72T – ‘GET ME OUT OF THAT PENALTY’
If you could create the ‘perfect’ investment, would it have penalties? We’ve asked this question thousands of times before and every time people have said ‘of course not’. So why are we penalized to take our money out of an IRA or 401K prior to age 59.5?
Well, obviously the government was trying to make certain that you stayed in for the ‘long haul’. They wanted to be sure that the money was there when it came time for retirement AND for future taxation!
If the general consensus is that taxes are going up in the future then paying taxes today on our retirement money for tomorrow becomes a sound financial strategy.
When people are introduced to the Family Banking Plan and its fundamental idea of a tax free withdrawal during retirement, they want to find a way of getting their money out of a qualified plan (qualified by the government) and putting it into their own family banking system.
BEING YOUR OWN BANK CAN BE COMPLETELY TAX FREE
Simply stated, if you could have the growth of your money tax free, rather than paying taxes on it, you would do it in a heartbeat. That is one of the many advantages of being your own bank.
A tax-free retirement would be the ideal for most Americans, especially when we consider that taxes continue to rise. Why in the world would you want to defer taxes to a later date if you believe that taxes are going up?
FINANCIAL EMPOWERMENT THROUGH THE TAX CODE
Most people are never shown that the government, even when putting together the tax code, allowed for early withdrawal WITHOUT A PENALTY. Yes, that’s right, even if you are under age 59.5. There is a way to pull that money out of your 401K or IRA penalty free.
The tax code is referred to as either 72T or 72Q, depending on your plan. This allows you to minimize the cost to move that money into your Family Banking Plan. You still pay the tax on the money you withdrawal, just not the penalty usually associated with taking your money out early.
AN EXAMPLE OF FINANCIAL CERTAINTY
A few years back, we were meeting with a client who saw the infinite banking system, recognized the power of a tax free retirement, and desperately wanted to move his money out of his 401K and begin creating his Family Banking Plan.
He recognized he would have to pay taxes on any money taken out of a qualified plan, but when he was shown the penalties, he hit the roof! He said, “I desperately want to participate in being my own bank, but there is no way I can afford to pay those penalties.”
When we came back to him, showing him that by using tax code 72T, he was able to be COMPLETELY FREE OF PENALTIES, he was thrilled. Now, he would be able to start his own banking plan, and move toward complete financial certainty and do it all in a tax free world.
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