Forbes recently described the Producers Capital Account™, as the Rich Persons Roth.
Why would Forbes look at a life insurance policy with a mutual insurance company specifically designed for early high cash value as the Rich Persons Roth?
There are essentially 5 ways you can set up a tax-free retirement income stream.
These 5 strategies include a Roth IRA, a Roth 401(k) and or Roth 403(b), Municipal Bonds and Funds, a Health Savings Account (HSA), and Cash Value Life Insurance.
Roth IRA contributions are limited to $5,500 per year ($6,500 if you are 50 or older) and. there are also income limitations for who can contribute and how much. For example, only couples who earn up to a combined $189,000 each year and single people who make $135,000 or less are able to contribute to a Roth IRA.
Roth 401(k) and Roth 403 (b) are only allowed by certain plans and you can only contribute $18,500 per year, as well as a $6,000 catch-up if you are 50 years of age or older.
There is not a single person that can expect to live off these accounts in retirement with these minimal contributions.
Municipal bonds and funds could be subject to state taxes and there is a risk of default on the bonds that could wipe out your capital.
Health savings accounts allow contributions of $3,450 per year or $4,450 per year if you are 55 or older. There is no way you can expect the income from an HSA to contribute to your retirement.
A well-designed high-cash value policy is a great vehicle to provide access to liquidity and a tax-free income stream for retirement.
That is why corporations use it to structure executive compensation packages for executives.
According to Forbes:
“Some of the richest Americans have chosen to park some of their hard-earned wealth into an IRS-sanctioned cash value life insurance policy that allows them tax-free growth on their investments and tax-free withdrawal as well.”
Forbes continues to share that the Rich Persons Roth has incredible advantages because if your income is too high, you will not qualify for a Roth IRA.
The Rich Persons Roth is a well-designed high cash-value life insurance policy structured specifically for early high cash value and provides a guarantee on the principal, a guarantee on growth which is tax-free, and also allows you to participate in dividends from the carrier which is tax-free.
There are also no contribution limits, a life insurance carrier will underwrite your life insurance policy based on your income and net worth. Based on your income and net worth, a life insurance carrier will calculate how much life insurance death benefit they will underwrite on you which would determine your maximum premium contributions. As your income and net worth increase, you will be able to add more life insurance policies.
The death benefit from your life insurance policy is paid out tax-free to your beneficiaries or to your family trust.
With qualified plans like Roth IRAs and Roth 401(k) and 403 (b)’s, you have little or limited access to your capital in these plans.
With a Rich Persons Roth, you are able to access your capital tax-free through policy loans or life insurance lines of credit to grow your business and or grow your investment portfolio.
Utilizing this strategy, your capital has multiple purposes and functions.
A Rich Persons Roth will give you control over your capital, and provide a tax-free retirement while you will have access to your capital to grow your business and investment portfolio today.
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Michiel Laubscher & Laubscher Wealth Management LLC is not an investment advisor and is not licensed to sell securities. None of the information provided is intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other offerings. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information contained herein is at your own risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Michiel Laubscher & Laubscher Wealth Management LLC does not promise or guarantee any income or specific result from using the information contained herein and is not liable for any loss or damage caused by your reliance on the information contained herein. Always seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, or other content.
