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Not every wealthy investor requires their retirement money (when net worth is $20M+ and they have built $2M+ in an IRA Rollover). This strategy is not appropriate for every investor and as always you have to check tax, legal and any money matters with your tax council, legal council and financial advisor. The case was a specific example demonstrated in 2013 so all the facts and figures were correct at that time given the circumstances. We have heard from Development officers when they were reached by wealthy donors, CPA firms dealing with retired executives, wealth management firms and others when it comes to alternative strategies dealing with a large rollover asset. Please contact me for a more detailed conversation.
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MOMENTUM ADVANCED PLANNING | 1
What do heirs inherit from my $5M IRA
Rollover?
For Illustrative Purposes ONLY
For:1. Financial Advisors2. CPA’s3. Non Profit Development Officers4. UHNW Investors
MOMENTUM ADVANCED PLANNING | 2
Disclosures
IRS Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Past performance is no guarantee of comparable future results
Diversification does not guarantee investment returns and does not eliminate the risk of loss
MOMENTUM ADVANCED PLANNING | 3
Disclosures
Please Note: This presentation is designed to provide introductory information in regards to the
subject matter covered and by no means complete.
Consult your attorney, financial advisor or tax advisor for complete up-to-date information concerning
Federal and state tax laws.
Momentum Advanced Planning and its representatives do not provide tax, investment, accounting or legal
advice and not “fiduciaries” (under ERISA, the Internal Revenue Code of otherwise). Any taxpayer should
seek advice based on the taxpayers particular circumstances from an independent tax advisor.
MOMENTUM ADVANCED PLANNING | 4
Disclosures
The projections here are based on assumptions stated and the information provided is not a reflection of past
experience or future guarantees. Changes in tax law could affect the tax consequences.
Momentum Advanced Planning strongly recommends that any proposed plan or changes to an existing
plan be reviewed by your tax advisor.
Any statements contained herein were not written nor intended to be used for purposes of avoiding
U.S. federal, state, and local tax penalties.
The views contained herein are not to be taken as an advice and or recommendation to buy or sell any
investment. Please consult with your advisor.
MOMENTUM ADVANCED PLANNING | 5
75 Year Old Retired Couple
MOMENTUM ADVANCED PLANNING | 6
$20M Net Worth
MOMENTUM ADVANCED PLANNING | 7
$5M in Assets
MOMENTUM ADVANCED PLANNING | 8
$5M
22.9$218k
CalculatingAnnual
RequiredMinimum
Distribution
(for additional information please
refer to Publication 590)
MOMENTUM ADVANCED PLANNING | 9
$87k in Income Taxes*
* Assuming 40% Income Tax Bracket
MOMENTUM ADVANCED PLANNING | 10
$131k Net Deposit*
* Assuming 40% Income Tax Bracket
MOMENTUM ADVANCED PLANNING | 11
The $131k
But I
MOMENTUM ADVANCED PLANNING | 12
4 Choices(in no particular order)
(1): Do Nothing
(3): Pension Plan
(2): Roth
(4): RothAlternative
The color coding of the diagrams does not indicate any preferences
MOMENTUM ADVANCED PLANNING | 13
5th Option (sudden passing) is by default, and out of everyone’s
control
MOMENTUM ADVANCED PLANNING | 14
$2.2M Estate Taxes*
* Assuming 45% Estate Tax Bracket
MOMENTUM ADVANCED PLANNING | 15
$1.1M In Income Taxes to Beneficiaries*
* Assuming 40% Income Tax Bracket for Beneficiaries
MOMENTUM ADVANCED PLANNING | 16
33% Of Original Balance Remains
$5M
-$2.2M*
-$1.1M**$1.6M
* Assuming 45% Estate Tax Bracket
** Assuming 40% Income Tax Bracket
MOMENTUM ADVANCED PLANNING | 17
Not much inheritance left for you kids - Sorry
MOMENTUM ADVANCED PLANNING | 18
MOMENTUM ADVANCED PLANNING | 19For Illustrative Purposes ONLY
Do nothing and live to 95
MOMENTUM ADVANCED PLANNING | 20For Illustrative Purposes ONLY
Do nothing and live to 95Option 1
For Illustrative Purposes ONLY
Roth
MOMENTUM ADVANCED PLANNING | 21
Comparison (for Illustrative purposes ONLY)
Retiree Lives to 95 and passes Roth Pension Plan (1, 2, 3 & 4)
Roth Alternative (1, 2, 3 & 4)
Are distributions required? No Yes No
Are distributions subject to income tax?
No Yes No
Are there penalties for withdrawals prior to age 59 ½?
