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4 Secrets To Lowering Taxes


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4 Secrets Successful Business Owners & Professionals Use to Reduce Taxes and Create Wealth

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4 Secrets To Lowering Taxes

  1. 1. 4 Secrets Successful Business Owners & Professionals Use to Reduce Taxes and Create Wealth Presented By: Ken Shapero, LUTCF Vice President CJA and Associates
  2. 2. A Few Questions Before We Start… <ul><li>What type of business entities do they own? </li></ul><ul><li>How many full time employees? </li></ul><ul><li>Are any of their businesses a target for lawsuits? </li></ul><ul><li>How much is too much tax? </li></ul><ul><ul><li>$100,000+ </li></ul></ul><ul><ul><li>$250,000+ </li></ul></ul><ul><ul><li>$1,000,000+ </li></ul></ul>
  3. 3. <ul><li>Are they using all the planning available under current tax laws to legally reduce their tax liability, protect their assets and create significant additional wealth??? </li></ul><ul><li>If not, let’s explore the 4 Secrets ! </li></ul>A Few Questions Before We Start…
  4. 4. Secret #1 <ul><li>What type of qualified retirement plan do they offer? </li></ul><ul><ul><li>Is it an employee benefit plan or </li></ul></ul><ul><ul><li>Is it an EMPLOYER benefit plan? </li></ul></ul>
  5. 5. Secret #1 Employer 25% 75% Employees Most companies tend to have employee benefit plans!!!
  6. 6. Secret #1 5% 95% Employer Employees Smart Employers offer Employer Benefit Plans in which the owner/owners receive 80% to 95% of the total contributions.
  7. 7. Free Feasibility Study <ul><li>Please allow us to offer you and your clients a </li></ul><ul><li>FREE feasibility study to assist you in discovering what type of plan would work best for their business. </li></ul>
  8. 8. <ul><li>What type of employer sponsored benefit plan would allow your clients and a number of their certain key employees to purchase personal life insurance with a 35% discount and have the policy paid up in 5 years ? </li></ul>Secret #2
  9. 9. <ul><li>Business Pays a tax deductible premium for life insurance for employees of corporation including key employees/owners. </li></ul><ul><li>Premiums are partially tax deductible to employees based on benefit provided </li></ul><ul><li>Upon transfer of the policy to the employee, the employee owns policy and all rights associated with policy including future tax-free loans. </li></ul><ul><li>Tax-free death benefit may be paid to employee’s beneficiary in event of death. </li></ul>Section 79 Plans
  10. 10. Advantages of Section 79 Plans <ul><li>Contributions to the plans may be tax-deductible. </li></ul><ul><li>Income tax-free portable death benefit. </li></ul><ul><li>Tax-deferred accumulation. </li></ul><ul><li>Tax-free income in later years. </li></ul><ul><li>Only 60-65% of the contribution is included in taxable income to employees. </li></ul><ul><li>Benefits of future planning are substantial </li></ul><ul><ul><li>Supplemental Retirement Income </li></ul></ul><ul><ul><li>Wealth Transfer </li></ul></ul><ul><ul><li>Estate and Liquidity Planning </li></ul></ul>
  11. 11. <ul><li>1. How comfortable are you today with our current or proposed health care system? </li></ul><ul><li>2. What impact will it have on you, your clients and your families after retirement? </li></ul>Secret #3
  12. 12. Secret #3 If you could set up a private plan that guarantees you will have a pool of money to draw upon in post-retirement and it would be tax-deductible , tax-deferred , creditor protected and more importantly provide tax free reimbursements for almost any medical expense, would you be interested?
  13. 13. Example Total Contribution: $523,580 Husband and Wife, age 62 NRA 65 1 other employee ineligibile due to service $727,500 52.95% $277,223 Owner #2 $646,500 47.05% $246,357 Owner #1 Plan Account Value @ NRA % Of First Year Contribution First Year Contribution Name
