Roll-out your 401K to a totally tax-free retirement bucket. In this episode, I'm going to address
the question "How to invest my 401K after retirement?" Because that's the way most people
ask the question. Well, I'm going to shock you with my answer. It's not what you think
I'm going to tell you to get it out. Do not take RMDs. That's the worst advice I've ever
heard and you're going to learn why. So, I'm Doug Andew. I'm a financial strategist. I've
been doing this for more than 46 years. I'm a retirement planning specialist. I've never
own an IRA or 401K. I never will. I never owned a Roth, I never will. And so, when people
ask me the question "How to invest my 401K after retirement?" Well, they're shock when
I say, "First of all, I would not leave it in the 401K." "What? Well, I don't need the
money yet. I don't want to pay tax. My accountant tells me who's telling you to pull out and
pay tax? You want to keep deferring it until you have to start to taking out the minimum."
And then they advise you to take the required minimum distribution, if you don't the money.
Those are called RMDs, require minimum distribution. Now, that's the worst advise I've ever heard.
And people say, "Really? Well why did tell you to do that on CNBC?" And I go, "Listen
here. Who's funding CNBC? Government revenuers. Why would they tell you stop at partnership,
to kill a partnership where the government gets a third or maybe 50% or more of everything
you will ever, ever earn if they can convince you to leave your money in that IRA or 401K
account?" And so, when people say, "How should I invest my money in my 401K?" Usually they're
saying, "Well, I have a 401K and it has money in it. Where should I invest money that's
inside my 401K?" And so, I usually say, "Well, first of all during retirement, I would get
it out the market. Do not have your money in the market." Because most people, they
would come to me maybe 5 years before retirement because I always help people look at retirement
planning which is different than for retirement planning. They would come to me and they would
be way too top heavy into traditional IRAs or 401Ks, yet to be taxed in the market. And
I would go, "What are you thinking? You should not have your money in the volatile market
because there's not an asset manager around that can legally show you a predictable income
stream out of that much more than about 4%." Because the average return according to Dalbar,
they have analyzed investor behavior for years is only about 3.5%. And so, they'll only show
you maybe a 4% payout because they don't want to be sued for you outliving your money. Wall
Street was built for you to put money in it. Not take it out, okay? If you ask any broker
or investment adviser, "When is the best time to get my money out of the market?" They will
say "NEVER." They want you to buy and hold forever. It was never designed to give you
income on the back end with predictable cashflow so they can't do it. You need to reposition
the money and get it out the market then protect yourself in that market and protect yourself
from that market volatility and create predictable cashflow. Predictable payouts more like 8,
9, 10 percent. That every million dollars doesn't generate 40,000 income. It generates
80,000, twice as much. 100,000 and it's tax-free. Where as 40,000 a year coming out of tax-deferred
IRA or 401K, you have to pay the tax. In just a 25% bracket, you're not netting 40(thousand),
you're netting 30(thousand). They charge you 1% on the million for asset management fees.
If you deduct that from the 40(thousand), now you're down to 20,000. What I'm about
to share with you isn't a little bit better. It's 4 times better. For years, I've helped
people get 80,000, 8% payouts. 10% payouts versus a net of 2% out of money in traditional
IRAs or 401Ks in the market. So, my first piece of advice: Get the money out of the
market and then begin a strategic roll-out. Not a roll-over. A roll-over is going from
the frying pan to the fire as far as I'm concerned. That's where people roll their money over
from a 401K into an IRA and continue to delay the inevitable. Postpone, procrastinate paying
tax until they have to start pulling it out at age 72 now. See, if you don't start withdrawing
money based upon your L/E (what's L/E? That's life expectancy, starting at age 72) the government
will penalize you 50% on top of the tax. Let's say your life expectancy is 20 years at age
72. So, if you have a million-dollar nest egg, you have to take out 120th or else you
have to pay a 50% penalty on that. What's 120th of a million? it's 50 grand. If you
don't pull out 50 grand and pay the tax on it, they will 25,000 and make you pay the
tax. See, they want the money out and tax before you die so they can tax you again when
you do die or at least tax you estate. I would not recommend you string out, you stretch
out and delay the inevitable and take RMDs. That's the worst advise. You're not saving
tax. I'll explain why here. So, as a tax-strategist for years, I've told people, "Hey, what are
you trying to accomplish?" Your account is saying, "Hey, do you want to save taxes a
year by not accessing money out of that IRA or 401K or taking out the required minimum?"
