Like everyone else, successful business owners need to plan for retirement.  Unfortunately, the cost of typical qualified plans (401k, defined benefits, etc.) can become prohibitive because of the need to incorporate all, or some, of their employees into the plan. In addition to this “cost” of the qualified plan, there are also stringent & complicated ERISA regulations that carry substantial penalties for non-conformity.  Because of the cost and risk of ERISA plans, many business owners turn to non-qualified alternatives which allow for discrimination; the ability to limit the plan participant to only themselves and/or a small, select group of key employees. However, like qualified plans, Non-Qualified Deferred Compensation plans can be complex and highly regulated and unfortunately, like qualified plans, income from these plans is taxed as ordinary income at the time of retirement.  

The Restricted Property Trust (RPT) allows a business owner to make fully tax-deductible contributions into the plan on their behalf while recognizing only a portion of the contribution in their current income.  Any additional taxes that are deferred in the RPT are paid by the plan at time of termination.  By using this strategy, upon termination of the plan, the business owner can use the assets of the plan to generate non-taxable cash flow, exchange it for a larger income stream (annuity), or maintain it as a death benefit and asset that is not correlated to the stock market with guaranteed growth.