If a tax advisor tells you to take RMDs, beware.
They're likely aren't saving you tax.
In this episode, I'm going to answer the question, "How do you find a good advisor for saving
taxes?"
You're going to be blown away with what I share with you.
So, I'm Doug Andrew and I've helped people optimize assets for more than 4 and a half
decades.
And I've often pointed people to proactive CPAs and accountants when they would ask me,
"Golly, Doug.
Who can I go to rather than just a fill in the blank accountant like they do in H&R block?"
Because a lot of my clients are sophisticated business owners.
And they were missing out on lots of deductions that they could've been taking.
Sometimes I would say, *"Well, here's how you find a good CPA.
You go down the phone listing or the Google search and you just start calling CPAs and
you ask them one question.
What is 1 + 1?
And the first one that says, "What do you want it to be?"
That's the one I would hire?"
No.
So, in all seriousness, I have found that many accountants, tax advisors (they call
themselves) are more reactive.
They show you what happened.
They fill in the blanks on your tax returns on where your money went.
But very few are proactive.
And the accountants that I have always used, we would meet several times a year especially
during the last quarter of the year to do tax planning.
And so, I'm going to share with you in this episode some other concepts that many CPAs,
they just don't think about it because they're focused too many times on just saving tax
in one single given tax year instead of looking at what we call the Big Picture.
When I talk about the big picture, ofttimes, CPAs, tax attorneys, financial advisors, they
are looking at your situation with blinders on.
They're focusing only on the immediate tax year.
And that's why when you ask them, "Golly, how can I save tax?'
They assume you mean right now on this year's tax return.
Because that's what most people think of, is is the now.
The present without looking at the tax impact over the long haul or what I call the big
picture.
So, when we talk about finding an advisor who is looking at your entire picture of your
lifetime, it is through all the phases of planning.
And I'm going to go into that here in just a moment.
But the big picture is not only as your accumulating your money on a tax-favored basis.
But what about when you got o access that money?
Are you going to be on the same tax bracket?
A lower one or a higher one?
And when you think about it, golly!
If you think taxes in the future will be higher, because most audiences that I speak to, I
will ask them, "Well, so how many of you think that in the future, tax rates will likely
be lower?"
And I get nothing but crickets.
No.
"Well, how many think they're going to be the same?"
And few hands go up.
In an audience of 2,000 people, "How many think they're going to be higher in the future?",
a sea of hands goes up.
And I go, "Well, why are you postponing and deferring to some future-perceived unknown
advantage?
Let's look at the big picture and maybe get the money out of those IRAs and 401(k)s sooner
than later.
If an advisor tell you to take RMDs, you're stringing out the tax liability.
And I'm going to show you, you will pay sometimes double, triple, sometimes quadruple the amount
of tax that you needed to pay by stringing out because some advisor didn't have the big
picture.
You're entire lifetime in mind.
They only looked at one given tax year.
Is this making sense?
So, before I share with you what I call the 4 phases of retirement planning, I just want
to share with you a sneak peek at the free gift at the end of this episode that I want
you to claim.
My most recent bestselling book called The Laser Fund.
And it'll help you understand more about what I'm about to teach you.
When you're trying to find a good advisor, you ought to be considering the question,
"Is postponing tax a good idea?"
And I often depict IRAs and 401(k)s like this sumptuous Subway hoagie sandwich depicted
here on the left.
But then when people go to retire and they pay tax on their IRAs and 401(k)s, the rest
of their life as they take distributions, it looks like this unappetizing sandwich here
on the right.
Well, there are 4 phases of retirement planning.
And many of advisors don't think about the big picture.
So, there's the contribution phase.
When we contribute money towards these accounts.
It overlaps the accumulation phase where we're hopefully earning interest, dividends, what
have you.
And then there's the distribution phase where we start taking income out.
We take withdrawals out of it.
And too many people go into withdrawal when they hit this phase.
And then there's a transfer phase where when you pass away, most people leave behind something
that would've sustained them had they live longer.
So, when we look at these various accounts, most people in America save the worst way
in tax as earned investments.
Banks, credit unions, mutual funds where you pay taxes every year.