No Yes No
Does the plan provide a death benefit beyond the cash balance? (b)
No No Yes (1)
Death benefits subject to income and/or estate tax? (b)
Yes Yes No (1)
Estimated taxes paid $4.3M
$6.6M (3) <$2M (3 & 5)
Benefits received by retiree + heirs $5.2M
$7M (3) $7M (3)
1) Requires underwriting and illustration of life insurance policy
2) Please contact us for more detailed information
3) Please consult your tax and financial advisor
4) Not suitable and appropriate for every investor
5) Assumes taxes are paid at death from policy
MOMENTUM ADVANCED PLANNING | 22
Reminder
Profit Sharing and Roth Alternative Strategies:
• Examine possibilities to remove assets out of taxable estate
• Not suitable and appropriate for every investor
• Requires underwriting and illustration of life insurance policy
• Retiree did not need IRA Rollover distributions
• Consult your legal council on formation of any legal strategies
• Consult your tax and financial advisor before deploying any such strategy
• Contact Amir Rafizadeh for more details on both Profit Sharing and also Roth Alternative Strategies
• Illustration occurred in 2013 so rates and assumptions were valid for that time - (for up to date information please contact us)
MOMENTUM ADVANCED PLANNING | 23
This has been prepared by Amir Homayoun Rafizadeh
For more information please contact me:
MOMENTUM ADVANCED PLANNING | 25
Sources of Pictures (1)
Uncle Sam Tax Picture:
http://www.savvysenior.org/
Retired Couple Picture:
http://www.dia-trofis.gr/eidisis/4-aploi-kanones-igeias-makrozoias/
Net Worth Picture:
http://www.investopedia.com/financial-edge/1212/net-worth-through-your-life.aspx
RMD Taxes Picture:
http://abcnews.go.com/blogs/business/2012/06/median-household-net-worth-down-35-percent/
IRA Rollover Picture:
http://www.bgcmc.org/index.cfm/ira.htm
MOMENTUM ADVANCED PLANNING | 26
Sources of Pictures (2)
IRA RMD Table Picture:
http://www.irs.gov/publications/p590/ar02.html
Don’t Need The Money Picture:
http://juangreatleap.com/2011/12/20/9-pinoy-startup-myths-i-discovered-just-werent-true-part-1-of-3/
Burn The Money Picture:
http://www.thedisciplinedinvestor.com/blog/2009/01/14/banks-we-dont-need-no-stinkin-lending/
Bank Teller Deposit Picture:
http://buzz.money.cnn.com/2012/07/16/banks-loans-deposits/
Tax Alternatives Picture:
http://www.foxbusiness.com/personal-finance/2014/02/21/earned-income-tax-credit-could-pay-off/
MOMENTUM ADVANCED PLANNING | 27
Sources of Pictures (3)
Estate Taxes Picture:
http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/estate-tax/
Family Funeral Pictures:
http://realtruth.org/articles/090806-007-religion.html
Heirs Inheritance Picture:
http://www.grantthornton.ie/Services/Investment-Life-and-Pensions/Personal-financial-counselling/Inheritance-and-gift-tax-planning
4 Choices Picture Source:
http://gregory-g-allen.blogspot.com/2011_08_01_archive.html
Shocked Kids with no inheritance pictures Source:
http://www.wnd.com/2012/02/now-kids-targeted-in-digital-privacy-breach
MOMENTUM ADVANCED PLANNING | 28
Why most advisors NEVER see their clients entire assets
Out on Slideshare next:
MOMENTUM ADVANCED PLANNING | 29
Disclosures
IRS Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Past performance is no guarantee of comparable future results
Diversification does not guarantee investment returns and does not eliminate the risk of loss
MOMENTUM ADVANCED PLANNING | 30
Disclosures
Please Note: This presentation is designed to provide introductory information in regards to the
subject matter covered and by no means complete.
Consult your attorney, financial advisor or tax advisor for complete up-to-date information concerning
Federal and state tax laws.
Momentum Advanced Planning and its representatives do not provide tax, investment, accounting or legal
advice and not “fiduciaries” (under ERISA, the Internal Revenue Code of otherwise). Any taxpayer should
seek advice based on the taxpayers particular circumstances from an independent tax advisor.
MOMENTUM ADVANCED PLANNING | 31
Disclosures
The projections here are based on assumptions stated and the information provided is not a reflection of past
experience or future guarantees. Changes in tax law could affect the tax consequences.
Momentum Advanced Planning strongly recommends that any proposed plan or changes to an existing
plan be reviewed by your tax advisor.
Any statements contained herein were not written nor intended to be used for purposes of avoiding
U.S. federal, state, and local tax penalties.
The views contained herein are not to be taken as an advice and or recommendation to buy or sell any
investment. Please consult with your advisor.
| 32
REFERENCE
MOMENTUM ADVANCED PLANNING | 33
MOMENTUM ADVANCED PLANNING | 34