- This couple saves $40,000
a year in unnecessary tax.
By the end of this episode,
you will understand how this couple saved $1 million
in taxes on their IRAs and 401Ks, get ready.
This is gonna blow you away,
but I want this to be your story.
(upbeat instrumental music)
So I'm Doug Andrew,
and I've been helping people optimize their assets
and minimize taxes now for nearly five decades.
And there are thousands
of stories that I could give you,
on how we have helped people
save hundreds of thousands of dollars of unnecessary tax
on their IRAs and 401Ks,
where they thought they were doing
the best thing by deferring until they retired,
because they were told they would
likely be in a lower tax bracket,
and that has not been a true or axiomatic assumption.
Now for more than 25 years, savers who save very much,
usually are not in lower tax brackets when they retire,
because they accumulate a sizeable retirement nest egg.
They have been killing their deductions,
their mortgage interest deduction.
They're not contributing money
to IRAs and 401Ks during retirement.
They don't have any other dependants.
Their kids are gone.
If they move back in, you can't deduct them anymore.
Business owners don't have those deductions anymore,
and on, and on, and on.
But especially because of irresponsible
government spending and the printing of money,
most Americans agree
taxes in the future will likely be higher.
So my question is always this,
if you really believe that taxes will likely be higher,
why are you postponing,
deferring, procrastinating paying tax
to some future perceived unknown advantage,
and then withdraw your money later on when taxes are higher?
That doesn't make sense.
And so people begin to rethink their thinking.
Now, sometimes they do this sooner than later
and they switch to Roths.
Now, a Roth IRA or 401k is a step in the right direction,
but there's still too many strings attached with a Roth.
So I've never owned an IRA or a 401K and never will,
but I've never owned a Roth.
See, Roths accumulate your money tax-free,
and you can access the money tax-free.
And you fund a Roth, IRA or 401K, with after tax dollars.
So you're realizing
that it's better to pay taxes on the seed money.
And I use the metaphor of a seed,
because if you were a farmer
and you had the choice of buying
your seed in the springtime that you were going to plant,
and you could either buy your seed without paying tax,
but you planted it, you irrigated, you cultivated,
you worked hard and later in the fall,
when you harvest your crops and sold them,
you now have to pay tax on what you sell you harvest for.
See, that's a traditional IRA or 401K.
You get a tax break on the seed money,
but then you agree to pay tax on the harvest.
If you think taxes are gonna be higher in the future,
I can prove to you
that it's gonna be better to have a Roth,
where you simply pay tax on the seed money,
and you enjoy the harvest without tax.
Now, I've never owned a Roth.
Why, because
a max-funded index universal life insurance contract,
what I call a laser fund,
has the two benefits of a Roth,
and for additional benefits
that Roths will never have.
Your money accumulates tax-free
and you can access it tax-free,
under two sections of the internal revenue code
that have been around for over 108 years,
Section 72E and 77-02.
And then when you finally die,
whatever is left behind blossoms
and transfers income tax-free.
Roths don't do that.
But what else do IUL policies have that Roths don't have?
Well, I can contribute
larger sums of money into an IUL policy.
I could put in 300,000 if I wanted to.
You can't do that with a Roth.
I don't have to put in 300,000.
I can put in 30,000,
but I could make up the other 270,000 anytime I want.
With a Roth, you can only put in a certain dollar amount,
but you can't make up for any room
that you didn't use in future years.
And once you don't use the room, you lose it, okay?
But if I put in 300,000 into an IUL,
and a month later, I need to access 250,000,
I don't have to wait till I'm 59 and a half years old,
or five years like you do with the Roth.
I can put in 300,000,
and withdraw 200,000, 250,000 four days later.
I had a client do that.
There's no 10% penalty by the IRS.
And I can use indexing, which allows me to participate
in the upside growth when the market goes up.
And that's why in my IUL policies I've earned some years,
not just 10%, but 25%.
In 2021, 61.33% and even 153%.
But if the market crashes,
I don't lose due to that market crash,
because my money is not invested in the market.
That's called indexing.
And you can learn
about that on this channel,
and also in a book,
that I'm gonna gift you at the end of this episode.
So stay with me.
Let's get back to the story,
and I wanna tell you about this couple that came to me.
And they were sort of thumping themselves on the chest,
very proud because they came to a seminar,
and they came in and they they laid down
their IRA and 401K statements.
And I always sort of tease people
and I tell them to bring
their after tax IRA and 401K statements with them.
Now, I know they don't have those,
and they go, "Well, yeah, what do you mean by after tax?"
I say, "Well, I'll calculate it for you."
So they had saved 2.6 million in IRA and 401Ks.
And I gave them the high five way to go.
They were proud of themselves.
Yeah, they were savers.
And they didn't realize they were in a tax trap,
because that 2.6 million was not all their money.
They said, "Well, we're not gonna take it out all at once.
We calculate based upon..."
And I think it was around 6,
6 and a half percent payout.
They felt like they could generate
about 160,000 a year of income out of their IRAs and 401Ks.
