Business Innovators Radio - Interview With Stephen Ng, CLU, ChFC, CEP Founder of Stephen Ng Financial Group-Discussing IRA Rescue to Leverage Retirement Wealth

Episode Date: May 14, 2024

Stephen Ng, whom you may have seen in NBC, Forbes, Wall Street Journal, U.S. News and World Report, New York Daily News, and others. He has also been interviewed by Fox TV and Christian Television Network. Stephen is the Author of “10 Financial Mistakes You Should Avoid” which has been a wonderful resource for many of his clients. All of the proceeds from the book sales go to benefit World Vision International. Stephen is also the Founder and President of Stephen Ng Financial Group.Stephen is married, has 3 children and resides in New Jersey and Florida. Stephen is a warm and passionate communicator who loves to share his financial wisdom and insights. He served as a Deacon at Trust In God Baptist Church in New York City and was the Chairman of the Board from 2008 to 2016. Currently, he serves as a trustee for Doxa Church in New York City. Stephen attends Bell Shoals Church, in Brandon, Florida. He loves to travel and frequently speaks internationally during mission trips with his church.Learn More: https://www.stephenngfg.com/The views expressed are not necessarily the opinion of Stephen NG, and should not be construed directly or indirectly, as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice.Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-stephen-ng-clu-chfc-cep-founder-of-stephen-ng-financial-group-discussing-ira-rescue-to-leverage-retirement-wealth

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with Stephen Ng, who's the founder of Stephen Eng Financial Group, and we'll be talking about IRA rescue to leverage retirement wealth. Stephen, welcome back to the program. Yep, good day to you, Mike. Yes, sir.

And, you know, whenever I hear titles, I always like to think, ooh, what's the purpose behind this? And I know that a lot of people know what an IRA is, but I don't think a lot of people think it needs to be rescued. So I'm excited to learn about what your perspectives are on rescuing an IRA. So what does it really entail IRA rescue and how could people use this in their retirement

while planning strategies? All right, Mike. Basically, the IRAA rescue entails different strategies to convert your IRAA to tax-free money. And when I talk about IRAA,

I'm talking about, you know, like qualified plans, could be 401, 401, 403B plan, a deferred comp plan, and all that. But I categorize it under an IRAA. it could be as easy as it's a rough conversion strategy to more advanced strategies. But I think the main thing to remember is that the IRAS wants your tax,

once you tax your IRAA money. It's important to understand that before you pass away. So if you're not convinced, and I tell my clients all the time, if you're not convinced, just look at the RMD table, the required minimum distribution at age 73 and at age 104. At H73, the RMD is around 3.8%. At H104, it is around 20%. So basically, the nearer you are to your grave, the more the government wants to tax you, which is not a good thing. You know, I've heard it. Someone in the past said that it's almost like a fox standing, sitting outside of like a ground hog hole in the middle of the, you know, field, just waiting for them to pop their hands. head up and boom, they've got their dinner. And it's almost like Uncle Sam is just sitting there waiting for our IRAs to trigger so that here comes the taxes. And maybe one day it wasn't happening as fast as they would like. So they started putting these RMDs, required minimum

distributions out there to require this tax-free money that's been growing all these decades in your account to now start having triggering some taxes. Yep, you're right, Mike. I mean, all you need to do is to to look at the U.S. debt, which is one of the six financial storms that we talk about all the time. I mean, the U.S. debt. I mean, if you just Google right now, it is around $34.5 trillion, which is six zeros. And it's just crazy. And the government needs a lot of your money. Otherwise, we are going to be in trouble.

Yeah. And, you know, the other thing is, and we don't need to get into detail about this, but when people were putting money into these qualified accounts like 401Ks or IRAs, our ways during their working years, it's been growing tax-free. So that was one of the benefits. Well, the people are maybe thinking in the back of the mind, oh, well, you know, I'm going to let it just roll into my retirement because when I am at that age, I'm going to be in a lower tax bracket.

Well, there's no guarantee of that because who knows what the tax brackets will be. And who knows whether taxes will be up or down. My vote would be. They'll probably be up given the deficit that you just mentioned. So it really is something to address now. when we know what the tax rates are rather than waiting to a way in the future. And then you just don't know how that's going to impact your retirement. Yep.

Well said, Mike. Yeah. So let's talk about some of the misconceptions or pitfalls because I feel like people just assume one thing and then they just kind of close off their mind. But I know that there's some misconceptions that might hinder retirement wealth growth. So how can some of these IRA rescue techniques that you address with your clients help? Yeah, I think most people, unfortunately, worship their IRAA, the 401, the 403, and do not realize that the IRAA asset is the type of what we call a red asset that are subjected to income tax and also estate tax. Also, most people do not have strategies to pay tax on the seed, using a farming analogy, but you want to have a tax-free harvest.

So you want the harvest to be tax-free. The biggest complaint I hear when someone reach age 73 for most retirees is that they have to pay more tax because of the RMD, and the RMD basically mess up the tax situation, right? You know, I agree with that. And it makes me think of something else. I've heard that there are very strict penalties if you don't take out your required minimum distribution. So for instance, I'll bet that there's someone out there that goes, oh, you know, I know I've been told by my advisor, I need to take out whatever percent. But I'm good this year because I've got this money squirled away and I had this come in.

