Many businessmen know that putting up your business a state like Nevada can provide tax incentives that contribute to protection. However, most asset protection managers and experts affirm that setting up an offshore trust or foundation in the right countries could be the best protection available. The jurisdictions that have proven good reputation for offshore trusts and foundations are vital for the success of such entities.

Offshore asset protection is not a simple process. It requires experts and specialists on trust and foundation laws on the jurisdictions chosen. It also needs experts with superb knowledge on international cross-border areas like real estate, banking, corporate, inheritance and other matters. All these experts will make assessment of the goal of the planned entity.

There are two major benefits in establishing an offshore asset protection trust or foundation. First, it helps in preserving your wealth against ambiguity, political and economic risks. Second, it is an effective tax planning tool for maximizing income from your assets to your advantage and to your family. These benefits are exclusive of its main purpose which is to keep your assets completely unseen by third parties and kept confidential.

There are companies in the asset protection industry who can offer help and advice in setting up an offshore trust or offshore foundation. They provide assistance in setting up the entity in any of the jurisdictions which have appropriate trust or foundation laws.

Establishing an offshore trust or offshore foundation will provide security and peace of mind for people who are looking for asset and creditor protection for their families in the long-term.

Again, before dwelling into the idea of setting up offshore trust or offshore foundation; it is strongly suggested to seek an advices from your lawyer or from an asset manager. If suggestions and advices regarding offshore entities are to your advantage, make and appointment to trusted companies who can assist you in putting up your desired offshore trust in the most strategic jurisdiction possible.

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Furthermore, the amount of companies contributing to final salary schemes have halved under the labour government. On top of this, they decided not to pass an amendment which would have given 8 million women with a partial pension entitlement the chance to make up the shortfall in their National Insurance contributions by making lump sum payments into their national insurance contributions. In fact, pressure is growing for Gordon Brown to step down as James Purnell has become the third cabinet minister to resign according to BBC news, June 5th. In fact, according to their ICM survey, only 29% of the 1,005 adults surveyed thought that Gordon Brown was in touch with ordinary people.

In the latest budget, Gordon Brown has increased the highest rate of income tax to 50% as well as reducing personal allowance to nil at the higher rate of tax. Double whammy. In a Treasury paper published in April 2003, the Inland Revenue reported to have 16,000 expats on its database declaring a total income of £800 million. Some estimates put it at more than £5 billion. But, you compare this to the £25 billion that RBS moved offshore and it’s put into perspective, especially when you consider £20 billion of taxpayers’ money went into their bailout.

One things for sure, with an ever increasing ageing population, there are not enough young people paying into the state scheme to take care of pensioners. The likely result is a crack down on pension schemes in the future and an increase in taxes (as we have witnessed already). Luckily, for UK citizens, they can transfer their UK private pensions offshore to mitigate tax. The Qualifying Recognized Overseas Pension Scheme (QROPS) allows most types of UK private pensions to be transferred offshore. QROPS was designed with the intention of giving UK expats who aren’t returning to the UK the option of moving their penion to a ‘white list’ country offshore such as Guernsey or the Isle of Man. Not only do you mitigate income tax, capital gains tax and inheritance tax, but you don’t need to purchase an annuity. This means that your whole pension fund is left to your spouse upon death and then onto your kids should your spouse pass away.

Furthermore, you don’t need to report to the HMRC (UK tax office) after 5 years. If you’ve been abroad for 5 years already, you don’t need to report to them at all. You may even be able to access 25% of your fund immediately after transfer provided you are over 50 (55 from 2010) and you can include your property within the QROPS, so your kids don’t have to pay inheritance tax on your house(s). Obviously there are fees upon transfer. Gordon Brown is knocking at the door and it is a mystery how long the Treasury will allow these offshore transfers. But, once they are offshore they will not be held in the UK so the government won’t be able to retract your funds retrospectively. Not all UK pensions benefit from a QROPS though. There are some excellent final salary schemes which provide certain guarantees that may be better off in the UK. The best thing to do is talk to a local qualified financial advisor.

Richard Malpass
Financial Planner
Global Wealth Management
Bangkok, Thailand

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What sets it apart is diversity. Employees who want to diversify portfolios and take advantage of employer-sourced retirement plans may choose self-directed 401k. Here, investment vehicles are limited to the trustee or plan administrator-recommended mutual funds, bonds or stocks. However, those employees who opt to self-direct assets may have other preferences not available in the plan. Employees can choose to deposit retirement plan contributions into a self-directed brokerage account, which offers better management of their investments.

In a common self-directed 401k plan, both the employer and employees enter pre-tax contributions in a trust account that is separate from corporate assets. In this regard, business owners can seek to match employee contribution, deposit a portion of wages, or pay contributions that match the two choices.

A glaring disadvantage of a self directed plan is that an investor could gamble and lose. A string of losses could lead to a good retirement plan into ruin. If the investor is an individual, he or she may incur added administration and transaction fees, which further decrease retirement assets. In the eyes of the employer, employees who choose to control asset investment through self directed plans are also at risk of liability.

