How To Transfer Money Out Of IRA With Less Tax - YouTube

This is the number 1 strategy for tax savings on an IRA? We are going to

address the question in this episode how do I transfer money out of my IRA's or

401K's or other qualified plans into a tax-free vehicle.

I'm Doug Andrew you're going to be blown away when you see how to do this. And

this is an actual client that we helped optimize their assets and minimize a ton

of tax by doing this strategic rollout.

So, I'm Doug Andrew. And I've been a financial strategist, retirement planning

specialist, tax minimization specialist for 47 years. I helped a lot of my own

clients with these strategies. And then in 2003 to 2007, I trained over 3,000

CPAs, tax attorneys, financial advisers on these strategies. But I got frustrated

because they weren't going out and helping their clients. They said, "Doug, we

don't have time to educate people like you do." So, what the public doesn't know

won't hurt them. Well, yes. I see a ton of people paying unnecessary tax on their

IRA's or 401K's at retirement. And so, that's when I let all my professional

licenses automatically expire the last business day of 2005. To become a

consumer advocate, to write books and to do educational videos. And my most recent

book the Laser Fund has actually 14 chapters of charts and graphs. But this

side has about 100 pages with 12 chapters. And it talks about stories

and examples. And this is one of them in this book that we actually helped this

70-year-old man get money out of his IRA's and 401K's with no tax consequence.

I'm going to simplify this and I want you to understand that this man is very

typical to many, many people that come to us and they thought they were going to

be in a lower tax bracket when they retire. This gentleman did

well for himself. He owned a lot of rental properties and these were

duplexes, triplexes, fourplexes and so forth.

The smaller apartment complexes. He done very well for himself. So, he didn't need

income out of his IRA's to live on in retirement. And so, he sort of took the

advice that most CPAs give. "Oh, if you don't need the money.

Defer. Just put it off and postpone until your age 70 ½." Now, you

have to start pulling it out at age 72 to avoid a 50% penalty. When he came to

us at the age was 70 ½. So, he came and he said, "You know what? I have to

start pulling money out of my IRA's and 401K. Now or I'm going to be penalized 50%.

The CPA says, "I should just take out the required minimum. What do you think?" And I

went, "That's the worst advice I've ever heard." So, let me show you what his

advisor told him to do. Now, this was in the year 2010-2011. And this man had his

IRA's and 401K's from 2000 to 2010 in the market. He had saved 600

thousand dollars. But that 600,000 in the year 2000, went down to

less than 360,000 from by 2003 because of the

market. It dived and for 3 years in a row. It took 4 years to get back to

600,000 in 2007. Then in 2008, he lost 30% again and went down to

three hundred some odd thousand. It took... Until he came to us in 2010, 2011 for it

to be back to 600,000. We call that the Lost Decade. So, when he

came to us, he finally had his 600,000 back that he had 10

years earlier. Isn't that sad? Now, his advisor said, "Hang in there? Hang in there.

The market will always come back but take out just the minimum distribution."

The financial services industry has a standard. It's called the 4-percent

rule. If your money is in the market, Dowel Bar who studies investor behavior

says that the average investor in the Mar

get especially in retirement only earns about 3.49%

because they're buying and selling at the wrong times. I mean, if they button

held, they would earn about 9.14%. But 9%

without paying tax is really only netting them 6% becuse you got to

pay tax of about a third. Well, he knew that. But the advisor didn't want to be

sued for him out living his money. So, the advisor said, "You know what?" Just take out

the 4%. Well, this is pretty pathetic. What's 4% on

600,000? A measly 24,000. He pulls out

24,000 and he has to pay tax of a third. He's in a 33-percent

bracket between federal and state tax that was 8,000 of the

24. So, here he is pulling out 24,000. He's netting only

16,000 to buy gas and groceries, prescriptions and golf green fees. That's

pretty pathetic. If he dies would only really leave behind 600,000

to his heirs because his wife when he came to us had just passed away. So, if he

dies, his children will have that 600,000. And they have to get

that out and taxed within 10 years now or else they're penalized 50%.

So, it's really only worth 400,000 to his kids. Have you got the

scenario? This is what most advisors and CPAs tell you to do. Let me show you how

we dramatically increased his retirement income and saved him a grundle in

unnecessary tax. So, stay with me. And you'll see this is so powerful. We have

done this for thousands of people. What we did is we had this man take

withdrawals out of his 600,000 far more than he needed to live

on. He didn't even really need this money but he was forced to take it out. But

that's a pretty pathetic rate of return. So, we told him to take out

$12,500 a month in a payout.

