Save Money on Taxes – eQRP Changes for 2020 – Extended contribution period

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0:00
If you’ve been following my journey, I’ve been selling my initial real property and transitioning into syndication deals lately for more purely passive investing strategy. One critical part of my portfolio is the American Home preservation fund, or what folks in the we call HP for short. George Newberry once apartment owner, operator and mentor to me is now sponsoring the podcasts is private fun, which by the way also accepts non accredited investors cuts the middlemen out and allows you to invest directly with him to fight the mortgage crisis in America. join him by purchasing distressed mortgages while getting a double digit annual return paid monthly. Find something else better out there. Well, let me know. Feel good knowing that you’re helping families stay in their home after buying their underwater note at a huge discount. Invest as low as $100 by going to HP servicing.com slash investors. And if you want the free birth zone book, please send me an email Lane at Passive cash flow calm

1:04
well that’s a light

1:09
that this is a special edition save taxes in 2019 this is your guys last chance we’re gonna be doing a special edition with Damon Lupo, the QR p man. And we’re going to discuss in last minute changes in the law right and then some changes that happened kind of like what Congress does the midnight hour right before Christmas in December 2019 and made it effective January 1 Lane This is the biggest overhaul in 13 years since like 2006. So it’s pretty big deal. So Damon was doing handstand push up against the wall and he decided to call me up and we realized that we need to record this for you guys so you guys can hear about this right away. So here we go.

1:47
This is a

1:48
story about a dude named Lane he moved to the mainland and bought one place to stay. And then one day he went try to rent them out. And then he became one that’s still me.

2:01
What’s the big news man? All right, well,

2:03
just real quick for people that don’t remember or you’ve never heard of it. Just remember the EQ RP is it’s that checkbook for your retirement money where you can invest quickly, like in these deals that come up where you have a matter of days or weeks, you need to do it fast. This gives you that option. You can use this if you’ve got employees, or you have no employees. I’ll talk about one of the changes in the secure act. That’s what we’re going to talk about that actually impacted the whole employee thing. This one gives you lawsuit protection, which none of the other plans the IRAs and solo plans they don’t have that gives you that $50,000 credit line, which is pretty nice for all sorts of things like education or things you might want to spend some personal money on. And then obviously, you can use this thing with debt. And for a lot of you that’s really important because many of you are investing your IRA money in syndications. And the problem with that is that you’ve got the youbut tax, which is up to 37%. And this is basically if you’ve got a deal where you have money in something that has dead like any of these multifamily deals and your IRA is investing you’ve got a huge tax bill coming good news is AQR peas are exempt from that and we can IRA’s into the GRP. So good news is you’re not stuck unless you don’t do anything. And I’m going to give you a way Atlanta is going to share an opportunity for you guys to get some more information in a couple of minutes. And you guys can fix that problem. We’ll help you fix it.

3:12
Yeah, let me kind of repeat what David said in case you guys have been living under a rock the last couple of years, we’ve done several webinars on this, you guys can check that out simple passive cash flow, comm slash q RP also get that free book there too by signing up, but this is the self directed IRA Roth IRA killer right here, you’re able to take your 401k, roll it over into a DRP not pay taxes on it and invest in whatever you’d like syndications rental properties and call it the killers because with investing with a normal self directed Roth IRA, for example, you’re subject to the unified tax which is on the leverage portion and that sort of circumvents this so more information there but for a lot of you guys already have heard about this. This is a new update on some changes.

3:58
Yeah. And I think sometimes there’s so many details Tails give you a really simple example, if you have a $50,000 investment in a property and it’s got 70% dead, which is very common and your 50,000 turns into 100,000, when that property sells, you’re gonna have a tax bill probably around 10 or $12,000. Just so you know, that’s what’s coming into your IRA. Any type of IRA, regular deferred or Roth is invested. And if you have that investment using a qualified plan, like EQ RP, that tax bill is zero. So that’s the real numbers 50,000 turns into 100 you’re probably paying around 10 to $12,000 in taxes. So that’s not do that. That’s dumb,

4:32
right? Your grandpa was probably using a self directed IRA to invest on the debt side of deals, but I don’t really know too many people in my circles that invest in debt, they want equity and the depreciation with it.