You're taking after-tax money and you're putting it into a vehicle that you have to pay taxes
on every year as they give you your 10-99's or your interest statements.
And then when you start to take it out and it gains are taxed.
And then when you die, those you leave it to also have to pay tax.
So, it's tax, tax, tax, tax.
It's the worst way and the most common way Americans save.
That's like crawling around a racetrack trying to get to the finish line with a million bucks,
let's say.
And I can prove this to you mathematically.
The next category would be taking after-tax money and putting it into a vehicle that is
tax-deferred like an annuity.
And so, it's tax-deferred.
But when you go to access money, it's no taxable and it's tax LIFO.
If you want to learn more about that, search that on this channel.
And it's taxed when it's transferred.
There's only one green circle.
One tax advantage phase.
So, ofttimes, I will help people look at this from a mathematical standpoint.
Do you know a dollar doubling 20 times, a dollar doubles to 2 to 4 to 8 to 16.
A dollar doubling 2 times will grow to a million 48 thousand dollars if it's tax-free?
But if that dollar doubles and you pay tax and a 25% tax bracket, you'll only have $1.75.
After it doubles to $2, you have to pay tax on a that dollar gain.
When that $1.75 doubles to 3.50, you pay tax on that.
You'll only have 3.06.
At the end of 20 periods, instead of a million, you'll only have 72,000.
Whoah!
In a 33% tax bracket, you'll only have 27,000.
2.7% of what you could've had.
And so, that is the worst way to save and yet the most common way Americans save.
So, when we look at traditional IRA or 401(k), you're putting in pre-tax dollars.
You're going to tax break on the contribution phase.
And it is tax-deferred during the accumulation.
But now, you have to pay tax on any distributions.
And most people are not in lower brackets when they retire if they save very much.
And then it's taxed when you leave it behind.
Your spouse has to pay tax on it.
Your kids have to pay tax within 10 years after they inherit an IRA or 401(k).
You know, I think a step in the right direction is really taking after-tax money and accumulating
it tax-free, accessing it tax-free.
Taking all the distributions tax-free.
And when you die, it transfers tax-free.
Now, that could be a Roth.
But I've never owned a Roth IRA or 401(k).
Because what I like is a max-funded tax advantage section 101(A) alternative what I call the
Laser Fund.
And not only does it accumulate my money tax-free and I could access it tax-free.
But when I die, it blossoms.
It increases in value and transfers totally income tax-free.
And you're going to see how this works in my examples here in just a moment.
I like 3 green circles better than 2 green circles because it generally gives you 33
to 50 percent more net spendable retirement income.
Sometimes double.
But I like 4 green circles.
And if you want to learn how to have 4 green circles, you need to read one of my books.
Free yourself from the IRA, 401(k) tax trap.
How?
Perform a strategic rollout.
Not a rollover.
So, how do you do this?
This is actually up to a 3-part strategy that I came up with years ago.
Part one is to strategically schedule your withdrawals out of your IRAs and 401(k)s over
let's say a 5-year period.
Maybe loner based upon your tax bracket.
Any special circumstances during a given tax year.
But generally speaking, my goal for most people is to get the taxes over and done with sooner
than later over a 5-year period.
And we're trying to basically make sure that after 5 years, you don't have to pay tax anymore
because of where you reposition the after-tax money.
Part number 2 in the strategy is to take the net after-tax monies from the rollout each
year and reposition that into something that's going to be tax-free from now on.
Now, most CPAs and tax-attorneys go, "Well, what's tax-free?"
And that's why they come and enroll in advanced continuing education and learn about my favorite
vehicle that I call the Laser Fund that allows you to accumulate, access, and transfer your
money totally income tax-free.
It actually will blossom at the end of the day.
Thus reimbursing you, sometimes many fold for any taxes that you did incur during the
rollout process.
So, your spouse, your kids are not out anything at the end of the day.
You actually come out ahead.
So, you're taking the next after-tax money in phase 2.