There are a few employers who offer workers self-directed brokerage accounts but if the investment goes awry, the owners are the ones blamed. But if the employees chose a self-directed 401k and their assets invested in bonds, mutual funds and publicly traded stocks

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A money market fund is usually a mutual fund which invests its assets in short term debt instruments like cash or cash equivalent securities. These funds are usually used as short term investments until the time you have found a suitable option to invest your money. This is particularly good option in recent times when the investors are waiting for the markets to bounce back. Once the Bull Run starts, investors can take out this money from money market funds and invest them in equity funds or other high yielding avenues.

There are various types of such instruments like Certificate of deposits, commercial paper, U.S. Treasuries, repurchase agreement etc. These funds come in two varieties which are taxable funds and tax free funds. As the name suggests, the taxable funds are taxed during maturity while the tax free money market funds are exempted from tax.

At a first glance, nobody will decide to buy a taxable fund due to obvious tax related reasons but the fact is that tax free funds have lower yields than taxable funds. While comparing the two, it is important that investor convert the tax free yield into equivalent taxable yield. The formula for this conversion is given below:
Taxable Equivalent Yield = Tax-Free Yield / (1 – Marginal Tax Rate)

There are various tax free money market funds available in market today. Most of them have same yield therefore there is not much difference between them. A few names from reputed financial institutions are American Century Tax-Free MMF (BNTXX), Vanguard Tax-Exempt MMF (VMSXX), Fidelity AMT Tax-Free Money Fund (FIMXX), and T. Rowe Price Tax-Exempt Money (PTEXX).

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Retirement accounts such as 401(k)s, 403(b)s and traditional IRA accounts are tax-deferred. This means that all money that is contributed to the retirement account is done so before any taxes are paid. This is the reason why your W2 can show a lower gross income amount. The money was placed into the tax-deferred account for retirement before taxes were calculated and deducted. Your federal and state taxes are based on your adjusted gross income, known as AIG. By making use of these tax-deferred retirement accounts, your AIG can be reduced.

Roth IRAs differ from these types of retirement accounts. This account is tax-exempt. This means that the contributions that you make to the account have already been taxed. This does not result in a decrease in your taxable income, but it does allow for you to withdraw from the account when reaching retirement age without having to pay any taxes on the withdrawn amount. In addition, you can withdraw your contributions before reaching the age of retirement without incurring any penalties. The five-year tax rule does apply to contribution withdrawals. If you leave all of your money in this account, you will earn more dividend, but the account is very flexible and offers you numerous options if you need to withdraw some of the funds before reaching age 59 1/2. Just be sure to adhere to the IRA withdrawal rules so you don’t incur any penalties.

It is important to be aware of the contribution limits. In 2009, the limit is $5,000 for all single and married taxpayers. If you do not follow the withdrawal rules, there will be penalties. However, keep in mind that you can contribute money for the 2008 and 2009 year until April 15. This will allow you to be one year closer to the five year magic number without having to actually wait five calendar years.

You can invest the funds in the account in many ways, including mutual funds, certificates of deposit and money market accounts. Individuals are allowed to have more than one retirement savings account. While you can only have one Roth IRA, you can take part in a 401(k) plan offered by your company. Utilizing multiple retirement accounts will help you save even more for those retirement years ahead. It is always best to make the maximum allowed contributions to your Roth IRA account. These contributions will be greatly appreciated upon retirement when you will have a tax-free source of income.

Then my friend found out that she could not open an account because she earned more than $116,000 a year. But for her and people like her there is definitely a solution. There is a solution better than a Roth IRA because your account can never go negative with the stock market and even grows tax free and has a guaranteed minimum rate of return as well as a death benefit. It is called Roth on Roidsâ„¢ It is even better than an annuity because when you take money out it is income tax free. When my friend found this out she wondered why I even bothered telling her about it all-together.

Best IRA Rescue provides services on your Roth IRA, IRA investments & traditional IRA and will help you reduce your inherited and beneficiary independent retirement account taxes in your estate assets. Roth on ROIDâ„¢ is your advanced Roth IRA retirement planning strategy. It is Cash Value Life Insurance and one of the best IRA tax-savings strategies with benefits of a guaranteed death benefit, guaranteed principal, tax-free growth, and tax-free distributions from policy loans. Traditional IRAs and ROTH IRAs cannot invest in life insurance. Please contact us if you have any questions. Rocco Beatrice, CPA, MST, MBA
Best IRA
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A money market fund is usually a mutual fund which invests its assets in short term debt instruments like cash or cash equivalent securities. These funds are usually used as short term investments until the time you have found a suitable option to invest your money. This is particularly good option in recent times when the investors are waiting for the markets to bounce back. Once the Bull Run starts, investors can take out this money from money market funds and invest them in equity funds or other high yielding avenues.

There are various types of such instruments like Certificate of deposits, commercial paper, U.S. Treasuries, repurchase agreement etc. These funds come in two varieties which are taxable funds and tax free funds. As the name suggests, the taxable funds are taxed during maturity while the tax free money market funds are exempted from tax.

