The Rich Persons Roth

Forbes recently revealed one of the most well-guarded secrets of Family Offices using the Rockefeller Family Office Model.

Why would Forbes consider 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 five 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.

1. Roth IRAs: There are limits to who could put money in a Roth IRA. Your tax filing status and Modified Adjusted Gross Income (MAGI) determine the income limits for Roth IRA contributions. If you are single and making over $144,000 and married, making combined over. $214,000, you cannot contribute to a Roth. If you qualify and are under age 50, you can contribute $6,500; for those aged 50 and above, $7,500, including a $1,000 catch-up contribution.

2.Roth 401(k) or Roth 403(b) are no better; the contribution limit for individuals under 50 in a Roth 401(k) or Roth 403(b) was $22,500. For those aged 50 and over, the catch-up contribution limit was an additional $7,500, making the total potential contribution $30,000.

A Roth strategy is excellent; the only thing that tops a Roth is a self-directed Roth.

But, with these minimal contributions, not a single person can expect to live off these accounts in retirement.

Unless you are Peter Thiel, co-founder of PayPal and chairman of Palantir Technologies, who has accumulated $5 billion in a tax-free Roth IRA. He placed stock he owned in start-ups into his Roth IRA, which grew from $2,000 in 1999 to $5 billion by the end of 2019.

Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank

I know what you are thinking…..

“There are other advanced strategies with Roths!”

I know…

You can convert qualified plans like 401(k)s and 403 (b)s to Roth accounts, but the funds in these plans are already in qualified plan accounts.

I have also seen every imaginable Roth strategy: backdoor, mega backdoor, rollovers, and inheritance Roth strategies.

I am in a mastermind group where someone shared how to put $70,000 annually into a backdoor Roth.

If you make $500,000 annually, that’s 14% of your income. If you make $1,000,000, that is only 7% of your income.

What would you do with the rest of your savings if you maxed out your Roth?

3. Municipal bonds and funds could be subject to state taxes, and a bond default could wipe out your capital. You have incredible counterparty and interest rate risk with any bond right now.

4. The IRS sets Health Savings Accounts contribution limits for individual coverage at $3,850 per year and for family coverage at $7,750 per year. For those aged 55 or older, a catch-up contribution of an additional $1,000 per year is allowed, bringing the total potential contribution to $4,850 for individual coverage and $8,750 for family coverage.

5. A well-designed high-cash value life insurance policy is a great vehicle to provide access to liquidity and a tax-free income stream for retirement.

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 a Roth IRA is not available to people with an income that is too high.

The Rich Persons Roth is a well-designed high cash-value life insurance policy structured specifically for early high cash value. It provides a guarantee on the principal, a guarantee on growth that is tax-free, and also allows you to participate in tax-free dividends from the carrier.

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. You can add more life insurance policies as your income and net worth increase.

Your life insurance policy’s death benefit is paid tax-free to your beneficiaries or your family trust.

With a Rich Persons Roth, you can access your capital tax-free through policy loans or life insurance lines of credit to grow your business and/or 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. You will also have access to your capital to grow your business and investment portfolio today.

Life Insurance carriers allow high- and ultra-high-net-worth individuals to put up to 25% of their gross income in these specifically designed life insurance policies.

So let me ask you a serious question…

If you can put your savings into a vehicle that is guaranteed, guaranteed to grow every year regardless of what happens in the stock market, grow tax-free, you can access it at any time for emergencies and opportunities tax-free, and you continue to maintain complete control over your savings, how much would you want to put into that vehicle?

This savings vehicle also would allow you to take income tax-free on the backend of life and leave a tax-free death benefit of a multiple of the account value to fund the family bank when you pass away.

Do you now understand why family offices and high- and ultra-high-net-worth individuals put as much into these vehicles as life insurance carriers would allow them to?

If you want to protect wealth from taxes and the only tool in your bag is a Roth, you are leaving out the most essential tool family offices utilize.

To explore Rich Persons Roth strategies for you and your family, you can complete this form of our preferred partner.

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