The benefits you get from a PRTsm may seem almost too good; your savings is exempt from judgement, bankruptcy, and creditor attacks, you maintain full control over your assets, and they provide inherent tax benefits. But how do you know if your PRTsm is a legitimate plan? How do you know it’s set up correctly?At Trust-CFO our mission is to provide you with all the information you need about your PRTsm,ensuring you have all the information needed to get your plan administrated correctly, securely, and legitimately.
Private Retirement Plans are extremely similar in construction to 401ks, IRAs, and Profit Sharing Plans because they all share the same basic components. In a PRT all assets must be held “in trust,” or in other words, held by a trusted third party to ensure contributions are held safely on your behalf for future use during retirement. All retirement plans have an independent administrator to ensure proper reporting requirements are being met to prove the plan is legitimate.
The initial set up of a PRTsm consists of several steps to ensure the safety and legitimacy of your plan. First, an upfront analysis is conducted between you and your plan administrator to identify and evaluate your current assets to determine if they qualify for exemption under statute or can be re-characterized for that purpose. Your administrator will collect and analyze this information then present their findings in an easy to understand diagnostic map that show a before and after scenario to illustrate which of your assets are exemption qualified, and which assets could qualify for exemption re-characterization.
Second, your administrator will assess your current assets and those you wish to contribute to your PRTsm to determine if there is a need for additional retirement savings by quantifying the current income gap at retirement. Lastly, your administrator will calculate the future funding needed to make up the savings shortfalls if current asset funding can’t satisfy the total funding need. These are needed to ensure you have a legitimate plan.
After initial set up, plan documentation is delivered to the plan trustee and all beneficiaries. Your plan administrator uses a benchmark tracker assesses the excesses and shortfalls of real returns and asset values annually as compared to the benchmark target values.Any assets not tracked against the Plan can be exposed to unwanted creditor attack.At the time of your retirement, your administrator will ensure that all benefits are properly paid out to all plan participants and beneficiaries as scheduled and report net balances remaining in the PRT.
A Private Retirement Plan is backed by the protection provided by exemption under statute to protect your financial future. As long as your plan contains all the necessary components of a retirement plan and is administered correctly, the safety of your assets is fully secured. The safety of your financial future is of the utmost importance to us here at Trust-CFO; in addition to providing the most comprehensive educational resources on PRTs, we also provide many services that can ensureyour plan is administered correctly, securely, and legitimately.