For a lot of successful business owners, having a Restricted Property Trust helps them in being able to grow their assets and reduce their income taxes. There are a lot of employer-sponsored plans that you can choose from. And yet, a lot of business owners go for a Restricted Property Trust because they can defer taxes on growth, make before-tax contributions, and access tax-advantaged distributions. Read more here for what you need to know about Restricted Property Trust.
One of the things that you need to know about the Restricted Property Trust is that it is not made for everyone. In terms of initial funding, you have to understand that the Restricted Property Trust requires $50,000 as their minimum commitment amount every year for the next five years. When you are unable to pay for your annual contributions, the assets of the Restricted Property Trust plan will go the charity that you have predetermined during signing of the plan. When you think that you cannot meet this requirement, then the Restricted Property Trust is not the right choice for you.
As mentioned above, business owners are the ones who are offered the Restricted Property Trust plan by their employers. It can be established by a partnership, LLC, C corporation, or an S corporation. You cannot establish this with just a sole proprietorship.
The main priority of a Restricted Property Trust is to deliver business owners with long-term accumulation, tax-favored contributions, and non-taxable income. Only a Restricted Property Trust can provide better outcomes for business owners, that is at least 8% than what a typical investment can bring them.
A Restricted Property Trust is basically not a qualified plan. So, if you have contributions on other qualified plans, the contributions that you have to your Restricted Property Trust will not in any way affect them. These qualified plans include profit sharing plan, defined benefit plan, and so on.
Compared with most qualified plans, when you use a Restricted Property Trust, you as the business owner will be the only one who can benefit from it. When you become a participant of a Restricted Property Trust, you have the liberty to select your own level of contribution not minding what other participants have chosen.
The annual contributions made to a Restricted Property Trust is deductible fully to the employer. When it comes to the taxable income of the participant, a small percentage of their contribution goes to it. The moment an annual contribution is made to the said trust, a conservative cash value life insurance plan will then be availed. You get a tax-deferred growth of cash value through this life insurance plan. Your life insurance policy will lapse when you fail to meet your annual contributions. Moreover, the charity that you have selected will forfeit the cash values of the trust.