No. They're only looking at that given tax-year. So, I designed some software and as far as
I know, it's the only software on the planet still that shows people that darkness of the
night (so to speak) if they take the minimum amount out and stretch it out during their
lifetime, defer, defer, defer, procrastinate. And through your spouse's and then your kids...
Now, your kids have to get the money out and taxed within 10 years. They cannot use it
for their retirement unless they're already retired. And so, it's the best savings bond
the government ever came up with for themselves. But when you stretch it out, people are flabbergasted
when I add up all the tax. And they go, "Wait a minute, you mean at age 65, I had a million
bucks in there and if I leave it there, I likely pay out at least a million in taxes
by continuing to let it grow tax-deferred?" Yes. Sometimes, you'll pay even way more than
that. They go, "Well, what's the solution?" I said, "Get it out. Get the taxes over and
done with sooner than later." In your current tax bracket is likely the lowest tax bracket
you will ever, ever be in. Hello? I mean when I ask most people, "Do you think future taxes
are going to be lower?" I get nothing but crickets. "Do you think taxes are going to
be the same?" Very few people. "How many think they're going to be higher?" Why? Well, because
(hello?) look at the government spending, bail outs, economic stimulus, free college
tuition is what they're advocating, the medicare for all. Congressional budget office says
that taxes will likely go to 50, 60 or 70 percent to fund these kinds of things. It's
going to cost 100 trillions to do some of those initiatives. The government only brings
in about 4.5 trillion a year in revenue. And 100 trillion in the next 10 years? That's
10 trillion a year. In other words, just those initiatives will require twice as much as
the IRS collects. And that does not even cover the normal federal budget. So, can you see
the writing on the wall? So, I would recommend as strategic roll-out. Get the money out the
taxes and done with because your current tax bracket is likely the lowest bracket you will
ever, ever be in. Because this country has seen twice. Tax rates go federally as high
as 94%. I'm afraid we may go that direction again. You'll be kicking yourself if you don't
get the taxes over and done with. But let me share with you what you do with the net
after tax money. You don't put a back end to a tax-deferred account. You put it in to
something that's going to be tax-free from now on and provide tax-free income that will
earn 8 to 10 percent rates of return predictably. You will never outlive your money based upon
that. You link your returns to the things that inflate. If inflation goes to 10%, you
probably earn 15%. Inflation will help you instead of hinder you. And at the end of the
day, anything you leave behind to your spouse or to your kids will blossom, transfer tax-free
and they don't have to take it out unless they want to. And it's tax-free whenever they
do. That is what I want for you. And I'm going to share with you how you can learn about
a far better alternative than keeping your 401K and wondering "Where should I invest
the money that's in my 401K?" First of all, get it out the 401K. And then I'll show you
where to put it that will be far better. So, I claim this term strategic roll-out. It's
not a roll-over. It's a roll-out. There's actually 3 parts to the process. You don't
have to do all 3. But number 1, you strategically plan how you're going to get the money rolled
out of that 401K or IRA over a certain time period so you don't incur a whole bunch of
unnecessary tax. Generally speaking, I usually have a minimum of 5 years because where I'm
going to put the money after I pay the tax is in my favorite vehicle, I call The Laser
Fund. And under the tax citations under the technical and miscellaneous revenue act, I
have to spread out the funding of a laser fund over a minimum of 5 years to grandfather
myself to have tax-free income for as long as I live. So, generally, let's say if I have
a million bucks in IRAs and 401Ks, I may only take out 100 grand year for 5 years and pay
the tax on that. See, that's strategic for a reason. Now, there's other years where maybe
you were unemployed or you are sick. Or during the covid-19 pandemic, they actually let you
access up to $100,000 out of an IRA or 401K before the age of 59 ½ without a 10% penalty.
