Is This the Best Retirement Plan You’ve Never Heard of?

Here at Secure Retirement Strategies, we help people like you get the most out of their finances, with tax-free life insurance and more. As a long-term care insurance company serving the Lehigh County, PA area, we work tirelessly to help you face your current financial challenges while preparing for what lies ahead. 

For most people, the end goal of financial planning is retirement, and there is no shortage of retirement plans to choose from. But there’s one you may have never even considered because it’s unlikely you’ve ever even heard of it: the 702(j) Retirement Income Plan. The plan was created but never widely publicized by President Ronald Reagan, though he did speak publicly about it as early as 1964 long before his presidential tenure. 

Tax-Exempt Retirement Income

It has been estimated that only 1 in 1,500 Americans has heard of the plan, but the few who have are among the most prominent figures in America: Joe Biden, Bill Gates, Warren Buffett, and other members of “America’s top 1%,” including dozens of elected officials. Hillary Clinton publicly disclosed putting $100,000 in a 702(j) Retirement Income Plan, but since the money is shielded from the public and even the IRS, it’s impossible to know exactly how much her plan holds. 

The plan is also popular among banks. More than half of all U.S. banks use corporate versions of 702(j) plans and have funneled a combined $143 billion into these savings vehicles. In 2013 alone, the combined interest these banks earned by transferring money from their vaults into 702(j) plans totaled $7.19 billion, thanks to tax-free interest rates of about 5%. The corporate version is also being used by:

  • Johnson & Johnson
  • Nestle USA
  • Harley Davidson
  • Procter & Gamble
  • Wal-Mart

All of these companies have more invested in 702(j) plans than in stocks and bonds combined. 

That’s because the current interest rates of 702(j) plans are 40-60 times higher than interest rates available in savings accounts at banks. This loophole enables those with 702(j) plans to receive 1.7 times the maximum social security allowance at age 65, with an amount that will grow annually.

“I don’t own a single stock or bond…I have no savings accounts.”  

These words might sound like they come from someone who isn’t very financially shrewd, but they were actually spoken by former Vice President of the United States Joe Biden. What he didn’t mention here is that he has money in a 702(j) plan – money that:

  • Earns 40-60 times more interest on savings than is possible in a bank account
  • Can be withdrawn, without penalty, at any time
  • Doesn’t have to be reported to the IRS
  • Is protected from the unpredictability of the stock market a fluctuating economy

To learn more about 702(j) Retirement Income Plans, contact Secure Retirement Strategies.