The Rich Man's Roth has 300% more benefits. In this episode, I'm going to address the question
Roth IRA or IUL (the Rich Man's Roth), which is better?
Hi, I'm Doug Andrew and I've helped people optimize their financial assets for north of 4
and a half decades and minimize taxes and prepare for a comfortable retirement. My favorite vehicle
by far for people to accumulate their money tax-free and then be able to access their money
tax-free all through their golden years and then at the end of the day when they finally pass away,
whatever they leave behind blossoms in value and transfers income tax-free is what I call the Laser
Fund. LASER is an acronym that stands for liquid assets safely earning returns. And if you stay
to the end of this episode, I want to gift you a copy of my most recent best-selling 300-page
book The LASER Fund. It retails for 20 but I'll show you how you can claim your copy free. Now,
when people ask me the question, "What's better? A Roth IRA?" Because a lot of people they begin to
watch my educational videos on this very channel. And they begin to realize, "Wait, Mr. Andrew
has never owned an IRA or 401(k)? And he says he never will? Hmm..." Then they learn and they go,
"Okay, he says a Roth is a step in the right direction. But he's never owned a Roth IRA or
401(k) and never will. Well, where does he put his money?" In IUL. Indexed universal life insurance
contracts which many savvy CAPs and tax attorneys refer to as the Rich Man's Roth. And I snicker
because you don't have to be rich to have one. I mean you can set one up and talk away 500 bucks
a month. But wealthy people, rich people if you make too much money you cannot own a Roth. So,
this is where they put their money. But it's also very beneficial for people who would not consider
themselves as rich. So, let me explain how these all came about. And when historically Roths
were first started. So, for years people were told to put money into tax-deferred IRAs and 401(k)s
and get a tax break on the contribution money and let it accumulate tax-deferred and when you go to
retire and you take out the money from the IRAs of 401(k)s, you'll pay tax. But you'll likely be
in a lower bracket then. Now, that was the premise. That has not been true or axiomatic
for more than 25 years. And it took the financial services industry until just the last few years to
finally admit. Yeah, that was probably the wrong advice but they don't want to be responsible for
you may be outliving your money due to taxes going up. So, they sort of just back off and so still 91
of Americans I think are duped into putting money into traditional IRAs and 401(k)s. When a Roth, I
can prove if taxes go up in the future which most Americans believe they will, a Roth can generate
25%, 33%, 50% more in net spendable income or it can last much longer than the same amount of money
at the same rate of return in a traditional IRA, 401(k) just because of taxes. If taxes go up, you
want it to be tax-free not continue to pay tax at higher and higher rates during your golden years.
It's that simple. When did Roths come about? Well, in 1997, the government was hard up
for tax revenue. And so, senator Roth said, "I have an idea and we'll name it after me".
A lot of Americans are realizing it's far better to pay tax on the contribution money.
Take after-tax money and put it into a savings account like an IRA or 401(k) and have it be
tax-free as it grows. But when they take it out, it's tax-free down the road when taxes are going
to be higher. People are getting smart. So, he says, "Let's offer a Roth, name it after me."
And so, what did that do? It was more for their benefit than your benefit. I'm not saying
it wasn't a step in the right direction. But if people convert from a traditional IRA,
401(k) to a Roth, it triggers tax. You have to pay the tax. And then it's tax-free thereafter.
That created a huge windfall for the federal government because a lot of people who were smart,
they converted to Roths. And the government got a whole bunch of tax revenue.
