Sign Banking Document Oregon Myself

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hey folks today we're gonna talk about how to fund an infinite banking policy with the retirement account but more specifically I want to talk about how you can fund it with your retirement account without actually taking money out of your retirement account and how this can work for business owners and non business owners there's a couple of different ways to go about this and it also depends on what type of retirement account you've got so I'm gonna go over how to do it with a 401k how to do it with a solo 401k and how to do it with an IRA or ik and cash flow pro offers free money management advice to help you take control of your finances and now here's your host personal finance enthusiast and licensed insurance brokers James Barbour first let's go over how to fund your infinite banking policy with your basic 401k retirement plan so your infinite banking policy is funded as nearly all life insurance is funded with after-tax dollars so a lot of times people will just say you can't do it you can't fund a life insurance policy with your 401k now there are some exceptions where you can actually buy life insurance inside a 401k but they're pretty rare and you lose you basically lose the tax advantages from it so it's generally not a very good idea to fund life insurance inside of your retirement accounts so how can we do it well it does require one thing and that's you have to be able to take loans out of your 401k not every employer allows this but ones that do allow it you can typically take up to 50% of the value of the 401k or $50,000 now you have to pay back this loan any loan that you take out of your 401k you have to pay that back within five years now the way we fund this policy you're going to actually be able to pay it back within a year and the bulk of it you're gonna be able to pay it back within 30 days right after you start your policy but to get access to those funds you do need to be able to borrow out of your 401k so if you have a 401k you got money sitting there you would like to have an infinite banking policy started you can get it started with a loan from your 401k what's the downside the downside is you end up having to sell off a position within your 401k what happens is is whatever it was invested in gets sold for however much you take for a loan you get the loan and now you're paying yourself interest on that loan the interest rate may be set by your employer or you may get to decide how to set it if you're if you have a solo 401k but it's probably going to be somewhere around 5% so rather than that investment being in your 401k plan and able to continue growing however it was growing you're going to pull it out for a short period of time so there is a small chance that you could miss out on a stock jumping up or an index jumping up whatever it was invested in of course you can also possibly dodge it going down as well so definitely something you want to consider if you're gonna consider taking out a loan from your 401k but you do know that during the time period that you have that out and as you pay it back you're going to earn whatever the percentage that you're charging yourself for that loan or what your employer is charging you to have that loan out so that's our first option loan from your 401k the advantages to using the loan from the 401k is all the loan interest goes back into your account so it goes to you it's not taxable loan funds are not taxable and the loan doesn't show up on your credit report just like with your life insurance policy anytime you take a loan against that that doesn't show up in your credit report either so that's how you fund your infinite banking policy with a loan from your 401k now let's move on to the solo 401k solo 401k is for business owners now if you already have a 401k for your business or if you have a business that has multiple employees this will not work but if you are a sole employer or it's just you and a spouse you can get what's called a solo 401k this potentially gives you checkbook control over your retirement account in which case you can give yourself loans in order to fund your infinite banking policy and you would do that just like you do the 401k loan I discussed earlier now another option that you have as a business owner whether you have a solo 401k or whether you have a regular 401k because you have multiple employees being the business owner all of your pay flows through the business before it gets to you you actually have the opportunity to divert those funds into your life insurance policy first and then pull them back out again and fund your retirement account did you catch that does it make sense you get to decide when your funds get deposited into your 401k as the business owner you can do that after you divert the funds through your policy it doesn't matter to the IRS they just know when you do your taxes it says this much was contributed into your 401k that happens at the end of the year or the next year so it's a great opportunity for you to take these funds that are in your retirement account and so far the only thing that they're doing is providing you an investment returns but if you divert them through a life insurance policy first now you also get a massive death benefit to go along with that so consider this if you only contributed to your 401k the if you were to have a tragic accident if you were to pass away your loved ones would receive whatever's in your 401k so let's say you had $50,000 in your 401k if you pass away your loved ones get $50,000 that they actually have to pay taxes on but if you diverted those funds into a life insurance policy first you could have two million dollars worth of life insurance coverage that goes tax-free to your heirs and have that money inside your 401k now that two million dollars is going to be less whatever you borrowed out of that account so if you put money into the account to start it up and then pulled it out to put into the 401k you're gonna be less that amount off of the death benefit if the tragedy were to occur if that doesn't make sense hopefully that makes sense to you if not you just need to understand how loans work against a life insurance policy and I believe I've gone over that in one of my other videos if not when I do that video I will link to it right up here ok so there's another way that you can access your funds I've got to say all of these have to do with accessing them before you turn 59 and a half because you get no more penalties for accessing your retirement funds you can actually access them whenever you want after 59 and a half not really a big deal once you turn 59 and a half to jump through any kind of Hoops to access those funds but prior to 59 and a half what is another way that you can fund your infinite banking policy with your 401k if you change jobs let's say you have an old 401 K or you turned it you rolled it over into an IRA you can access those funds with what's called a 72 T early distribution what that does is you end up breaking up whatever the amount was in that account into a series of substantially equal payments it's based on your life expectancy and this one's kind of tricky but you're required to maintain those same exact payouts for five years or until you turn 59 and a half which ever one is longer so if you're 40 years old and you want to tap into that retirement account you can turn those funds into substantially equal payments that you can then make premium payments on your policy but it's going to be the same amount that you're gonna get paid out all the way until you turn 59 and a half before you can stop taking those or before you can change it and withdraw the rest of it so it's kind of a big decision there's a lot of things to consider along with that because if you mess it up the penalties are huge so definitely don't just jump into this without really researching at first and having some financial help okay so now how do we do it with an IRA an IRA is your individual retirement arrangement or individual retirement account and what you can do with your IRA is you can take a short-term loan without paying any interest you get 60 days you can do it once every 12 months you can request a check out of your IRA and as long as that money is deposited back into your IRA within 60 days it's like you never took it out so what some people do to fund their infinite banking policy is they'll pull out from their IRA fund their policy with those funds and then take a loan out against that policy so they can pay that money back into the IRA within 60 days and it's really easy to meet that timeline so the way it works is once you get the approval for your policy then we ask for the withdrawal from the IRA you fund the policy and within 10 or 15 days you should be able to get a loan again from your policy in order pay back your IRA now you're not gonna be able to pay back your IRA a hundred percent because you're not going to be able to withdraw 100 percent if this is the first year you're making those payments but you can probably get about eighty to eighty-five percent so that's something to keep in mind whatever you don't put back into the IRA you're going to end up paying taxes on them and you might have a penalty to pay on that so the way I would suggest looking at it is you have a little bit of money to start your policy you can use your IRA to supplement that and then this much will come back out through your policy loan to pay back into your IRA and of course with the IRA you can do the 72 t distributions as well if you want to go that route so this little roll over trick also works if you want to change your 401k to an IRA so when you leave employment and you get the opportunity to rollover your 401k into an IRA you also get that same 60-day window so that's something to consider as well if you have a 401k and you're wanting to switch it into an IRA you have that 68 window where you can do stuff with it you can basically take a short-term loan but you got to make sure that all that money gets back into the IRA before the 60 days are up and those are called bridge loans or rollover bridge loans that's it for now hope that helps you to recognize another tool in your tool belt for funding your infinite banking policy and immediately increasing the death benefit that you have available to your heirs that really is quite a big benefit to have to be able to continue your 401k and your IRA investing but also adding in a depth benefit to go along with them alright that's it take care for now if you found value in today's video please hit the like button below and subscribe to the channel we've got more good stuff coming your way soon [Music] you [Music]