Get the money out of your 401(k)s strategically in 5 years. In this episode, I'm going to address
the question "How to withdraw money from 401(k)s after age 59 and a half?" Now, get ready. It's
going to be the opposite of what you've probably heard to take out the minimum that you need.
Nope. You want to get it out the tax is over and done within 5 years if you can and reposition
that net after-tax money to something that's going to be tax-free from now on.
I'll explain why and the power behind this as we continue in this episode. So, get ready.
So, my name is Doug Andrew and I've been a financial strategist and a tax minimization
specialist retirement planning specialist for more than 4 and a half decades. And in doing that,
I've helped many, many people free themselves from what I call the tax-trap and they've sort
of painted themselves into this corner with their yet-to-be taxed IRAs and 401(k)s. You're going to
see here something that I developed years ago that I call a strategic rollout. It's not a rollover,
it's a roll-out. You're getting the money out of your IRA and 401(k). See a rollover as far as I'm
concerned is going from the frying pan into the fire. You're continuing to defer, delay,
procrastinate, okay? Another word for defer is put off or procrastinate. When has procrastinating
anything turned out good for you? It hasn't for me. You know, if I were a physician,
I probably spent most of my career curing people's financial dis-ease. See when we're not at ease
physically at a cellular level, we call that disease. Well, there's a lot of people that
are not at ease financially. They have a tax dis-ease when they go to retire. Because they
find themselves in as high or higher bracket as they've ever been in and they don't know what
to do and they think they're saving tax by taking out minimum distributions the rest of their life.
No, no, no. You're going to see that actually compounds the problem. So, I would rather prevent
the tax disease but frankly, most people I have had to cure the tax disease. And so,
I'm going to show you how to do that and if you're young enough how to prevent it altogether.
So, there are many, many couples that have come to me and whatever their retirement resources
were, whether they had $500,000, a million, 4 million. One couple had 8 million. ofttimes, as
they begin to withdraw money out of a qualified plan like a 401(k) or their IRAs or pension
or profit-sharing plans. They're all qualified plans. Qualified with who? The government, okay?
You got your tax break usually on the contribution phase unless you opted to convert to a Roth
and you've already taken care of the tax by doing that. And so, many couples, if they had $200,000
that was going to show up on their 1040 tax return, by doing a strategic rollout over 5 years,
I have successfully transferred 80 thousand, 100 thousand, even 120 thousand. 60% of their income
from being taxed the rest of their life on the front of their 1040 tax return. And they've gone
down to only maybe 40% of that. 80,000 is taxed. The other 120,000 is now tax-free. Now, the IRS
knows they keep receiving that but they know it is cut and dried. It's been tax-free as a sacred
tax-free cash cow in the internal revenue code for over 107 years. So, I'm going to share some
stories with you. But remember, at the end of this episode, I'm going to give you an opportunity to
claim your free copy of my most recent bestselling book The Laser Fund, over 300 pages of charts,
graphs, and explanations. But also there are 12 chapters that have 62 actual client stories
like the ones I'm going to share with you. But let's talk about the strategy first of all. It's
actually a 3-part strategy. A strategic rollout is the term that I coined. It's not a rollover,
it's a rollout. You're getting the money out and the taxes over and done with usually
strategically over a 5-year period maybe longer. And so, most of the time, we've been able to get
people's money trapped in IRAs and 401(k)s repositioned out the tax is over and done
with it today's lower rates. And then what do we do with the after-tax money? See, a lot of CPAs,
tax attorneys go, "Well why would you do that? Now, where you're going to put the money?" I go,
"Hello? You're going to reposition the after-tax money into something that's going to be tax-free
from now on." They go, "What's that?" So, I have to teach them about the Laser Fund, okay? But see,
what I like to do is reposition it into something that's not only tax-free from now on. But what
will ultimately blossom in value when you die reimburse and you many fold for the taxes you
paid. So, you're really not out anything or your spouse or your children. They'll actually come
out ahead versus leaving the money and IRAs and 401(k)s the rest of your life and taking
required minimum distributions which is the worst advice I've ever heard. You're going to understand
why when I tell you the stories. Now, the third part of the strategy we don't use all the time.
But it's to offset. Some or all of the tax incurred during the rollout process by creating or
resurrecting new tax deductions. Many, many people have been killing their tax deductions
because they were paying off their real estate properties or their house. The children are gone.
And later in life, if they're still living with you, you can't deduct them anymore. People usually
aren't contributing money to IRAs and 401(k)s in retirement. If they're business owners, they don't
have those deductions and congress keeps raising taxes. And so, we have to resurrect tax deductions
to help you eliminate the tax impact during the rollout process. So, that's what is called a
strategic rollout. You'll understand it better next when I give you some actual stories and
examples of how we've done this. So, in your free copy of The Laser Fund book which is 300 pages,
there's 12 chapters that contain 62 actual chicken soup for the financial soul stories.
One of those chapters is dedicated to this strategy. And so, I'll give you a quick
summary of some of the stories. I remember a husband and wife, they were both school teachers
and they came to me at age 60. So, they're over age 59 and a half. They don't have a 10
penalty if they start tapping into their 401(k)s, their 403Bs and their tax-shielded annuities.
Their tax advisor said, "Oh, do you need the money?" They said, "No, we don't need the money.
We're not going to really retire until we're age 70 and a half." Back then, you could put it off
until age 70 and a half before you had to start withdrawing money or else the irs penalizes you
50% on what you should have pulled out. Now it's a 72. They want that money out in tax before you die
so they can tax it again when you do die. Now, most CPAs and tax attorneys, in fact,
CNBC tells you "If you don't need the money, continue to defer, defer, defer."