I don't need to take it out this year because I don't need the money. But if they don't follow the RMD, it could be not only tax, but penalties as well, right? Oh, yeah. I mean, the penalties, by the way, used to be 50 percent of the penalty. Thank God. with the passing of the Secure Act during COVID, it dropped down to 25%. However, the government is still collecting billions of dollars for people who say, you know what, I do not want to take on my RMD.

Sorry, there are penalties. And the government is collecting billions of dollars in penalties, might. It reminds me of like when you have overdraft in your checking accounts, or you go over your limit on your credit card, you know, they're not going to shut you down, but they're going to charge you for that. So I think that that's really important to remember is to have someone qualified that can look at your situations, map out the blueprint of when you have to take out your RMDs, make sure you're doing it to stay compliant, plan for taxes, make sure you're not paying those penalties. So I think that's that's huge. So let's talk a little bit about how IRA rescue complements a traditional retirement planning method because I feel like traditional retirement planning is you put your money in these qualified accounts.

You retire at whatever age. and then you deal with the withdrawals and the taxes. But you're talking about kind of sequencing them beforehand and kind of rescuing that IRA to kind of smooth it out ahead of time, right? Yep, definitely. And, you know, the IRA rescue strategies might not only complement traditional retirement planning, but it has a big impact on one's financial plan when a client is alive. And more importantly, when a client is not around of the transfer of wealth

to the beneficiaries and the advantages are just many when a person consider an IRA rescue strategies. Tax-free money will definitely help to stretch once money in retirement. And remember, it is not what you make that is important. It is what is left after you pay the tax. And as a fiduciary, our responsibility is not only to our clients, but it's also to our client's beneficiaries. And that's something which we remind ourselves day in and day out. Yeah, exactly. Because it's kind of like the domino effect. If you do one thing, it might affect multiple things. So you need to look at the strategy as a whole. You know, you mentioned that an IRA rescue could be as easy as a Roth conversion strategy and even more advanced strategies. Where is it that you start? When you're

looking at a client to start looking at an IRA rescue, where are you starting with them to see what would be beneficial for them? Well, first of all, I mean, we need to find out, first of all, how much IRAA they have. And most of the time, we find out that most clients just do not have enough rough. They have more traditional IRAA, whether it is in a 401k, the 403B, their TSP, their deferred com, and all that. So that's always a good starting ground. And most people have most of their assets in IRAA assets, which unfortunately assets that the government want to tax like crazy. And that's where, you know, we use, we deploy our IRA rescue strategies. And there are many of them, obviously. And that might mean maybe triggering some, you know, rolling out of an IRA

into a Roth so that you can start having a growth tax free. So let's talk about some specific tax implications or maybe even regulatory considerations that people need to be aware of when they're looking at some of these. So where do you start in advising your clients in that direction? All right. So I think fundamentally, to state the obvious, and sometimes that's not very obvious, Mike, is we always tell our clients, we always tell our clients, remember, tax avoidance and not tax evasion, because one of them, you go to jail, right? Which is not good.

So tax implications and, um, uh, regulatory considerations depends on the type of strategies that we recommend and implement. One of our strategies provide tax-free money at the death of the owner. Another of our strategies provide tax-free money while the individual is alive and at their passing. Most people do not know how to leverage example their house or the investments to create big tax deductions in their financial plan to avoid income tax, capital gains tax and estate tax. One big item, by the way, on the tax horizon for serious consideration is the sunset provision, which is coming by the end of 2025, in particular on estate tax exemptions.

Potential for drastic reduction on federal tax exemption is real. We tell our clients that planning is urgent, especially for high net worth individuals with the sunset provision coming up in two years' time. So you know, I think that a lot of times people, they, we all think that we know something, right? You know, they come to you and like, oh, well, my house is paid for or my house is not paid for or I do want to use my house to leverage or I don't want to use my house to leverage. But I think that one recommendation that you would make is to be open-minded and just kind of look at the big picture, because there could be a way to leverage your house or investments to create tax deductions or

capital gains savings or estate tax. So don't come in with a preconceived idea of I would never do this or this or this. Take a look at the big picture because to your point, things could benefit you now, but then at the end of 2025 with these sunsetting rules on estate tax, things can change. So it's never set it and forget it. Oh, I'm good to go because I did this four years ago. And now I never need to make a change to this plan. It needs to be reviewed so that we're making sure that any extra.