  14. 14. Secret #3 <ul><li>Employers today are using this </li></ul><ul><li>“ Post Retirement Medical Reimbursement Plan” </li></ul><ul><li>for themselves and their employees with </li></ul><ul><li>confidence that no matter what happens with </li></ul><ul><li>health care reform they will have resources to </li></ul><ul><li>provide for their needs. </li></ul>
  15. 15. Sample Numbers <ul><li>Census </li></ul><ul><ul><li>Owner, age 62 retiring at age 65, salary $235,000 </li></ul></ul><ul><li>Account at Retirement: $1,374,000 </li></ul><ul><li>Annual Withdrawal: $97,489 </li></ul><ul><li>Total Sum of Withdrawals: $2,437,217 </li></ul>
  16. 16. <ul><li>Create </li></ul><ul><li>Your Own </li></ul><ul><li>Insurance Company </li></ul>Secret #4
  17. 17. Secret #4 The purpose of creating your own insurance company is primarily to insure or reinsure the risks of the owner.
  18. 18. Secret #4: A Little History <ul><li>Around since the 1950’s </li></ul><ul><li>Currently over 5,000 privately owned small insurance companies </li></ul><ul><li>Used by nearly 80% of S & P </li></ul><ul><li>Substantial Case Law & IRS Guidance </li></ul>
  19. 19. Why Consider Your Own Insurance Company? <ul><li>Contribute significant Pre-Tax dollars (under IRC 831b) up to $1,200,000 per insurance company </li></ul><ul><li>Grow the money over flexible periods of time (no 59 ½, no 70 ½, no eventual IRD Tax) on a tax favored basis </li></ul><ul><li>Asset Protection Structure; protected from the claims of creditors personally & professionally </li></ul>
  20. 20. Why Consider Your Own Insurance Company? <ul><li>No contribution for employees </li></ul><ul><li>Ability to access the money on a favorable tax basis while living and passing assets to loved ones without gift and estate taxes </li></ul><ul><li>Tax Favored access to assets based on clients & advisors </li></ul><ul><ul><li>Dividend rates @ 15% </li></ul></ul><ul><ul><li>Capital Gains rate @ 15% </li></ul></ul><ul><ul><li>Tax Free </li></ul></ul>
  21. 21. Typical Captive Structure Shareholders Shareholders Parent Company Parent Company Premiums Claims
  22. 22. Possible Risks <ul><li>Insured </li></ul><ul><ul><li>Workers Comp </li></ul></ul><ul><ul><li>Auto Insurance </li></ul></ul><ul><ul><li>General Liability </li></ul></ul><ul><ul><li>Property Coverage </li></ul></ul><ul><ul><ul><li>Deductibles </li></ul></ul></ul><ul><ul><ul><li>Exclusions </li></ul></ul></ul>
  23. 23. Possible Risks <ul><li>Uninsured </li></ul><ul><ul><li>Administrative Actions </li></ul></ul><ul><ul><li>Legal Defense </li></ul></ul><ul><ul><li>Construction Defect </li></ul></ul><ul><ul><li>Employment Practices </li></ul></ul><ul><ul><li>Product Liability </li></ul></ul><ul><ul><li>Product Warranty </li></ul></ul><ul><ul><li>Terrorism Risk </li></ul></ul><ul><ul><li>Computer Operations </li></ul></ul>
  24. 24. Captive Benefits <ul><li>Insurance is typically a good investment </li></ul><ul><li>Provides coverage for uninsured risks </li></ul><ul><li>Lower insurance cost-overhead and profit are a large portion of premium </li></ul><ul><li>Establishes best risk management practices </li></ul><ul><li>Provides tax benefits </li></ul><ul><li>Creates wealth </li></ul><ul><li>Facilitates wealth transfer </li></ul><ul><li>Asset Protection </li></ul>
  25. 25. To Review <ul><li>Secret #1 : Have an Employer Benefit Qualified Retirement Plan </li></ul><ul><li>Secret #2 : Buy your personal life insurance with Big Discounts paid for by your company </li></ul><ul><li>Secret #3 : Set up your own “Post Retirement Medical Reimbursement Plan” </li></ul><ul><li>Secret #4 : Set up your own Insurance Company </li></ul><ul><li>Sign Up For A Private Consultation To Discuss Any Of These Plans! </li></ul>
  26. 26. Thank You! For Additional Information Contact: Kenneth Akiva Shapero LUTCF 954-775-5514 [email_address]