|
Author: James Burns Article source: http://www.kabish.com/. Used with author's permission.
Uncle Sam and his band of merry-men, better known as Congress, have been pushing snake oil on the unsuspecting public in the form of retirement plans. But wait, isn't a pension plan one of the perks we look to when shopping for an employer? Well, not all pension planning is created equal and in most cases, quite disastrous.
Distributions from all qualified plans must begin no later than April 1st of the calendar year following the year that the participant attains age 70 1/2, or the calendar year in which the employee retires. Special rules apply if the distribution is made to a 5 percent owner of the business. The purpose of minimum distribution rules for retirement plans is to force the owner or participant of the pension plan to withdraw money from the plans, thus triggering an income tax on these monies. On April 16, 2002, the Internal Revenue Service issued final regulations as to these distributions.
Generally, the idea pursuant to the regulations is to have the owner or participant of the pension plan begin taking the money out of the pension plan beginning at the later of when he finishes working or age 70.5. One purpose of this is to insure that these monies will be subject to income tax prior to the death of the owner.
Based on the current system the government has created with pension plans, the average retired couple will pay eight to twelve times more in taxes on their IRAs and 401(k)s during their retirement years than they saved during their contribution and accumulation years. Generally, it is understood that you put money into your pension plan and tax is deferred and this is a great thing. Unfortunately, you may well be in a higher tax bracket if your pension accumulation is done right.
In addition to a higher tax bracket upon reaching retirement, many people find themselves with a free and clear home; they no longer have mortgage interest deductions to offset income tax. Many Americans find they are now paying back everything they saved in taxes during their accumulation and contributions years within the first two years of distributions. Therefore, there is an insidious income tax awaiting most people and if they didn't plan their estates, double taxation in the form of both income and estate tax.
Many postpone the transfer of their qualified funds until age 59 ½ in order to avoid the 10% tax penalty. Sometimes by delaying the payment of taxes, retirees will find themselves in a higher tax bracket after age 59 ½ because Congress could raise tax rates because of a political change. Inevitably, one must pay the piper now or later.
What is the answer? Simple, investment grade life insurance. This type of life insurance is not the same as the one you get countless letters about in the mail. This is life insurance that is focused on building up a triple compound because it is tax deferred. The difference between the deferral that life insurance experiences and pension plans is that when it comes time for payout, life insurance is received as a loan. This is a powerful concept because the proceeds will not be taxed; loans are not a form of taxable income. However, as a loan you will have interest on the payments. Most people mistakenly think they are going to pay interest on their own money with life insurance. While in theory that is true, the best insurance carriers provide for zero wash loans where the interest basically is forgiven or taken out of the death benefit when a person passes on. We are talking about real life insurance not the typical death insurance that most people have because you use it while you're alive.
The best candidates for creating amazing wealth with investment grade life insurance are those in the age rages of thirty to fifty. Once committed and in the proper product it is foreseeable they will retire wealthy and without the annoying taxation that surrounds a pension plan. There are even strategies to start a contribution plan to your investment that only requires repositioning your current finances. To see a presentation on ways to finance your retirement go to www.abundantmoney.com.
If you are over fifty, I'm sorry we missed you. If you have children don't let another day go by without them starting a plan because 79 million people are heading for the social security hand out in the next few years. Despite Social Security getting a 2.7 percent boost next year (2005), Medicare will eat up much of the increase and when the 79 million qualifying Americans sign-up - look out below.
James Burns, Esq.
Law Office of James Burns
18662 MacArthur Blvd., 2nd Floor
Irvine, CA. 92656
Jambur64@cox.net
(949) 440-3243 James Burns is an attorney with 2 law degrees one in tax and has trademarked financial concepts to assist individuals in creating wealth, protecting it and eventually transferring it to loved ones.
Chicago Hair Laser Removal
If you hate shaving, are tired of putting up with painful waxing, tweezing, and depilatory creams, then I can tell you for sure that laser hair removal is the r...
You Dont Have To Be A Genius To Write A Love Poem
Most people are intimidated by the idea of writing a poem. But it may be easier than you think to express how you feel in verse.
Bodybuilding Weightloss Diet Tips And Strategies
Effective bodybuilding weightloss tips to trick stubborn fat stores into throwing in the towel. Try just one of these tips a week and get ahead of the bodybuil...
Sell Your Home and Invest at the Same Time
I continue to see the same For Sale signs in my neighborhood. The houses just aren't selling. If you are considering selling or have a home on the market that...
FTC Adding to the Franchise Rule
Last summer the FTC put forth a report and then asked for comments on modifications of the franchise rule. There has been no real significant changes since the ...
Reinvent Yourself in a New Career
Some people reserve the word "vocation" for religious calling. Contemporary career guides encourage us to think of a "life purpose" that guides and gives meanin...
The 7 Ultimate Laws Of Success
The 7 Ultimate Laws Of Success, when obeyed, will bring great
success to the people who practice them. These laws are universal laws that operate whether or no...
Did You Start Your Life With Enough Probiotics?
Probiotics are very important for health. Find out whether you got the healthy bacteria you needed as a baby.
Repetition: The Secret to Visibility and Attention!
If you have ever felt disappointment and dismay when trying a new marketing approach because it didn't generate the response you expected, you are certainly not...
I Said Pareto Chart… Not Potato Chart!
Does this sound familiar? You were hired for the new management position. You were tasked to turn the numbers around. You take some time reviewing the current s...
20 Ways to Blow a Sale
There are so many ways to make mistakes selling! I have made them all for you ... all you need to do is understand what they are and to avoid them!
Protein Wont Make You Fat: Myth #1
I'd like to explain an important concept about protein and how it's stored in the body. Have you ever heard that 'protein can't be stored as fat'?
Behavior Modification Plan Example
It is important to know that children behave in certain ways (even in annoying ways) because it serves them. When it comes to learning how to positively adapt a...
Jesus Christ: The First, The Last, The Eternal
There are many times in our lives where we ask ourselves the question;"What is my purpose in Life?" And there are some who make a living, telling others exa...
Thoughts are Things
You've probably heard this idea at one time or another. You've probably nodded your head in agreement understanding that thoughts are in fact, things. You proba...
Burnout and Purpose
In our society, something called burnout is a common phenomenon. Most of us wrongfully assume that burnout results from working too much, too long, or too hard....
Power Keys To Writing Power-Packed Marketing Copy
In order to maximize your sales efforts and fully seize your greatest profit potential, these essential elements are a "must-have" and "must-apply" in all of yo...
Five Common Poker Mistakes that Will Lose You Money!
These five common poker mistakes are made especially by novice players who do not prepare themselves properly and think winning at online poker is much easier t...
Fat Cells, Your Diet, and Losing Weight
Inside this article you will find information about fat cells and how they tie into weight loss.
How To Make Your Site RSS User-Friendly
Try these simple steps to make your website more Friendly for RSS users.
4 Steps To 1,000.. 2,000..3,000 Subscribers In Days!
Are you struggling to get at least 1,000 actual responsive subscribers into your database? If so, then read this detailed article that will show you step by ste...
Long Distance Relationships – Not Always a Bad Thing
You hate it, but it's happened - the love of your life has to travel abroad. Will it be days, weeks, or even months before you'll see them again? Many people ...
Oil, Lube and Filter Employee Pay
How Much Do I Pay My Team?
Reduce Your Debt
Do you want to reduce your debt?
|
Print this page