We had his money diversified into a portfolio. And the 600,000

was in an instrument that would allow him

to realize about an 8 and a quarter percent effective rate of return on his

money. He was able to pull out 12,500 a month or $150,000

a year out of his 600,000. Now, if you do the math,

150,000 times 5 years is 750. Well, yeah. Because he's

earning interest on his money while he's rolling it out. Your money just doesn't

stop growing. But we increased his rate of return quite a bit more than double

than the 4% payout with his money in the market. The point is this:

Worst case scenario, if he pulled out 150,000 each year,

it's like, "Well, I don't need the money. Why am i pulling out more than the RMD?"

To get the taxes over and done with sooner than later and reposition it into

something tax-free from now on. Let's say that he pulled out 150

and in a 33-percent bracket, he paid a third in tax. That's 50 grand. So,

after 5 years, he withdrew 750,000. It's all out

of there. And he paid a third of that. That's 250,000 in

tax. People say, "Well, that was bad advice." No. You're not safe. He's going to

pay it sooner or later. Later is going to be more than that. So, let's do the math.

He pulls out 750,000 over 5 years.

He pays 250,000 in tax. What does he have left? 500

thousand. Now, that 500,000, he has that in his Laser Fund. That's my

favorite vehicle to reposition the money after tax money. 500,000

and his laser fund was earning between 8% to 10%. Because we were rebalancing, he

actually was earning 10. Let's just take 8. So, 8% on 500

thousand is 40,000 a year tax-free. That's just the interest. How much

more is 40,000 than 16,000? A lot more, okay? But he was

actually earning 10%. So, 10% on 500,000

in the laser fund is 50,000. 50,000 tax-free is how much more than 16. A

triple, okay? Now, that's not where we ended. See, I'm a

tax strategist. What we did is the third part of a strategic rollout. We

resurrected some deductions he had been killing. How did we do that? So, we already

had enabled him to be able to have triple the amount of money cash flow

tax-free by doing the strategic rollout increasing his rate of return actually

increasing the safety and of course the tax advantages. But you know what? I just

can't stand to just do that. I want to dramatically increase his net spendable

income by saving unnecessary tax. So, in his case, he had several of these rental

properties. Duplexes, triplexes and so forth. And he had been paying them off

thinking that was his retirement, that was pretty good. I said, "Wait a minute.

Do you understand the velocity of money?" If you borrow money out of those rental

properties at 4.5% which is the interest rate at the time,

it's tax deductible. On Schedule E or on your LLC's, you can tax deduct the

interest. So, every million he borrows on those apartments at 4.5%,

that's 45,000 of interest he gets to deduct. In a 33-percent

bracket, it's only costing him 30,000 on every million. So, he's making

in his laser Fund 8 to 10 percent. Let's just take the average 9. How

much more is 9 and 3? He's making 300% on every dollar. On

every million he borrows, he pays 30,000 a year and he makes 90,000.

He says, "Doug, you're making me so much money. I don't know what to do with all

this money." I said, "Well, we can... You can give it to me. You can give it to charity.

You can do so much more with it." He used this to bless the lives of his kids and

grandkids in his family bank which is another concept. But what was the

strategic byproduct that came along for the ride?

Those new deductions that were no longer on his

tax return when he paid off those rental properties came back onto his tax

returns. That gave him the ability to earn 3 times the cost of the funds

for the mortgage. But it offset. Every year he pulled out 150.

The deductions on his rental properties now were equal to that. It saved him the

50,000 of tax every year for 5 years. 5 x 50,000, we

saved him a quarter of a million dollars there. But as we rolled it out, we

actually did it over a 5-year period. And so, guess what? He didn't have a net

of 500,000 in his Laser Fund. He had a net at the end of 5 years of

750,000. He got all this out with growth tax-free.

750,000 now at 8% gives him 60,000 a year.

Not 30. At 10%, he can take out 75,000 a year tax-free.

How much more or better is 75 than 16. People sit here and they go...

They get this deer-in-the-headlight look. Like, "What, you really did that?" And when

he dies, what did he leave behind to his heirs here? A net of 400. Here, if

he dies, this inside the Laser Fund which I explained in this book blossoms to a

million two hundred thousand. Triple, okay? Why would you generate this much income

in retirement when you could generate 3-4 times that? And why would you

leave behind this --400,000 when you died when you could leave

behind triple that if it doesn't cost you anything? You can actually have your

cake and eat it too. If this is resonating with you, read this

story and others in this book. I would love for you to get a free copy. You can

click on this episode, watch it. You'll understand this concept. And I'll fire

one out to you. You just pay $5.95 shipping and handling. But there's

other episodes also I want you to watch the relate that shows

several examples just like this one.