4:43
Yeah, mostly investments or people are doing are definitely on the equity side. And there’s only one real smart way to do it, where you’re not paying taxes. So that’s what this is all about. Alright, why don’t we get into the secure act? And basically, there are a number of things that happened here that matter to you. A lot of this stuff had to do with insurance companies, but there’s a few things Things that are really important. The first one that’s huge like right now, let’s say it’s March of 2020. And you realize you made too much money, you realize, oh my gosh, 2019 I made too much money and you got to try to figure out how to save money on taxes. Well, it’s usually too late what Congress did is they said you can set up a qualified plan like the EQ RP all the way to the time you file your taxes. This actually could be all the way till October of 2020. And what that means is you can set up a plan for the previous year and then you can contribute so I’m going to get into an example of what you could do just to understand this is actually a tax planning but accurate like it retroactively you can go all the way backwards to December and have the effective date to save money on last year’s taxes. Even though we’ve already gotten into the new year. Congress also changed the rules around retirement accounts. So a lot of times people had set up solo 401 K’s and they thought that was great, but the problem is now they’re saying if you have part time employees, most people have to be included in a plan so a solo 401k will blow up an EQ RP, on the other hand is actually adaptable. It includes employees. This is huge. So Even if you don’t have employees, you don’t want to plan that gets blown up if you’re investing because you hire a part time person, one of the big strategies for the last 2030 years was something called a stretch IRA. And that basically meant you had as an estate planning thing, you were giving somebody, your IRA, they could take that IRA, and they could spend it the rest of their life. Well, Congress said, No, we don’t like that. That’s kind of not really the purpose of it was, so we’re going to make you take all that money over 10 years. So somebody inherits it, they got to spend it over 10 years, and that allowed Congress to push that money back into the system and start getting taxes as how they paid for the legislation, the unrelated business income tax, which is what we talked about that 37% for leveraged real estate is still exempt in an EQ RP is not exempt in an IRA. So you’re going to be paying that tax, if you have IRAs, in real estate, not going to be paying it with Niki RP and they raised the limits for EQ RP is not where IRAs but they raised the limits. Now it’s 57,000 per year, and if you’re over age 50, it’s 63,500 per year, so a little bit more still 10 times more than IRA and let me give you an example about the big one, the retroactive So let’s just say you made 200,000 bucks in 2019, you’ve used all your deductions and you’re stuck. One of the problems is you don’t get to take advantage of that 20% deduction that Congress gave everybody a couple years ago. And the only way you can do that is if you make under 157,000. So one thing we can do now is we can set up any q RP make it effective December 31, you can contribute 50,000 bucks, and now your income is 150. Well, if it’s 150, then you qualify for that deduction, you get to take another 20% off. So your actual income on the books, your adjusted gross income is like 120,000. That basically means that you’re by doing this strategy, you’re going to save about $20,000 in taxes instantly, just because Congress changed the rules. So this is a really big deal. When you’ve made too much money and you forgot to do this before the end of the year, Congress gave you a big gimme.

7:45
And a lot of our guys like the doctors in our group, they’re making about like 350 and above like 400. So that’s kind of another example. Maybe put 50 grand into your tarp to get you from 400 down to 350. I don’t know exactly where The tax levels are but I know above 350, you get absolutely killed above that it’s brutal. And

8:05
if you’re married, if you make under 315, you can get that 20% deduction. So like, let’s say you made 400. And you and your spouse each contributed 50. Now you’re under 315. Now you get the 20% deduction, that’s a $60,000 deduction off that 300. So you’re talking about 60 plus 100, that you put in, so you’re talking 160 off of your 400. I mean, at that highest tax bracket, you just saved about $50,000 in taxes by doing this 50 cents on every dollar. It’s massive. It’s I mean, it’s like you got to know about this, if you’re not doing this and you’re making a bunch of money and you’re trying to figure out what to do other than drink heavily. You got to look at this. This is about the only thing you could do retro actively and one of the other questions just to reiterate this, it’s important for people to know anybody who’s qualified if you’re doing deals, if you’re a passive investor in deals if you’re a doctor and you’re investing and you’re self employed as a doctor, I mean if you have an eBay company, like you have an eBay store, even if you’re a W two employee, you have employees yourself, even your grandmother like it It doesn’t matter really what your situation is, there’s a way to utilize this strategy. So it’s not just for some random alien class of people. It’s literally for anybody that wants to not pay as much taxes as they’re paying, right? I think people will say, Well, I’m just a W two worker. I’ve been that way for the last 30 years. We can make this work. Yeah, it we’re in the digital age. And so when somebody says, I don’t have a business, I’m not qualified. I say, well, what’s an eBay store? Like, what does it take to set up an eBay store where you’re, you know, you put some stuff on there. Like there’s a lot of ways we can make it work. Bottom line is if you want to do it, you can do it. only reason you’re not qualified is if you disqualify yourself. And it’s kind of this is probably something you should know about. If you don’t already have the book, we just updated it for 2020 with the new rules, and you can get a copy of it, I will send you a copy if you go to simple passive cash flow, calm forward slash qR P. And there’s a little form there, you can get a copy of the book, we’ll send it out to you and we can talk to you about setting this thing up again, retroactive all the way back to December and that’s part of the rules now. So take advantage of it if you can, and just

