Alternatives to Traditional Retirement Accounts

What are some typical retirement accounts?

• Roth - post tax
• 401k - employer provided retirement account
• IRA - Individual Retirement Accounts - set up by individuals and not employers
• 403b - for education employees and some non-profits

Why do we contribute to these accounts?

• employer match
• tax advantaged growth

What are some of the downsides?

• early withdrawal fees
• contribution limits
• required minimum withdrawals or 50% penalty
• tax obligation passed on to heirs

What are some other options that allow us the same advantages without the negatives of traditional retirement accounts?

MFIC - Maximum Funded Insurance Contract

Properly structured, these are some of the best investment options. Banks are the largest holders of MFIC's for a good reason. They know something you don't. The only down side is that you have to structure them properly. Not very many people know how.

• Insured and Protected Principle
• Index exposure options
• Tax Advantaged Growth
• Tax free withdrawals if done properly
• Liquid
• Protected from Law Suites and Bankruptcy
• Most Lenders consider this a cash asset

Real Estate

A 1099 Exchange allows you to postpone taxes from a real estate sale by reinvesting the money within a year. This allows money invested in real estate to grow tax deferred.

A Cash Out Refinance gives you tax free money because it is offset by a loan. An example would be if I purchased a house for $65k, remodeled it for $15k and then did a cash out refinance for $135k. This leaves me with a $55k return that is tax free. I then could rent out the property and the renters would pay the $135k mortgage.

Other Benefits

• depreciation
• many tax write offs including interest and expenses
• assets can be protected by business entities such as LLC's
• immediate realized gains
• passive income
• protection against inflation

In conclusion, invest in yourself. I'm sure there are other ways to get the same tax advantages of traditional retirement accounts without the negatives. I feel that I am a better stuart of my money than any other manager who has their own interests. It's hard to pass up an employer match, and maybe you shouldn't, but never think your 401k, IRA, or 403b is the only place you can save for retirement.

Be Smart and Thrive