Recapturing Pre-Tax Contributions and Tax Deferred Accumulations in a 402(b) Regulated Asset Protection Structure
Contributions to this Internal Revenue Service (IRS) acknowledged and FATCA registered foreign company retirement plan are for persons working inside or outside the USA. Assets held within this specific IRC 402(b) are recognized globally as not included in worldwide taxable assets nor subject to any social legislation in the country where the employee is resident.
Passive Foreign Investment Company (PFIC), Unrelated Business Taxable Income (UBTI) and Securities and Exchange Commission (S.E.C.) rules are irrelevant. This 402(b) allows for the broadest and deepest investment choice globally without U.S. person restrictions, restraints or blockage. Both domestic and foreign securities are available because foreign government regulated and registered pension fiduciary professional investor rules apply.
Employers set their own criteria for eligibility. The contribution frequency and amount is pre-tax, tax deferred, as much as the law fairly and reasonably allows.
1) The Mechanism by which Pre-Tax Profit is Tax Deductible Capital
A patriarch of Fund of a Fund firm wanted as much, as the law fairly and reasonably allowed, to invest his business income pre-tax, tax-deferred. To
improve retention, he provides his team of champions deferred compensation in shares of their fund of funds.
2) Pre-Tax, Tax-Deferred Investing with Low Cost Leverage
He wanted to defer business income by investing pre-tax, tax-deferred, into his own company stock which he leveraged at an interest cost of 3%. By investing pre-tax with leverage, that he more than doubled his accumulation power.
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