9:53
the hammer that again before you had to do it all in the same calendar year, right? But now it’s sort of like how you can stop that money into your Roth IRA for the past year again I don’t know why you would want a Roth IRA or IRA in the first place

10:06
you don’t know better I mean people that that they simply just that was the best information they had and that was the way you could do it retroactively in in April you said oh, I can get another $5,000 off my income if I put money into an IRA well shoot now you can do 50 plus thousand dollars using this strategy and it used to be you had to do it by by New Year’s Eve now you can do it all the way until October

10:25
most of our investors they file extensions because they don’t want to give the IRS another six months to do it and they want to see these changes happen in front of them for the next year to be able to plan so that’s right you can delay all the way to October right not

10:36
April yeah all the way till October if you do an extension it’s all the way till October This is a good one to learn about now so you’re not stressing about it for the next 10 months but it’s you got time now because Congress they kind of gave you something instead of just taking things away so it’s great to take advantage of it if you see this you should be looking at it right one

10:51
random question while I have you Damon had a guy he’s signing some ppm docs right now he’s using his q RP to invest in a leveraged syndicated And he looked going over the documents and you have to sign whether you’re a natural person or LLC or a trust, how are you setting these up as an LLC or trust,

11:08
you have to plan is a retirement savings trust. That’s the technical term for it. Every ppm has slightly different verbiage. Some of them don’t have that term on it. So we have to figure out what makes sense. Oftentimes, it’s the trust because it’s not a typical 401k plan that’s covered under ERISA. So we look at those and that’s part of the service we provide is looking at those documents and making sure that those boxes are checked correctly. It’s typically a trust because sometimes

11:30
you could do like a Wyoming LLC, sometimes it’ll be a trust, right? It just depends where they live, or

11:36
Yeah, every situation is different. It’s different and so there’s not a one size fits all in terms of what they’re supposed to do. So really, it’s important to make sure that your team is looking at the ppm and then giving you guidance on what to check so that you’re in compliance. All right, well, yeah, this

11:49
is meant to be a quick update for you guys. Grab the 2020 edition of the book. It’s simple passive cash flow calm slash key RP and every situation is different. I think a situation that does come up a lot is somebody reads that dang purple book Rich Dad Poor Dad book, they realize they have half a million or $2 million in their silly 401k. And they realize they’re not going to be able to retire because it’s not cashflow base investing, and they need to get the money out of it. Well, instead of blowing up their adjusted gross income and taking it all out in one year or five years, the cure P is a good option for that to get it out onto the battlefield, but not pay that UDF tax and not have it show up as income right away.

12:27
Yeah, one bonus, I’ll give you guys too. If you want to reach out and get the book and reach out to us, there’s a way for you to get your money out of your 401k at any age without paying any of that 10% penalty. So we can help you do that. If you want to take some of it out. There’s some taxes involved like normal, but normally, if you’re 4050 years old, you got that 10% penalty, and we can actually delete that and get rid of it completely. So kind of a nice little bonus. What’s kind of the mechanism for that? Well, that’s part of the surprise laners in the space be using that the Roth mechanism, doing some conversions and then the rules around when you can take Roth money out. That’s one of the strategies that we give people It’s just it’s available with every EQ RP that set up you have the ability to pull your money out no penalty I got it got

13:06
it get the book guys talk to real people stop just listening to podcasts even listen to podcasts for more than two years and haven’t done anything. Get off podcasts and talk to real people. All right Damon we’ll see you in LA coming up and here’s the 2020 bucks you guys later

13:21
thanks you guys

13:26
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Transcribed by https://otter.ai

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