environmental, regulatory changes that have been made aren't impacting you negatively. So I think that's a pretty big thing that people should keep in mind, right? Correct. Yep. My, I think your comments reminded me of one of my professors years ago when I was in college said this. He said there's nothing worse than a mind that is closed. You always want to have an open mind. That's important. And, you know, I tell clients and potential clients through, you know, our webinars, our seminars and all the time, that that's the reason why we do webinars, we do a podcast, we do seminars, because we want to educate clients and potential clients out there. Most people are just not aware. And you're right, Mike, we are in just such a dynamic

environment, right? Unless you had been in hibernation, right? The Secure Act that came out in 2020 and then they have the Secure Act 2.0, they made drastic changes to tax laws. in particular on IRAA, and then now we have the sunset provision that is coming. And some of the strategies, if you do not use it, you're going to lose it. You know, if you speak to an elder care attorney and a state planning attorney, they will tell you that, especially if you're married and all that. So just be open and realize that we are in a dynamic environment, and the IRS is always out there to make changes, to erase benefits or to make changes

to the tax law so that they can get their money. So you've got to be careful. You know, I tell you, I was thinking about a comment and then you ended the word with being careful. And here's my comment. It just goes so well. It's almost like we knew what each other was going to say and we don't. But I was going to say when someone hears, oh, keep an open mind. That could be really scary when you're talking about your life savings in retirement because that could mean that advisors getting ready to tell you some hairbrain crazy idea and strategy that benefits them more than you.

But given our conversations in the past here of you being a fiduciary and caring about your clients and being careful with the recommendations that you're making to make sure that they are being well taken care of, now taking that open-minded mind approach is helping them understand just some options. But at the end of the day, they're the ones in control making that decision. So I think being careful is just so, so important that you just made. Yep. You're absolutely right, mate. So let's think about maybe an example or a case study or a success story where you've worked with a client with this IRA rescue strategy. And it really worked to help them improve their retirement outlook.

So what are some things that you've experienced in the past that you've provided to clients? Yeah, Mike, we out of our 32 years in practice, I would say we have been using a lot of these IRAA strategies, rescue strategies, probably consistently over the last probably 15 years to provide either a guaranteed income to our clients and at the death of the owner, the beneficiary gets the original deposit of the IRAA even without medical underwriting, which is really really because there are some strategies that requires you to basically get life insurance and all that. And most people, you know, when they are over 65, they are not able to to get medical underwriting and to get life insurance and all that, which is another different

strategies. One of the strategies that we use a lot, and we have many, many of this that we have used and help our clients. And one in particular came to my mind. This particular client was an engineer. And, you know, unfortunately, he passed away when he was 65. Before he passed away, three years, actually, before he passed away, we took $500,000. of his IRAA money before he passed away. And we used one of our IRAA rescue strategies designed for him and his wife. So when he passed away when he was 65, his wife actually got $500,000 tax free, although the account value was around $300,000 after all the withdrawals and market volatility. In most cases, at the passing of an IRAA owner, the amount that passed on to the

beneficiaries, actually the account value and not what was originally deposited into the IRAA. So in this case, his wife was able to have more tax-free assets to use in her lifetime without having to pay any taxes at all on the IRAA that she inherited. And we just got so many other cases that we have used this particular strategy without medical underwriting because she was not very well when we opened up the 500,000 IRAA. There's no way he's going to get any life insurance. And this was just perfect to use it nicely. And the wife was in a state of shock.

And most of the time, the beneficiaries are in like absolute surprise. He said, wow, how can that happen? I said, well, we recommend that to your parents and, you know, to your dad or your mom. And that is great. And we were happy for the beneficiaries that we can help. You know, it's amazing. You know, not that you can promise that kind of thing to everybody, but it's neat to see that that's one of the options to get a little bit more benefit than what you even put in or the face value.

That's huge. It kind of makes me think about something, too. If someone has an IRA or someone's being told you should do this with it or that with it, I would think that someone like yourself could sit down with them and look at their plan, look at their strategy and give a second opinion and kind of give some guidance that way, right? Oh, absolutely. Remember, what I just mentioned in my...

the case study or the example, it's just one of the many strategies, right? And remember, there's not, you know, one strategy fits all, one size fits all. And we really need to know you as a client, being that if I do, Shari, to know your situation, how much you have, how much net worth, how much investable assets, what are your goals, what is your, how is your lifestyle, what are your legacy and all that, before we can provide a suitable recommendation. Because remember, we just do not have just one strategy, but sometimes often the IRA rescue involved maybe a combination of strategies or, you know, not just one strategy. So keep that in mind in terms of your planning. Yes. Well, I feel like that is so important, Stephen, and I really

appreciate you coming back on and explaining this IRA rescue strategy. If someone is interested in learning more and getting maybe that second opinion, what's the best way that they can reach out? Well, the easiest way is give us a call. Our number is 973-218-9-6-00. I'll go to our website. All our information are there. Our website is Stephen, spelled with a P-H-S-T-E-P-H-E-N-G-N-G-G. And we look forward to helping you and to manage and to rescue your hard-earned IRAA money. Excellent. Well, Stephen, thank you so much for coming back on. It's been a real pleasure talking with you. No problem, Mike. God bless you. Always good to talk to you, Mike. The views expressed are not necessarily the opinion of Stephen Eng and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein.

Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations, can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities and investment advisory services offered through Osaic Wealth, Inc., member of FINRA and SIPC. Osage Wealth is separately owned and other entities and or marketing names, products or services referenced here, are independent of Ozaic Wealth.

You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more, about the resources mentioned on today's show or listen to past episodes visit www. www. influential entrepreneurs radio.com