At a first glance, nobody will decide to buy a taxable fund due to obvious tax related reasons but the fact is that tax free funds have lower yields than taxable funds. While comparing the two, it is important that investor convert the tax free yield into equivalent taxable yield. The formula for this conversion is given below:
Taxable Equivalent Yield = Tax-Free Yield / (1 – Marginal Tax Rate)

There are various tax free money market funds available in market today. Most of them have same yield therefore there is not much difference between them. A few names from reputed financial institutions are American Century Tax-Free MMF (BNTXX), Vanguard Tax-Exempt MMF (VMSXX), Fidelity AMT Tax-Free Money Fund (FIMXX), and T. Rowe Price Tax-Exempt Money (PTEXX).

The author writes articles on various topics related to personal finance including best tax free money market funds and money market certificates.

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You’ve saved for years to accumulate benefits to use throughout your retirement years. Most likely you’ve used government-regulated plans – called qualified retirement plans, company plans, IRAs, etc. – to do so.

But these tax-advantaged retirement savings plans have rules you must follow – both for companies and individuals. These rules prescribe key ages to frustrate early use of those savings and then to force their use later in retirement. You also paid into the Social Security and Medicare programs; they also have their key ages.

Being aware of these ages and what they imply is critical to your retirement planning. Let’s explore them from the earliest to the latest:

Let me first mention that most tax-advantaged savings plans involve tax deductible contributions you make from your working income. These savings then grow tax deferred. When this money is eventually withdrawn, it’ll be taxed as ordinary income. Such plans also include company pension plans – all of which are produce taxable income at retirement.

There are also ‘Roth’ based plans (Roth IRA, Roth 401(k), etc.) that you contribute to only with after-tax working income. These savings grow tax-free – a clear tax-advantage. And when you withdraw from them, the money comes out tax free.

The government offers the opportunity for using such tax-advantaged savings/retirement plans as an incentive for people to save for their retirement – and to lessen their dependence on Social Security benefits. So government sets up rules to penalize early withdrawals from these plans, and more… Let’s check out the rules – by age:

Age 50 – Catch-up age for additional contributions to retirement plans:

The earlier you can begin contributing to your retirement, the better. All tax-advantage retirement plans have limits on how much you can contribute yearly. But when you reach 50 years old, as an added incentive you can contribute a little more – called ‘catch-up’ contributions. Keep current each year for increases in both the regular annual contributions and catch-up amounts.

Age 59½ and age 55 – Age for no more 10% penalty for early withdrawal:

To frustrate early withdrawal of retirement savings, our government imposes a 10% penalty tax on what you withdraw before you turn 59½. But the government has lowered that age to 55 only for those laid off from work so they can access their company plan benefits.

Of course, anything you take out of these plans is treated as taxable income (except for Roth plans) so the 10% penalty is imposed in addition to whatever income tax you’d pay.

Age 65 – Age you qualify for Medicare:

You must wait until age 65 to qualify for Medicare. This is a government-assisted health care system to help the elderly. You must apply for it to receive it. Apply 3 months before turning 65 so you have access to it on your 65th birthday.

Age 65 or your FRA and (ages 62 to 70): Social Security Retirement Ages Sixty-five has long been the official retirement age for business, Social Security, and Medicare benefits. And it still is for Medicare eligibility.

But future insolvency problems with Social Security has made it mandatory to slowly increase the retirement age to receive your full Social Security benefits (i.e. income).

The age at which you get your full Social Security benefits is called your full retirement age (FRA). It’s been slowly increased to 67 depending on the year in which you were born.

Everyone can receive Social Security benefits earlier than their FRA, but their (i.e. the income) is reduced from what you’d get if you waited until your reached your FRA. This reduction increases for each month you begin benefits before your FRA. Generally, age 62 is the earliest you can begin receiving your permanently ‘reduced Social Security income’

On the other hand, government rewards you by increasing your Social Security income beyond your FRA benefits for each month you delay receiving them beyond your FRA. However, no additional benefit is given for waiting beyond age 70.

Age 70½ – After turning this you have minimum required distributions (MRDs) annually:

Lastly, the government wants the tax money for all that ‘untaxed’ retirement plan money you’ve saved. So when you turn 70½, they require you to withdrawal at least a minimum required distribution (MRD) from your plans annually.

Remember that all the withdrawals are taxed as ordinary income. If you withdraw less than your MRD, you’ll be penalized heavily on the fraction of the MRD you didn’t withdraw. So do it; it’s not worth it not to.

Incidentally, Roth plans have no MRD obligations for you. And whatever you take out is tax free too.

Shane Flait writes and consults on financial, legal, tax, and retirement issues. He gives you workable strategies to accomplish your goals. Get his FREE report on Managing Your Retirement => http://www.easyretirementknowhow.com/FreeReportandSignUp.htm, you can contact him at contact@easyretirementknowhow.com

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