- Let's go ahead and say this number together, $100 million.
That's a lot of zeros, a few commas,
and probably more money than you could ever imagine having.
- $100 billon!
- Now, I'm sure you've heard the expression before,
the rich get richer.
So how do the rich get richer?
Is it because they have all their special rich friends?
- Which car should I take, eenie, meanie, miney, may,
which car shall Jess drive today?
The Lexus it is.
- Is it because they get special tax breaks
that they only have access to?
Now I already got a lot of friends,
but I could definitely use some more rich friends.
You know what I'm saying, so come on,
friend me up on Facebook.
The answer to those questions is yes,
and the reality is because they have access
to resources that many people just aren't aware that exist.
And here's the cool thing, so I'm actually
on the verge of writing a check to deposit $110,000
into my retirement account.
So today, I'm going to share with you
how I'm able to do that and how ultra rich people
also take advantage of this
to where they could have over $100 million
in a retirement account.
We're going to find out all about that and more, right now!
(upbeat music)
What's going on, y'all, my name is Jeff Rose.
Welcome to Wealth Hacker Lab, the channel dedicated
to teaching you new ways to grow wealth,
that is not taught to you in schools or by your parents.
And today we're talking about ultra rich people.
How you can accumulate $100 million in a retirement account.
Before we get to all that, let's just outline a few things.
So it's one thing to accumulate $100 million of wealth.
I mean, that definitely puts you in like the top .01%
of wealthy people in the world.
But, to accumulate that inside a retirement account
where you have tax protection,
like that is a whole other world because it's hard
to be able to put in a lot of money in a retirement account.
There are income restrictions, there are contribution limits
on how much you can put in.
So for somebody to accumulate that,
that is a pretty staggering feat.
Now this data is a bit old, but the last time the IRS
released any information about IRA holders that had
over $25 million was back in 2011.
It was reported that at that time 314 people
had over $25 million inside an IRA.
Now, I'm gonna let that number sink in for a minute
because it is mind-blowing.
- Whoa!
- Mind-blowing, boom!
Wow!
But you're probably watching this wondering, Jeff,
how does this even apply to me?
Sure, I'm an entrepreneur,
I'm self-employed, I'm freelancing.
How in the world am I going
to accumulate $25 million in an IRA?
Well, I want to get to that.
First, I wanted to share what were some
of my beginning stages of retirement accounts,
especially for being a business owner.
Now, starting off, you're not gonna be able
to do $100,000 into a retirement account
like I'm doing this year.
And I'm goin' to get more to why
and how I'm able to do that
here later on in this video.
But when I first started investing for myself,
especially as a business owner,
I didn't have any sorta special retirement account.
I just starting contributing into a Roth IRA.
Now you've heard how much I love the Roth IRA.
Because I love, I love the Roth IRA.
- I like it. - I like me the Roth IRA.
I have another video that you can check out
on How to Become a Roth IRA Millionaire.
And that video will outline everything that you need to know
about how awesome the Roth IRA is.
Now the Roth IRA is not
a special business retirement account,
you don't have to start a business to be able to open one.
So if you have a job, if you have a nine to five,
you can open up a Roth IRA.
So the strategy for my wife and I
was I open a Roth IRA for myself.
She opens one up for herself,
and we were maxing out our Roth IRAs.
Now at the time, it was about $5,000 each
that we could do, so $10,000 total
that we could put in for tax free money
later on in retirement.
Once your business starts making more revenue, more profits,
you start looking for other areas to put your money away.
The next logical step is the SEP IRA,
otherwise known as the Simplified Employee Pension Plan.
So what the SEP allows you to do is to put a percentage
up to 25% of what your salary is.
So let's say, for example, that you're paying yourself
a $100,000 salary from your business,
you can put in up to 25% of your salary, so in this case,
$25,000 into the SEP IRA.
This goes in pre-tax and is also tax deferred,
and this is a business expense.
And in my case, this is what I did.
I went from the Roth IRA to the SEP IRA, and I was trying
to funnel in as much money as I could.
But there are a few limiting factors of the SEP IRA
that we can talk about in another video.
But it came time to the point where I needed to graduate.
I needed to move up to the big boy stage
where the real players hang out.
And that was opening up what is called a Super 401k.
Super 401k right here, look I'm flying, I'm super.
Now we get to the fun part
in how in the world am I able to put $110,000
into our retirement accounts?
Now I just referred to this thing as a Super 401k,
and it's not named super, I just liked it
and I wanted to do the whole chair thing, super.
You do appreciate my sense of humor, right,
like you gotta chuckle, just a little chuckle.
(girl laughs) Alright, cool, sweet.
Yeah, sweet, if you have a nine to five job,
you probably have access to a 401k,
and you're most likely familiar with the concept
of an employer match.
This is where a company is going to give you money
so as long as you're contributing to the 401k plan.
So with the employer match, they may put in three percent
of your salary and match it dollar for dollar,
so as long as you are participating.
Now the cool thing is that as long as you are in the 401k
and the company has that employer match,
like they're putting that money in,
that's pretty much yours,
so as long as you are taking advantage of the 401k.