And they let you pay the tax over 3 tax years. That's when I told my many, may people, "Hey,
that's an opportunity to get the taxes over and one with." Now, you don't need the money.
That's not what the question is. Or "I don't need the money." So, you get it out during
a strategic time period and get the taxes over and done with sooner than later. And
then you reposition the net after tax monies into something that's going to be tax-free
from now on. And it will ultimately blossom when you die. Now, my favorite vehicle is
a max-funded indexed universal life insurance contract where I've average 10.07% net rates
of return for the last 25 years tax-free. Many people don't understand how to structure
one of these. But I call it the laser fund because laser is an acronym that stands for
liquid assets safely earning returns. My money is liquid, it's safe. I do not lose due to
market volatility and it's totally tax-free. When I ultimately die, it blossoms it value.
So, I'll explain what that is. In a laser fund, you're taking the after tax money rolling
it out and putting it to laser fund in according to IRS guidelines so that the money that goes
into your laser fund will accumulate money tax-free the rest of your life and allow you
to generate tax-free income. It's way better than a Roth. Okay? Roths do that but the laser
fund allows me to put in large lump sums. You can't do that with a Roth. You can make
up for past years. I can access money anytime even before the age of 59 ½ without a 10%
penalty. I don't have to start taking money out at age 72 like I have to with a traditional
IRA or 401K. There's none of those strings attached. But when I ultimately die, whatever's
left in there will blossom. I'm 68 years old. If I die tomorrow in an accident, every million
I would have in my laser fund would blossom to 2.5 million instantly and transfer income
tax-free to my spouse. There's not an IRA or 401K or Roth around that will do that.
And people say, "How much does that cost?" Nothing. Now, nothing is free. But I'm not
paying for that benefit. It's being paid for with a minuscule portion interest that you're
going to pay in unnecessary tax if you leave your money in that (stupid?) 401K once you
understand. All the strings attached to that thing, I think it's one of the stupidest places
to put money. And so, other than that, I don't have any strong feelings on that subject.
So, how can you learn about this? Well, I want to share with you one of the quick stories
and then show you how can get a free copy of this book. It's 300 pages. I'll pay for
the book, you pay the shipping and handling. So, in this book, there's about 200 pages
of charts graphs and explanations and 14 chapters, if you're a left-brain learner. If you flip
the book over, this is about 100 pages, 12 chapters with 62 actual client stories. There's
one chapter that voted to strategic roll-outs. You're going to learn stories in here about
1 couples, school teachers. I save them a quarter or a million dollars of unnecessary
tax rolling the money out of their 403Bs and their 401Ks. They were so grateful. I double
their net spendable retirement income. There's another story of a gentleman who's wife has
just past away. He was 70 ½. And his advisor telling him to take out RMDs. I said, "What
are you thinking?" We got his money out in 5 years and I want you to read the story.
We saved him $750,000 of unnecessary tax. And we were able to quadruple his net spendable
retirement income. He was so grateful. There's another couple, I'll explain in here. They
were physicians, husband and wife. We save them 1.2 million dollars of unnecessary tax
that they would've paid had they left their money in their 401Ks. And so, I want you to
learn. Here's how you can claim your free copy of this book. It's my 11th book. They're
flying off of our warehouse shelves. Go to laserfund.com. L-A-S-E-R, fund, ".com". You
pay $5.95 shipping and handling. I'll pay for the book. There's also options there to
get the audio version or get video education. I want to empower you. So, be sure and claim
your free copy of this book.