The first time someone mentioned eQRP, I thought they were talking about a hot stock tip.
I remember first hearing the term two years ago in Dallas at a real estate conference about apartment syndications.
Many attendees in the room were like most Passive Investor Circle members searching for alternate ways to invest their locked up retirement account money.
At the time, I didn’t realize that I’d only learned about one way to invest for retirement. It’s the traditional (accumulation) model that the majority of the financial institutions teach.
It goes something like this:
“Hey Jeff, you’ve done fairly well for yourself and now we suggest you begin maxing out your 401k/IRA each year (with our group, of course, because it’s too difficult and time consuming to do it yourself).”
“Now the only way to ensure of having a great retirement savings is to continue to invest in this manner over the next 40 years. At that point, hopefully the stock market is doing well and then you can start withdrawing up to 4% a year to avoid NOT running out of money. If not then no worries, you can KEEP working longer if needed. “
Now that I’ve learned that there IS alternative way and better options to invest for retirement, that first model sounds downright risky.
Instead of guessing if I’m going to have enough when I’m ready to retire, I feel much better KNOWING that I’ll have adequate funds as we’re investing for TODAY and not 40 years from now.
My wife and I know what our expenses are now so we simply invest in passive cash flowing real estate to replace them. Not that difficult.
For example, if you need $70,000 a year to cover your expenses then your aim should be $1 million in passive real estate that pays 7% annually (tax free of course.)
This is MUCH lower than what we’ve been led to believe we need in order to retire.
The more real estate syndications we invest in, the better we’re able to calculate the checks coming in annually. Once that amount covers our expenses then we’ve reached financial freedom.
There’s NO more guess work after that. If we want to bump up our lifestyle then we’ll invest in another property or two.
If not, then we’ll keep it on cruise control.
My job isn’t to sway you to invest in one model or another. It’s mainly to give you CHOICES so you can decide what’s best for YOU.
Passive Real Estate Conference
Let’s get back to my conference.
One of the speakers, Damion Lupo founder of the eQRP, began talking about how much of a problem it is when people decide to invest in real estate but then realize their money is locked away in retirement accounts that penalize and tax you if withdrawn from it early.
They lack control of their own money and financial future. And this is a HUGE problem to have.
He then went on to educate us about something called an eQRP.
What Is An eQRP?
Here’s Damion’s explanation about what an eQRP entails (his explanation starts at the 8:40 mark):
The term eQRP stands for Enhanced Qualified Retirement Plan and is also known as a “checkbook retirement account.” It allows people to have checkbook control of their retirement accounts whether they have employees or not.
Checkbook control means exactly as it sounds. You’re able to write a check from an eQRP account to purchase assets. Unlike a 401k, there’s no middle man involved, you’re in control.
It seems that this type of investment account has increased in popularity for this hands-on control reason. This in turn allows people to decide for themselves where their money will be invested.
For instance, if someone wants to invest in alternative investments such as real estate (direct properties, syndications, debt funds), precious metals, notes or oil & gas then they can do so with an eQRP.
What’s A Qualified Retirement Plan (QRP)?
A QRP is a retirement plan recognized by the IRS where investment income accumulates tax-deferred.
Here are the common plans we’re used to:
- Individual Retirement Account (IRA)
- Pension Plan
- Keogh Plan
Most of the plans offered through your employer are examples of a qualified plan.
Specifically, these meet the specifications laid out in Section 401(a) of the U.S. tax code.
There are several types of plans including:
- defined-contribution plans
- defined-benefit plans
Defined-contribution plans include 401(k) and 403(b) plans.
7 Advantages To Invest in an eQRP vs IRAs (401k)
#1 No Unrelated Debt Financing Tax (UDFI) with Leveraged Real Estate
Since the eQRP conforms to IRS rules, it qualifies for special tax breaks as the IRS will tax you if you use your IRA for real estate investing if there’s debt involved.
This includes syndications as the majority of the time there’s debt on the property.
This tax is called UBIT (Unrelated Business Income Tax). Because IRAs are governed under section 408 they are not exempt and are subject to this tax, which is up to 37% on all the gains you made.
By using an eQRP, you can avoid this tax as it conforms to IRS rules under Section 401.
#2 Fewer Plan Restrictions
The eQRP plans have fewer restrictions when compared to a 401(k).
For example, most 401(k) plans have limits written into them. They restrict:
- what you can do
- what you can’t do
- what you can invest in
- when you can access your money
With an eQRP, YOU have total control over what you invest in such as real estate, precious metals, etc.
#3: 10x Higher Contribution Limits vs IRA
Annual contribution limits to IRA accounts are $6,000 per year. If you’re over 50, the limit goes up to $7,000.
Do the math. If you max this account out over the next 30 years, you’ll likely need to keep working. It’s NOT going to get you anywhere near what you’ll need for retirement.
Related article: How Much Money Is Enough?
The contribution limits for an eQRP are:
- $56,000 per person
- up to $112,000 with your spouse max and even more if you’re over 50
- An extra $6,000 per person over age 50 per year can be contributed – this is the catch-up bump.
As you can see, that’s quite a bit more than traditional IRAs.
#4 Multiple Investment Options
Typically retirement account options limit us to cash, stocks, bonds and mutual funds.
There are multiple different ways to investment in eQRP accounts:
• Real Estate
• Physical Gold and Silver
• Small Business Startups, LLCs
• Trust Deeds and Mortgage Notes
• Single Family and Multi Unit Homes
• Stocks, Bonds, Mutual Funds
• Commercial Property
• Improved or Unimproved Land
• Commodities and Futures
• Contracts of Sale
#5 Borrow Money Anytime
You’re able to use an eQRP similar to a private bank line of credit.
It’s always available which allows you to write yourself a check as needed.
#6 Total Checkbook Control
The eQRP allows the owner to also become the trustee which is responsible for funding the investments.
As trustee of the plan, you no longer have to get approval for each and every investment you’d like to make.
You’re in control over your own money. (Shouldn’t that be the case anyway?)
#7 One Consolidated Account
Another benefit that these plans provide is the ability to consolidate all other outstanding retirement accounts like 401(k)’s and IRAs into one place and manage those funds more efficiently.
Furthermore, if you have a spouse who also is contributing to multiple retirement accounts of their own, those accounts can also be moved into the plan.
The transfer of funds are both tax-free and penalty free.
Are You Interested in Checkbook Control of Your 401k and IRA?
If you’re interested in learning more about what an eQRP can do for you, download a free eQRP book where you’ll learn:
*How to get your 401(k) and IRA money in your hands, in your checking account and under your control.
*AVOID the UDFI Tax that you get hit with on ANY Self-Directed IRA. This is a GAME CHANGER
*How to never pay another fee to an adviser for “Holding your money”
*How to defer taxes on up to $100k+ in income every year
*How to 100% protect your investments from any law suit and even bankruptcy
*How to buy gold and silver with your retirement money and legally take physical possession of it
Interested in Real Estate?
Many Passive Investors Circle members have cash locked away in the stock market that are underperforming and want to know their options.
Qualified retirement plans give those options especially when interested in investing in passive real estate such as syndications.
And you can even keep the real estate investment tax-deferred. No early withdrawal penalties and you get to escape Wall Street and invest in real estate!Join the Passive Investors Circle