But what most people don't realize
is that retirement accounts are structured
so that an individual can put in up to $55,000,
that is for 2018.
And for 2019, $56,000 per individual.
But unfortunately, if you're working for a company
and they only offer that three percent match,
there is no way that you're getting to that $55,000
or $56,000 limit.
That's why you have to become a business owner.
Because as a business owner, you're not limited
to just doing the employer match.
You can also do what's called profit sharing.
That means you can take a percentage of your business,
of the profits, and put that inside the 401k,
all pre-tax, all tax deferred as a deduction,
as an expense from the business
and that's how the wealthy people do it.
Just so I can be 100% transparent, I want to break down
and show you how much we're actually contributing
into our 401k accounts
and you can see how the process works.
All right, so this is a printout I got from my CP
that shows how much we are putting in.
And I keep saying we,
it's because my wife is an employee of the business.
So in our case, you can see that is our current salary.
So that is how we are paying ourselves in the business.
And this is the $18,500
that we can put in just straight up off the top.
So that's typically what you're used to
when you have a 401K, is that 18,500 amount.
Now we do have the option of doing a Roth.
We don't at this moment,
and that's because we're taking advantage
of the tax write-off.
Here is the other two missing parts.
This is like the big deal with how we have this structured.
So you have the Safe Harbor Contribution
and also the Profit Sharing.
I've already talked about the Profit Sharing.
What the Safe Harbor is, is that with this,
this helps if you have other employees in the business.
Basically the Safe Harbor allows you,
if you are putting money for yourself,
the IRS just wants to make sure
that you are not discriminating against other employees.
So by making a Safe Harbor Contribution
that allows key employees, especially the owners,
or could be like the top executives are able to put in more
than let's say an operator or a lower level entry employee.
So as long as you make that Safe Harbor Contribution,
that just allows you as the business owner to put more in.
And then we have the Profit Sharing portion.
So as you can see, that is where the huge chunk
that we're able to put in.
And if you add the 18,500
with the Safe Harbor
and then the Profit Sharing, that's how we're able
to put in $55,000 each into our retirement accounts
for a a grand total of $110,000.
Boom!
All right, a few questions you may have.
Why in the world am I talking about 2008
when it's almost the end of 2019?
Well, the other advantage with having a business
and also with having a business retirement account,
is that you can file an extension.
So typically we always file an extension
so we don't have to figure out how much we want
to put in for last year until September 15th.
It gives us a lot freedom of flexibility
to see how's the next year going to be,
do we want to put more in for last year's tax year
or do we want to save cash going forward for next year?
The only thing I wanted to point out
is that we have a profit sharing 401k.
Now since it's only my wife and I,
we could have a solo 401k
because you can add a spouse to a solo 401k
and get all the same benefits that we have
with our current 401k.
But with the 401k, I have had employees in the past.
So with that, I had to have a traditional 401k
with the Profit Sharing provision.
The other thing I wanted to point out
is what I currently have is something that you can set up
with any brokerage firm, any online institution,
you could even set up a 401k with Vanguard.
Now if you think about those that have
over $25 billion inside their IRAs,
chances are they're not buying index funds.
They're not buying mutual funds.
But what they could buy is individual stocks.
So let's say, for example, you've been socking away money
inside your retirement account
because you are a successful business owner.
You want that tax write off, you want that deduction
from your business, and now you have all this money
sitting in your retirement account.
And there's the news that this IPO is getting ready
to release, and you want to put as much money as you can
into that IPO and that thing skyrockets.
You could make a killing.
In one real life example, it's rumored that Peter Thiel,
the co-founder of PayPal, was able to put a ton of money
into Facebook stock, before the IPO.
And it is rumored that that amount, that one investment,
is worth $25 million alone.
And right now, we're just talking about stocks.
What I actually own is a Self-Directed 401k Plan
with Profit Sharing, and with Self-Directed,
that means you're not limited to mutual funds,
ETFs or individual stocks.
You could also invest into private equity.
You can invest into real estate.
You can invest into minority interest
of private owned businesses, and that's the secret sauce
in how you can grow wealth at a super accelerated rate.
Now, as I mentioned, these are things
that are not just available to the super rich.
Anybody can go and open up
a self-directed retirement account,
so long as you are a business owner.
But it's just educating yourself, getting connected
with a tax professional, a business professional.
Being surrounded by other people that have already achieved
and accomplished this where you can learn from them.
Now you may not have hopes or aspirations to have
over $25 million in your retirement account
or over $100 million in your retirement account,
but what I have shared with you is something
that you can take advantage of
that can set you up so far ahead of other people
that don't take the time to understand,
that don't take the time to educate themselves
on what is available, on what the potential
and on what the options are.
But if you are a wealth hacker, this is what it's all about,
making sure you know what you can do,
knowing what your potentials are
and knowing what you can take advantage of
so that you can accelerate your wealth building status.
Alright, y'all, I hope you enjoyed this video.
If you got time, if you liked it, be sure to like,
subscribe, all that good stuff.
This is Jeff Rose, reminding you, that it's your money,
it's your life, and only you can make it awesome.
'Til next time, peace. (upbeat music)