And you're repositioning that in accordance with IRS guidelines under what is called the
Tamra tax citation where you cannot fund a laser fund any faster than 5 years or technically
speaking, 4 years and 1 day if you put in a lump sum at the first day of the first year,
then the first day of the 5th year which is actually 4 years and 1 day later, you have
complied with the tax citation Tamra, technical and miscellaneous revenue act of 1988.
So that from that point forward, any money you access sooner or later out of the laser
fund is totally income tax-free.
And when you ultimately pass away, it will blossom and transfer income tax-free.
Now, the third part of the strategy sometimes we can't apply.
But in any situation that I can, I will employ this and it's to offset some or maybe all
of the tax incurred during the 5-year or longer rollout process by creating or resurrecting
new tax-deductions that maybe you were killing.
Okay?
This may be in a form of real estate that maybe you were owning, it was rental income
properties, whatever.
And you thought the best way to handle that is to hurrying and pay it off and you're killing
your tax deductions.
Or maybe at your house.
So, I've had many people refinance and re-leverage or acquire new real estate properties, leverage
them and bring in new deductions because of the mortgages.
Or resurrect deduction by refinancing those properties.
And I'm going to give you some examples of this.
And I've helped many people transfer a quarter of a million, 3 quarters of a million, 1.2
million out of their IRAs and 401(k)s.
Sometimes with no tax-consequence because I offset the tax by creating new deductions
on their tax returns.
The IRA, 401(k) rollout is showing up on the front of their 1040 tax return.
But under deductions, ofttimes on schedule A or schedule E of the real estate, I'm creating
all kinds of new deductions that they had been killing or I'm acquiring new properties
are able to get their money out with at least tax impact.
So, I'm going to share with you some examples of how this works.
Let me give you some simple examples to illustrate the point that I have been making about with
strategic rollouts and how to find a good advisor.
See, when you have a tax strategist, they will show you how to accumulate, access, and
transfer your money totally income tax-free.
If they understand a laser fund, it's what I call it, a max-funded, tax-advantaged insurance
contract, they usually come to one of my advance continuing education courses or read one of
my books of how to do that under section 72(E), 7702, and 101(A) of the internal revenue code.
So, you can learn and read about that by claiming your free copy of my most recent bestselling
book.
But let me share with you just a couple of examples that are contained in the book.
We helped a husband and wife school teachers save a quarter of a million of unnecessary
tax on their 403(b)s and 401(k)s by getting the money out and the taxes over and done
with and offsetting the tax by refinancing their rental properties and even their home
and their cabin.
With another gentleman, he owns several rental properties duplexes and 4 plexes, when we
rolled the money out of his 401(k)s, we successfully got $750,000 rolled out over a 5-year period
with next to no-tax impact by resurrecting deductions on his existing rental properties
and also by creating new deductions because the money that we used, he was able to leverage
and buy additional properties.
He ended up doubling, even tripling his cashflow.
He said, "Wow!
I can't believe how much money I am now making, Doug.
I don't know what to do with all of this money."
I have 2 physicians.
Both the husband and wife, doctors.
They had accumulated 4.6 million.
I could not save them the total amount of tax on that.
They're going to pay 2.6 million in tax if they kept it in IRAs and 401(k)s.
Well, their advisor said, "Oh, they can afford to pay 2.6 million in tax."
I said, "Well, I'm a tax strategist.
Let's ask them."
I did it and I said, "What if you could save a million or 1.2 million of that 2.5 million,
would you like to do that?"
Absolutely.
So, we did a strategic rollout and we saved them 1.2 million of unnecessary tax.
What did they do with that?
That is in a laser fund generating about 100,000 a year of tax-free cash flow that they're
using in their family bank is what I call it to fund all kinds of college education,
funding, for their grandchildren, great-grandchildren, humanitarian trips, family vacation with a
purpose, religious missions.
Things that they couldn't have if they would've just rolled over and paid unnecessary tax.
We do this all the time.
So, please claim your free copy of The Laser Fund.
Here's how.
If you go to laserfund.com (it's on the screen here) and claim your free copy, you contribute
a nominal amount towards the shipping and handling.
I'll cover the rest of that cost and I will send out a book to you.
There's also options there for you to listen and learn and watch and learn.
But here's to your brighter future.