Form a strategic role out. In this episode, we are going to answer the
question "Can I convert my IRA or 401K funds to be tax-free?" I've been helping
CPAs and tax attorneys help their clients do this strategy for over 45
years. Get ready to watch some very powerful strategies from a tax
standpoint. I've been a tax minimization specialist for this entire 4 and a
half decades helping people avoid pain unnecessary tax. Especially on their
hard-earned savings and the money they've earned throughout their life for
their future on their IRAs and 401Ks.
So, my name is Doug Andrew. And if you've watched other episodes, welcome back. If
you understand my background, I've helped people optimize their financial assets
and minimize taxes for 47 years now. And I'm going to share with you a strategy that
has saved some people a quarter of a million. Others a half a million. One
couple just this last year, 1.2 million. And so, there's other episodes that will
illustrate those examples. But in this episode, I'm going to give you the
overriding concept or strategy behind saving tax on your IRAs and 401Ks.
Because the problem is most financial advisors sort of convinced their clients
to sock away money. Follow the herd, so to speak into the traditional IRA or 401K
type plan. 403 B's, 457. They're all the same. And 91% of Americans I think
are duped into putting their pre-tax money or tax deductible contributions to
an IRA or 401K where I get a tax break today on the seed money, so to speak and
the money grows tax-deferred. And then later on and sometimes we get this. But
they're going to have to pay tax when they go to harvest the money. So, if they were
like a farmer, they bought their seed without paying tax but they later on in
life when they harvest their money, they've agreed to pay tax. And people did
that because way back when IRAs a 401Ks were first introduced, most
accounts said, "Oh, people will be in lower tax brackets when they retire." That has
not been true or axiomatic over 27 years. But it took the financial services
industry until a few years ago to finally say, "Ooh, most people aren't in
lower tax bracket." In fact, only people I know of that are in lower tax brackets
when they retire are the ones that didn't say very much. Is that why you
want to be in a lower bracket? So, when I asked audiences as I speak throughout
America, "How many of you think taxes in the future are likely going be lower?' I
get nothing but crickets. "How many think they're going to be the same?" Maybe one or
2. But I say, "How many think they're going to be
higher because of irresponsible government spending the printing of money and so
forth?" And the sea of hands goes up. And I go, "Then why are you continuing to defer
paying tax on your IRAs and 401Ks? Postponing procrastinating some future
perceived unknown advantage and let it grow to this and then withdraw that
money when you're in the highest or as high bracket as you've ever been in? Why?"
Because even normal workers, schoolteachers going down the highway
with one foot on the gas pedal. And the other foot on the brake pedal. And they
don't even know they're doing it. They're they're putting money into tax-deferred
accounts and then they're killing their deductions in the process. They pay off
their house their mortgage. They don't have that deduction. Later on in life, the
kids are gone. Or if they're not gone, you can't deduct them anymore.
Congress keeps raising taxes. If you're business owner then you've lost those
deductions. Most people end up killing the deductions and so that's why they're
in as higher, higher tax bracket. In fact, I've found that most people pay back
every dime they saved in tax over 30 years on the seed money, the
contributions into those IRAs or 401Ks. They pay it back the first 2 or 3
years of retirement and they do it again and again and again. If they live 15
or 20, 25 years after retirement, they pay back 8 to 12
times the money they saved on the seed money. So, I've been telling people get
the money out. Don't stretch it out. Don't take RMDs, required minimum
distributions. Perform a strategic rollout. Get the taxes over and done with
sooner than later. But they go, "Well, what do I do with the money?"
Even CPAs go, "Well then, what do they do with the money if they don't need the
money to live on?" You don't keep compounding the problem and delaying the
inevitable. So, let me show you the 3-part strategy of a strategic roll
out. Not a rollover. So, make sure you listen to all 3 parts of this
strategy. You don't have to employ all 3. I do. And this is what I usually
recommend for people who come to me with money trapped in their IRAs at 401Ks.
And I would recommend you consider this at
least 5 years before you anticipate retiring. Now, I mentioned, this is called
a strategic roll out. I coined this term years ago. I teach this in all of my
various books and educational materials. But this is not a roll over. See, a roll
over in my opinion is like going from the frying pan into the fire. People take
money out of their 401K and they roll it over to an IRA and they put off
retirement and they're told, "Well, if you don't need the money, take it out.
You'll have to pay tax. Keep deferring it until you're age 70 and a half." Or they
just recently increased that age to age 72. You have to start pulling money out
at age 72 based upon your life expectancy. The government wants that
money out and taxed. They've been waiting for that tax revenue. If you die with
money left in there, your kids if they inherit it now have to get it out in
taxed within 10 years. Or else, there's huge penalties. It's a 50% penalty if you
don't take it out and get the taxes taken care of. So, instead of doing a roll
over, you want to do a roll out, strategically. So, here's the 3 steps:
Number 1, I'll read this and you can digest it. You strategically reposition
your retirement funds, IRAs, 401Ks, what-have-you. Subjecting them to tax. You
withdraw that money. It's going to show up on the front of your 1040 tax return.