That's like saying continue to procrastinate, procrastinate, procrastinate. But see, I have
a software program and in a nutshell, I showed these 2 school teachers. Now, if you continue
to earn let's say 7.2% rate of return, they had 250,000 in their accounts. That should double to
500,000. And then if you started taking out RMDs, required minimum distributions, this is how much
tax you will pay by stringing it out during the husband's life expectancy, then the wife's life
expectancy because usually, the man dies first. And then as you leave it behind to your children,
their life expectancies, they were flabbergasted. Even if congress never raised taxes,
they were going to shell out more than a quarter of a million in taxes. And that's how much they
had. I said, "Yeah, you're just delaying the inevitable. You're compounding the problem."
I felt like Sam I Am in Green Eggs and Ham. I said, "You will like this. You will see." -"No,
no we don't want to pay the tax." You're going to pay it sooner or later. Finally, I convinced them.
I said, "If we get it out over 5 years and we roll this out, you're going to pay about $12,500
a year in tax or 60,000." Oh, we don't wan to pay that. I said, "You're going to pay more than that.
I just showed you." They go, "Okay." And so, I said, "You ready to go?" And they said, "Well,
is this what you would do?" And I said, "Well, I would resurrect some deductions you've been
killing on your rental properties. I would refinance those and get some deductions going.
It's a concept that I teach about being your own banker." They did that and the tax liability went
from 60,000 down to 20,000. They refinanced some other properties and it went down to zero. In 5
years, they were ready. Now, pay off all their properties and I said, "You're earning twice as
much as the net after-tax cost of the mortgage." I wouldn't do that. You're making 32,000 a year
and the mortgage is only costing you 16,000 and they go, "Oh, yeah. That would be stupid."
But here's the deal: I saved them a quarter of a million dollars of unnecessary tax that they were
going to pay by stringing it out. Now, they got that quarter of a million out over a 5-year period
and they actually got out 360,000 tax-free. They are experiencing double the net spendable income
and it's tax-free because they use the laser fund. Now folks, I have helped a gentleman who
was widowed at age 70. And I was able to save him 3-quarters of a million dollars of unnecessary
tax. At the time he came to us, he had 600,000. And his advisor said, "Oh, just take out RMDs,
4% rule." 4% on 600,000 was 24,000 a year. How pathetic is that? And it was taxable. He was only
netting 16,000. Long story short, in 5 years with a strategic roll-out, he ended up getting 750,000
because he was earning interest that he was able to earn with us on his laser fund. He had 750,000
tax-free. We got the money out without any tax consequence. He's been earning 8% and some years,
10%. Let's just take 8. What's 8% on 750,000 in the laser fund? That is 60,000 a year. How much
more is 60,000 than 16,000 which is what he was getting net after-tax out of his IRAs? Folks,
we 3 and a half times his cash flow by using the strategic rollout strategy. Another couple,
both husband and wife were physicians. They had 4.6 million saved. Their accountant said, "Oh,
they're going to pay 2.6 million in tax over the next few years on those. But they can afford it."
I said, "Well, let's ask them." I said, I can't save you all of that in tax, 2.6 million. But
I could save you 1.2 million." They said, "Yeah, let's do it." I was able to do a strategic rollout
and save them 1.2 million of unnecessary tax. They set up their family bank with that. 1.2 million
is generating 100,000 a year of tax-free cash flow for their children, grandchildren, into perpetuity
for a college mission accounts, of military. It doesn't matter what it is where they can empower
their posterity instead of just sending the money down the drain in unnecessary tax. We do this
all the time. So, as I connect the dots here of how to withdraw money out of tax-deferred accounts
like 401(k)s or IRAs or 403Bs or 457s, they're all qualified plans. Hopefully you're getting
some insights that you want to strategically roll the money out sooner than later and get
the taxes over and done with it today's lower tax rates rather than thinking taxes in the future
will be lower. No. People find themselves in as high or higher tax brackets especially
during retirement if they've saved very much money. Now, my favorite vehicle to reposition the
after-tax money is in what I call the laser fund and so I wrote a book with that title. The Laser
Fund: How To Diversify and Create The Foundation For a Tax-Free Retirement. And in this book,
it's actually two books in one. This site is about 200 pages, 14 chapters with all kinds of charts
and graphs and explanations. If you're more of a right-brain learner, you turn the book over and
read this one. This has 12 chapters with 62 actual client stories. And you'll see examples of how
people with money trapped in IRAs and 401(k)s got their money out with the least tax impact
and reposition it into a portfolio of laser funds to accumulate their money tax-free
under section 72(E) of the internal revenue code the rest of their life. They were able
to access income in retirement totally tax-free under section 7702. And when they ultimately die
anything that's left in there blossoms in value and transfers income tax free
under section 101 A. You will learn about those 3 sections of the code in this book.
So, to claim your free copy and understand this and many other concepts on asset optimization,
claim your book by going to laserfund.com. LASERfund.com. And you contribute a nominal
amount towards the shipping and handling and I cover the rest of that cost.
You have to have some skin in the game, if my children wanted a copy, they would have to do
that. And I'll pay for the book. I'll fire out a hard copy to you. There's also options in there
to get the audio version, digital version. If you like to watch and learn listen and learn.
I am really into empowering you so that you can have a brighter future and not outlive your money.