So I said, "Okay, let's assume that
you pull out 160,000 a year and I see a big problem."
And they go, "What's that?"
And I go, "Well, it's showing up
on the front page of your 1040 tax return.
It's all taxable income now."
Plus, they had another 40,000 a year coming in,
I think from a defined benefit pension.
I think one of them had taught school or what have you.
So they had a total of 200,000 of income,
that was gonna show up
on the front page of their 1040 tax return.
I go, "Yeah, that's a problem to me,
'cause I'm a tax strategist."
And they sort of went, "You mean there's another way?"
And I went, "Yeah,
(Doug chuckles)
I could get 60% of that 200,000 off of your tax return.
But now, it's gonna take me about five years to do it."
And they said, "Well, where have you been?"
And I said, "Well, I've been here all along,
but you've sort of had your blinders on, following the herd,
like many Americans are putting money
in tax deferred IRAs or 401Ks,
and now you've got this tax trap.
And so they said, "Okay, we're all ears."
So I illustrated a strategic rollout.
This is not a rollover.
A rollover is going from the frying pan
into the fire, so to speak.
This is where people have money in 401Ks,
and they roll them over to IRAs.
And then they postpone, delay until their age 72.
And then they are told to take
RMDs, required minimum distributions,
which I think is the worst advice for most Americans, okay?
I said, "No, you wanna get the money out,
and then the taxes over and done with sooner than later,
and then
reposition the net after tax money into a portfolio
of indexed universal life insurance contracts,
structured correctly and funded properly.
Take the least amount of insurance
the IRS will let you get away with,
and this will allow you to earn
11 and net 10, earn eight, net seven.
Some years you'll earn 25 and net 24,
but it will be tax free.
They said, "Well, wow, we've never heard of these."
I said, "Well, it doesn't surprise me.
Most advisors are not aware of these."
So, long story short, what did we do?
In five years, we got that money
out predominantly out of their IRAs and 401Ks.
Not all of it, okay?
They still wanted to leave some in there.
But on their tax return,
they only now had to report 80,000 of taxable income.
So we reduced the 200,000 of taxable income
down to 80,000 of taxable income.
Well, what happened to the other 120,000?
They're still receiving it.
They're still experiencing $200,000 a year of income,
but 120,000 of that 200,000 is tax-free.
It's coming out of their IUL policies
now tax-free without depleting the principal.
They actually doubled their rate of return.
They still have the same $200,000 of income.
But now, 60% of it is not showing up
on the front page of their 1040 tax return.
The IRS knows they're receiving it,
but the IRS knows, oh, this is tax free.
It's not even worth auditing,
because money out of a insurance policy
has never been taxable if you do it the right way.
So what did we save them?
We saved them in a 33%
combined federal and state income tax bracket.
33% on 120,000 of their 200,000 of income.
What's that?
40,000 a year in tax.
From that one strategy, a strategic rollout,
we are saving them 40,000 a year of otherwise payable tax.
You times that out
by the husband and wife's life expectancy.
One of them is expected to make it to age 90.
They retire at 65, that's 25 years.
25 years times 40,000,
we save them $1 million
of unnecessary tax with one strategy.
That's just the beginning.
We were able to increase the rate of return by double,
and create tax-free income, and on, and on, and on.
And when they ultimately pass away,
the laser funds will blossom and leave behind
twice as much as their IRAs and 401Ks would've left behind.
I'm just giving you the first phase of tax savings.
Yes, we do this all the time.
We can maybe do this for you.
Would you like to save 40,000 a year of unnecessary tax?
What could you do with that?
They were able to enjoy
visiting their children and grandchildren, family vacations,
helping those they care about with that extra 40,000,
that would've gone down the drain in unnecessary tax.
A million dollars over their golden years,
that they used for their family,
instead of seeing it go down the drain in unnecessary tax.
They still pay tax, but not as much.
If this is intriguing you,
I can show you all kinds of ways
that you can optimize assets and minimize taxes.
I wanna gift you a copy of this book, "The Laser Fund".
It's 300 pages.
And you don't have to pay 20 bucks on Amazon,
I will gift you a copy.
You can claim your free copy by going to laserfund.com,
L-A-S-E-R fund.com,
or click it on the link below,
and you contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost.
I'll fire out a hard copy to you.
It's actually two books in one.
This side is 200 pages, 14 chapters.
If you're a left brain learner,
that's all the charts, and graphs, and what have you.
If you're a right brain learner,
you can turn it over and read this one,
about 100 pages, 12 chapters,
with 62 actual client stories.
Or you can use your whole brain and read both, okay?
But when you're in there claiming your free copy,
be sure and check out how you can learn
by listening or watching, there's audio and video.
And also you can join us for online educational webinars.
You can even schedule a time to talk to a professional,
to see how this can be employed
in your particular set of circumstances
at no cost or obligation to you,
to see illustrations,
to see how you can optimize assets and minimize taxes,
diversify and create the foundation
for your tax advantaged retirement.
(upbeat instrumental music)