Exempting Personal Business Stock Using a Private Retirement Trust

Exempting Your Business Stock & Interests in a Private Retirement Plan

Is your Business Protected

Is your business prepared for what may be coming?

Funding Your Retirement with Your Business Stock

While other retirement plans prohibit private business interest funding, a Private Retirement Plan (PRP) allows the funding of any appreciating private asset, including business stock and member interests and/or any appreciating income-producing business assets, in order to help make up for the often massive retirement savings shortfall left from other plans.

  • What qualifies?  C-Corp, S-Corp stock and LLC/LLP Member Interests, revenue agreements and accounts receivables, consulting or commission contracts, and more.

Your Business as an “Exempt” Retirement Asset

When you fund your business to your Private Retirement Plan, you don’t have to sell or gift transfer away your assets.  All you are doing is “recharacterizing” your stock or interests from “non-exempt” to “exempt” and retaining a beneficial interest, and thereby securing the following “true” asset protection benefits:

  • Your equity interests are immediately protected from creditors, both bankruptcy and lawsuit, as an exempt retirement asset.  WARNING: if not properly planned, inside creditors may still be able to access business assets for its liabilities.  It’s critical to employ a defensive strategy backed by an integrated shareholder’s or operating agreement.
  • All distributions from a PRP maintain continued creditor protection if properly administrated, so your Corporate dividends and LLC distributions can be protected against seizure even after you receive them.
  • All death benefits paid from a PRP are fully exempt for beneficiaries. So in the event of a premature death a PRP becomes a safe-haven to ensure that your business values are fully transferred and protected for your family and heirs.

What does this mean to you?  By working in a safer planning environment, you can keep focused on being productive to grow your business with less worry about unknown and uncontrollable risks of loss.  It also allows you the ability to utilize risk management strategies that can actually help maintain cash flows and recapture lost opportunity costs.

Capturing Owner’s Equity while Honoring Business Commitments

One of the unique aspects of a PRP is that unlike all other retirement plans, the trustee can pledge or offer assets to help support other business obligations.  So while a business needs to meet commitments for bonding-surety and bank lending arrangements including personal guarantees, a PRP can indemnify those obligations while protecting the remainder owner’s equity from unwanted outside creditors.

Cash Flow Enhancement

A secondary but equally potent benefit of a PRP is the ability for it to accept as well as make Plan Loans.  Again unlike all other plans that have prohibitive transactions against loans, a PRP is not limited to its capital allocations and by virtue improves cash flow planning opportunities.

Accelerated Asset Protection – a 10x multiple

Probably the most powerful strategy in all of asset protection is the PRP AcceleratorSM, which is using future business revenues to secure against current business/asset equity.  By funding a Promissory Note (loan) to a PRP against future profits, the PRP can lien current assets as collateral and own equity as a secured interest.  The result is typically around a 10-1 ratio of asset security to dollar outlaid year one, thereby accelerating asset protection.

Using PRP funds to fuel Business Growth…and Enhance Returns

While we don’t favor the term “Be Your Own Bank”, the fact is a that a PRP can legitimately invest directly or loan funds to a profitable business and recapture lost opportunity costs that plague other retirement plans.  If properly structured the PRP can leverage its assets and offer low-cost funds to invest in a higher ROI business, and create a capital and tax arbitrage for improving long-term gains.  With proper guidance, this enhanced return can be strategically used to offset other revenue risks and wealth-eroding risks like inflation.

The bottom line is that it is good business for a PRP to invest in a successful business either as a shareholder/member, or as an investor and/or lender.  There are no limits to funding, but options should be analyzed to ensure maximum capitalization and asset protection.

Finally, Avoiding the Tax Trap of Passive Retirement Plans

One of the things you don’t get for funding a PRP is a tax deduction for funding your private business interests to a PRP.  And guess what, you don’t want it.  That’s right, while everyone is promoting tax deductions for “passive” investments, that is a negative for the PRP because it triggers negative tax consequences on inherently tax-favored “active” assets like your business or real estate.

The Bottom Line – Build Your Business, Just Do It Protected for Your Retirement

If you can build your business the way you want but do it safer and smarter, aren’t you better off?  You can protect your principal and ensure maximum capitalization, both of which translate into greater asset values and more net benefits to you and your family, for a more comfortable and less stressful lifestyle.


The PRP is certainly one of the most powerful risk management strategies a successful business owner can employ to protect their world without disrupting their plan or cash flows. It requires oversight by an expert in the area who understands how to administrate such a plan and accommodate you as the plan participant and beneficiary.  And more importantly, it demands an advisor that can explain benefits in simple terms so you can understand your options and know your decisions are in your best interests.

A Call to Action for California Business Owners

This is a reminder that the Private Retirement Plan is an exemption right afforded to all resident of California and must be funded prior to any legal recourse or issues.

To get educated and learn more about your exemption right, you can get connected with an accredited professional through TRUST-CFOSM.  Call us at 800-730-3020 or email info@trust-cfo.com

Want to see how your world looks?   Click here to get your free PRP Exemption Diagnostic & True Asset Protection MAP to find out what your potential is for retirement and asset protection improvements.

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