The RPT provides significant income tax savings, personal asset protection and death benefit coverage on a discriminatory, pre-tax basis. It is an appealing strategy when considering a typical host of obstacles faced by current business owners and operators in the medical care industry today, namely:
• Increased liability concerns
• Increased income tax rates looming on the horizon
• Inability to save enough through Qualified Plans
Benefits of the RPT include:
• Up to 70 percent annual income tax savings to participants
• Tax deferred growth of plan assets
• Contributions are 100 percent deductible to employers
• Creditor protection
• Partners can individually choose their level of participation, or choose not to participate at all
• Not subject to Qualified Plan participation requirements
• Death benefit protection
• Enhanced returns on conservative plan assets
How does an RPT work?
Fully tax-deductible contributions are made by the business to an RPT for each participant. The entire contribution is used to fund a whole life insurance policy on each participant, with approximately 30 percent of the contributions treated as current taxable income and the remaining 70 percent not subject to tax.
Contributions must be made each year that the trust is in existence. There is no ability to defer or accelerate contributions. Failure to make the annual contribution causes both the whole life policy to lapse and the surrender proceeds within the trust to be given to a pre-selected charity. This risk of forfeiture is a critical plan provision and causes many plan participants to scale back their planned contributions.
While the trust is intact, whole life cash values are protected from creditors and grow without being subject to income tax. If death occurs, the death benefit is paid to a named trust beneficiary and is not subject to estate or income taxes.
The trust has a scheduled period of five years and can be extended by the participant. At termination the participant receives the whole life policy. A portion of the cash value will be subject to taxation, with a longer trust period resulting in reduced taxes. A non-taxable policy disbursement can be made at the participants' option to cover this tax cost. Once the policy, which at this point will require no additional funding, is in the participants' hands a number of options exist, among them distributing non-taxable funds and / or maintaining insurance coverage.
The RPT is available to individuals with earned income, whether from a C-Corp, S-Corp, or partnership. Because an RPT is not a Qualified Plan participation limits and tests do not apply. Individual participants can select their own level of contribution, regardless of what other participants contribute.
If you would like to gain additional information, have questions, learn more about RPT, or set up a time to meet with our professional consultants and advisors, please contact Joseph Resnick of JR KATZ at firstname.lastname@example.org, or call 847-564-8430.
Long-Term Asset Accumulation Strategy: Restricted Property TrustWritten by Joseph Resnick & Steve Schaumberger of JR KATZ | Wednesday, 23 November 2011 20:50
At the 18th Annual Ambulatory Surgery Centers Conference in Chicago we had the pleasure of presenting the Restricted Property Trust (RPT) a tax-favored, long-term asset accumulation strategy. In case you missed our presentation, here is a brief summary of the RPT, which we have found has a strong appeal to business owners and physician/doctor groups.
© Copyright ASC COMMUNICATIONS 2016. Interested in LINKING to or REPRINTING this content? View our policies here.
Most Read - Improving Profits
- 9 Mayo Clinic strategies to quench the physician burnout flame
- Rochester Regional Health in NY acquires Finger Lakes Bone & Joint Center: 5 key notes
- What not to wear — Physician's attire elicits mixed responses in outpatient orthopedic centers
- 7 trends in healthcare digital transformation
- What are the driving forces behind Medicare reimbursement for total joint arthroplasty? 7 key notes
Top 40 Articles from the Past 6 Months
- 20 new MIS spine devices in 2016
- 21 smart spine surgeons with gifted business minds
- 44 MIS spine devices to know | 2016
- Top 12 most-liked spine surgeons on the internet
- Police investigate death of American Spine Center's physician accused in federal kickback scheme: 6 things to know
- Consumer Reports: 34 top-rated US hospitals for hip replacements
- Suicide likely cause of Dr. Sandeep Sherlekar's death, police report shows: 6 things to know
- Dr. George Rappard performs 1st US MIS procedure with Sony heads-up display: 5 observations
- Zimmer Biomet to acquire LDR in $1B transaction — 9 things to know
- Annual & hourly orthopedic surgeon salary — 10 latest statistics
- Trusting a robot — Dr. Juan Torres-Reveron on performing 1st US ROSA Spine surgery
- 12 statistics on social media's presence in the healthcare space
- 5 key notes on the Zimmer Biomet-LDR acquisition & its impact on Texas
- 38 female spine surgeon leaders to know
- Dr. Gregory Sherr sues HealthEast, CentraCare & 6 neurosurgeons for allegedly ruining his reputation & career — 6 things to know
- Oregon spine surgeon implicated in $22M lawsuit for paralyzing patient with dropped instrument: 5 things to know
- UPMC to pay $2.5M+ to settle neurosurgery-related False Claims Act violation allegations: 7 things to know
- 4 North Carolina orthopedic practices merge to create EmergeOrtho: 5 key notes
- US News & World Report: Top 10 hospitals for orthopedics
- 7 things to know about Mazor Robotics & Medtronic's plans to roll out Mazor X
- The state of minimally invasive spine surgery: Dr. Frank Phillips on devices, payment & outpatient ASCs
- 11 highest-paying states for orthopedic surgeons: New Jersey tops the list at $494.5k
- Beyond the implant — DePuy Synthes pushes innovation inside & out of the OR
- Zimmer Biomet jumps into robotics with MedTech acquisition: 5 things to know
- Orthopedic surgeon Dr. Michael Russin dies following plane crash: 5 key notes
- 34 latest trends in the global orthopedic devices market
- 21 statistics and facts for orthopedic surgeons — compensation, net worth and more
- 19 more things to know about orthopedic bundled payments — September 2016
- Are Stryker's hip implants about to be recalled?
- Trump or Hillary? The physicians have voted
- FDA regulation, insurance coverage: Dr. Raj N. Sureja talks challenges in regenerative medicine
- Do you know what patients really care about when choosing a spine surgeon?
- 13 facts and statistics on Baby Boomers for spine surgeons to know
- 5 trends for orthopedic surgeons to watch in 2017
- 3 orthopedic clinics to pay $2.39M to settle False Claims Act allegations: 5 things to know
- 10 thoughts and statistics on medical malpractice claims against orthopedists
- Evolutionary vs. revolutionary: The future of surgical devices and spine surgery
- Robotics is here to stay — Drs. Kornelis Poelstra & Dennis Devito on working with Mazor technology
- UCLA pays $8.5M to settle 2 lawsuits after undisclosed spine surgeon relationship with Medtronic: 5 key notes
- Medtronic, SeaSpine, Zimmer Biomet & more: 17 key notes