There's no way around it. That's taking care of taxes now rather than postponing
and increasing the inevitable liability. We have software that I develop years
ago. In fact, I think it's the only software on the planet this shows people
the darkness of the night if they keep deferring deferring till they're 70 and
a half then take out required minimum distributions. And the tax, they will pay
if they string it out. And people are flabbergasted. At age 60-65, if they have
a half a million or a million in there, they're shocked that they will pay a
half a million in tax the rest of their life. Even if taxes don't go up. They go,
that's how much I have in there. Well, it's going to keep growing and it's going to
keep giving Uncle Sam one-third of everything that you earn from this point
forward. Why do you
want to have a partner like that? So, you want to get it out and the taxes over
and done with because taxes down the road probably aren't lower. So far, so
good. Step number 2 is one of the most
critical steps to understand why we do this. You want to reposition the
after-tax moneys. So, you pull 150,000 out of an IRA or 401K
and you pay tax of a third of that. Let's say between federal and state taxes,
41 out of 50 states as a state income tax. So, you pull out
150,000, you pay tax of 50,000. You only had a net of
100,000 after paying the tax. That's okay but stay with me here. You
reposition that 100,000 or whatever the after-tax amount is into
investment vehicles that will allow you to have tax-free accumulation,
distribution and transfer. Now, there's only one vehicle in the Internal Revenue
Code that allows you to accumulate your money tax-free,
access your money tax-free forever after. And when you die, it actually transfers,
it blossoms in value and transfers tax-free. I'm not talking about municipal
bonds or Roth IRAs or anything like that. I'm talking about what I call the Laser
Fund and I'll show you how you can get a free copy of my book that explains this.
But the Laser Fund is a maximum funded tax advantaged insurance contract where
I've averaged just a little over 10%. 10.17% to
be exact rate of return for the last 25 years
tax-free. So, I reposition the after-tax money into a portfolio of Laser Funds.
And then it will blossom in value at the end of the day when I pass away. And it
replenishes many-fold the amount of tax that I paid. So, if I pulled out
150,000 pay tax of 50 and I really have an out of 100. But if
I die the next day that 100,000 blossoms to 250 or 300 thousand tax-free.
Wait a minute. I pulled out 150 net at a 100. Put that 100 into it the
Laser fund and I die, I get 300,000 or my spouse desert my kids do.
Did they lose anything? No, they came out ahead. Because the Laser Fund will
reimburse you many fold for the taxes you pay. So, you're not out anything. But
here's the critical step that I love" Number 3, you offset some or all of
the tax liability incurred during the roll-out process. This may take 5 years.
It could take 7 years. Some people ten years. I have several examples of
this. And you do that by usually resurrecting new deductions that you had
been killing. So for example, it could be charitable contributions.
It could be mortgage interest. People many times have their house paid off.
They have their rental properties paid off. And they go, "Why would I go mortgage
those?" Because I teach them how money really works. And they go and they
refinance their properties and they borrow money.
I've had people borrow money at 4.5% on their duplexes, their
triplexes, their apartment complexes, their commercial buildings. They borrow
it 4.5%. It's deductible. That's a net cost of 3.
They put it in their Laser Funds and they earn 9. How much more is 9%
than 3? They make 300% by refinancing their
properties. But what came along for the ride while they did that? They got new
deductions. And those new deductions offset the tax you owe while you're
rolling money out. You take money out of your IRA, it's on the front of the 1040
tax return. And on the deduction portion which used to be on the back, now it's
down a little bit lower. You offset that income with new deductions you
resurrected. And if you'll watch some additional episodes here, I'm going to show
you examples of how we have helped people take out money from their IRAs
and 401Ks and saved a quarter of a million. One man a half a million. One
couple 1.2 million by doing what I just said. We offset the tax liability by
creating new deductions and they got their money out tax-free. Oh, and by the
way, they were earning 300% rates of return on their money while they were
doing this tax strategy. So, I want you to learn how to do this
for you. So, let me connect the dots. When CPAs and tax attorneys say, "Well, you take
it out, pay the tax and then put it into something tax-free..." "What's tax-free?" And
so I say, "Well, that's what I call the Laser Fund. And I hand the CPA this book
usually in a day or 2, they call back and they go, "Why didn't I know about this?"
Yeah, I teach advanced continuing education. But I wrote this book for you.
I'll gift you a free copy. You'll just pay $5.95 shipping and handling.
But this is actually 2 books in one. This side has all the charts graphs and
explanations of why this is the best dream solution to accumulate your money
tax-free, access your money tax-free. When you die up blossoms and transfers
tax-free. And I use this for college funding, retirement planning, real estate
management and especially for strategic rollouts.
So, if you're a left brained person, you can read this one. If you are not a
numbers person, you learn by stories, you flip the book over and read this one.
This is about 100 pages, 12 chapters with 62 actual clients stories
and examples. And what I've been referring to here is a chapter on this
side of the book. It is chapter 11 and it's How The Laser Fund is Used For
Strategic Rollouts. There are four or five really good examples in here. And
then also, there is an example when somebody didn't do it right. I'm going to
record some additional YouTube episodes talking about these various examples of
how the Laser Fund was the dream solution. You can go to laserfund
.com. Laserfund.com. You'll have a chance to get a copy of this sent to you
absolutely free. You just pay $5.95 shipping and handling. There's also
some other classes you can take in other videos that will help you learn more
about this concept.