, once you choose your annual contribution amount it cannot be changed. Second, you must commit to a period of no less than five years, and any plan extensions must be no less than five years. There for the plan is only available in five-year increments. If you stop working for your current company, or can no longer afford the contribution, your entire account will be forfeited to a charitable foundation of your choosing. Third, the assets and the death benefit can never revert back to the corporation funding the trust. Fourth the cash is not accessible in any manner (loans or withdrawals) while participating.
The RPT is not a fit for everyone. Individuals seeking the advantages of this strategy must have a five-year horizon and a strong, consistent cash flow. However, if the RPT fits your business, it can play an integral role in helping you achieve your personal financial goals.