They didn't have to wait till people retired to start getting their tax revenue. Well, when they
got hard up for money again, they introduced the Roth 401(k). So, see, it was a step in the right
direction. But Roths only have 2 benefits. So, oft times, when people hear me on the radio... I've
had a national radio show for 12 years and they do double-takes. Why? Now, before I explain why,
if this is intriguing you and you can think of somebody who ought to hear this information,
be sure and share, like, post a comment. But subscribe to the 3-Dimensional Wealth channel and
be sure and click that little bell so that you'll be notified every time I post an in-depth answer
that's going to educate you on opportunities that maybe you didn't know existed before because I
post them almost daily. So, when people hear me on the radio, they say, "What? What did Doug say
on the radio?" Well, recently, I've been saying, "Now, may be the perfect time to get taxes over
with on IRAs and 401(k)s. Because your current tax bracket is likely the lowest bracket you will ever
be in." And so, I will often talk about, "Hey, if you stay until the end..." And I'm talking
about the end of this episode. "...you're going to understand how to save hundreds of thousands
of dollars of unnecessary tax. How to not outlive your money in retirement. How to not lose money
when the economy and the markets whipsaw? Which they will continue to do. And how to have 50 to
100 percent more in net spendable income. Would you like to learn these things?" Well, first
of all, if you're feeling anxious like the Great Recession... What's the Great Recession? The years
2000 to 2010. I'm going to go to 2012. It's the worst 12-year period since the Great Depression.
See, a lot of people who have their money in tax-deferred IRAs or 401(k)s in the market, we're
going to start with November 8th of 1999. Let's say they spent their entire life accumulating a
million dollars in their tax-deferred IRAs or 401(k)s in the market. They saw that
million-dollar nest egg go down in value after the terrorist attacks of 2001, okay? 9/11. For 3
consecutive years, 35, 40, some people lost 50 percent. If you lose 40% which was the average,
a 40% loss has to be followed by a 67% gain to get back to break even right here. Break-even
right here. If 100,000 goes down to 60,000, if a million goes down to 600,000, six hundred thousand
has to grow by 67% --400,000 to get back what you lost. A 40% loss has to be followed by a 67% gain.
It took 4 years to do that. People felt like they lost their future. They had to put off retirement
7 years. Very frustrated. Then what happened in 2008? As Warren Buffett put it, he said,
"When the tide went out..." In 2008, "...it revealed who was swimming naked" is what he said.
In other words, they weren't protected. They didn't learn. And they lost 40% again for the
second time in a decade. It took 4 years to come back to break even. And finally, 12 years later,
they had $1,046,800 to show for the million they started with. How pathetic is that? It didn't even
buy the same gallons of gas and loaves of bread than a million did back here because of inflation.
Now, what's the point? People using the Laser Fund, when this market went down, down, down;
they didn't lose. They may not have made much of anything but their money stayed steady. As soon
as the market turned around, they started making money again. So, they're clear up here when most
Americans are only here. When the market went down again, they stayed up here. They didn't make much
of anything but then they started making money again and I'm going to show you the difference
with people who have their money linked to the market but not in the market. This is called
indexing. And it's a feature that only exists with the max-funded insurance contracts in the
way that I'm talking about right now. So, what it means is if we took this 10-year period because
a lot of people weren't even back to break even at the end of 2010. People using the Laser Fund,
they made money but when the market went down, even if they earned zip, they didn't lose.
They started making money again. And when the market dived again, they held steady and
then they started making money again. Even when people only had 68,000 to show for their 100,000
people here had 178,000. And then I showed you in the previous chart 2 years later. Many people had
2.5 to 3 times the money when most Americans this red line was barely, barely back up here again.
Is this arousing curiosity? Watch. So, my recommendation to people who have their life
savings in yet-to-be-taxed IRAs and 401(k)s in the market, get it out of the market.
Strategically roll the money out. This isn't a rollover. So, what is this? See a rollover is like
going from the frying pan into the fire as far as I'm concerned. You're taking money in 401(k)s and
rolling it over to IRAs continuing to delay the inevitable, procrastinate, paying tax, and then
being duped into at age 72 taking RMDs, required minimum distributions thinking you're saving tax.
