A Restrictive Property Trust (RPT) is an advanced employer sponsored plan designed exclusively for the business owner and/or high-income key executives and employees.
RPTs Address the Following
- Contribution Limits in Qualified Plans (401(k), SEP, etc …)
- Current and Future Tax Rates
- Inconsistent Investment Returns
- Asset Protection (using Cost-Effective Life Insurance Plan (and its tax-advantages))
- Benefit Segregation (Exclusive Benefit for the Business Owner(s) / Key Employee(s) only)
- Underfunded Retirement Plan
How Does an RPT Work?
• Business Owner decides on contribution amount (5 year min. commitment – at least $50,000)
• Contributions placed into a participant-owned Whole Life Insurance Policy
• Business receives 100% tax deduction on the contribution
• Participant pays income tax on 30% of the contribution amount
• Cash Value builds inside the Life Insurance plan (approx 7-8% equivalent yield)
• At end of contribution period, taxes due on extra 70% contributed + growth inside the plan
• Excess Cash Value inside the Life Insurance plan used to pay taxes
• After taxes paid, participant owns a paid-up Whole Life Insurance Policy with excess cash
• Excess cash can be taken income-tax free as a “loan” or left in the plan
RPT Features and Key Benefits
• 100% of the contribution goes to the participant
• Business receives 100% tax deduction on the contribution
• Participant pays tax on 30% of the contribution amount
• Business owner decides contribution amount (no contribution limit)
• Plan assets are protected from creditors
• Contributions do not interfere with or limit other qualified plan assets or contributions
• Investment vehicle is very conservative and predictable
• A death benefit is provided for family or partners
• Exclusive: an RPT may be just for the benefit of the business owner(s) and/or key personnel
RPT Restrictions
• Fixed contribution amount (minimum annual contribution is $50,ooo)
• Minimum term of 5 years
• Failure to comply results in amounts accumulated being forfeited and donated to a client directed charity
• Funds are Illiquid during chosen term length
• Assets never revert back to the corporation
RPT: Ideal Business Owner Candidates
Consistent Income
High Taxes
Maxing Out Qualified Plan Contributions
Need Tax-Advantaged Plans
Are in Relatively Good Health
Looking for Low-Risk, High ROI Strategies
Contact Us to Get More Information and See How a Restricted Property Trust Could Benefit You.
*Please note, all concepts, strategies, and products mentioned may not be suitable for you or your company. Information provided is not intended to be legal or tax advice. Please consult with your tax and legal advisor for specific tax questions.