Worst advice I've ever heard. I show people the darkness of the night if they keep doing that
and how they're going to outlive their money and pay taxes forever through their lifetime their
spouse's lifetime and even their children who inherit those. Instead of doing that, I'd like
to show them the brightness of the day or their future if they will get the money out. Now, people
will say, "What about a Roth? You mean convert to a Roth?" I go, "Well a Roth is a step in the right
direction. But Roths only have 2 benefits." What are they? You fund a roth with after-tax dollars
but your money accumulates tax-free in a Roth and you can access it tax-free. The Laser Fund has
those 2 benefits and has had those 2 benefits for over a century-long before Roths were introduced
in 1997. But the Laser Fund has 4 additional benefits, 3times the benefits, okay? 6 instead of
2 that Roths have. What are they? In a nutshell, with your contributions to the Laser Fund,
you can deposit larger sums than you can to a Roth. With a Roth, you're limited to a certain
percent of your income or a certain dollar amount each year. In fact, if you make too much money
you can't even participate in a Roth. That's why savvy CPAs and tax attorneys call the Laser Fund
the Rich Man's Roth. You don't have to be rich to have one. But rich people can't own a Roth. So,
if you were a business owner and you had a banner a year, you could put in $300,000, you don't have
to. You could put in 30,000. If you put in just 30,000 but you could have put in 300,000, can you
make up the other 270,000? Sure, anytime. Anytime down the road. With the Roth, you can't do that.
If you don't use the room in a given tax year, you lose it. If you don't use it, you lose it. See,
Roths have strings attached. But here's a big difference. If you need to access money for
any reason, you can. There are no IRS penalties attached when you take money out of a Laser Fund.
For example, let's say, I put in $300,000 during a banner year and then all of a sudden 30 days
later, I have a wonderful investment opportunity or I can merge with my partner in business
and I need 250,000. I can access that out of my laser fund. There's no 10% penalty. It doesn't
trigger tax. You can't do that with a Roth. You have to wait 5 years or until you're 59 and a
half. Those are the strings attached. Now, using indexing, indexing allows you to do what I showed
you. Not lose when the markets go down because your money's not in the market. Your money is
linked to the market. You may not make anything but you don't lose. And when the markets go up,
you get to participate. And this is what has allowed many people to double or triple
the amount they earn over a 12-year period instead of just barely getting back what you lost twice
in that decade. So, you can use indexing. But the last benefit, when you ultimately die, the account
increases in value and transfers totally income tax-free. I'm 68 and a half. If I died tomorrow in
an accident every million that I would have in my portfolio of laser funds would blossom right now
to about 2 and a half million and transfer totally income tax free to my wife, to my children,
grandkids, a church, a charity. There's not a Roth around that will do that. And people say, "Well,
how much does that cost?" Well, nothing's free but it doesn't cost me anything. It's being paid
for with a minuscule portion of interest that would otherwise go out the window in unnecessary
income tax. So, are you interested? I would strongly recommend you look into reading
and studying your own copy of The LASER Fund. So, let me show you how you can claim your free copy.
This is my 11th book. And it's been flying off of the warehouse shelves.
You can pay 20% for it on Amazon. But don't tell them. I want to gift you a free copy. This is
how you claim your free copy of this 300-page book. You can go to laserfund... LASERfund.com
but just click on the link below. Go in there and you contribute a nominal amount towards the
shipping and handling. I always require people have a little bit of skin in the game so that
they will take it serious and read it. If you do that, I'll buy the book. I'll gift it to you. This
side has 200 pages, 14 chapters with all kinds of charts and graphs so that you'll understand how it
works and why it's been a sacred tax-free cash cow in the internal revenue code for over 100 years.
But if you want to read stories of how it actually works in real life, actual historical example;
you flip the book over. And you read this side, 12 chapters, 100 pages with 62 actual client
stories of how the Laser Fund is the most powerful tool that knocks the socks off of any IRA, 401(k)
and any Roth IRA or 401(k) because it has 6 benefits instead of just 2.