USA pension plan 401k vs. 402b

The 401(k) compared to the 402(b) Foreign Retirement Plan

With a 401k your employer will match your contribution to their pension plan up to 15% to a maximum of a set value. If you want your money back you must pay a 10% penalty up to age 59.5 years and declare the entire sum as taxable in the highest tax bracket. Also, a defined Benefit option is not possible with this plan. Conversely, the IRC 402(b) Foreign Retirement Fund (RAPS) provides the pension member complete flexibility to plan their own benefits options. In terms of tax, with a RAPS you can exclude up to 100% of current year income from tax.

The 401k plan is based on your own choice of investments from the menu of investments which you did not select because your employer decides which investments you can choose from. Normally 20 to 30 choices and always in US dollar only and the investment choice can only be a mutual fund that is registered in the USA. Also, your pension assets must always be located inside the USA and in US Dollars. In the offshore, with a 402b you can expand your wealth manager selections to include the top overseas award winners, as well as access to the out-performing power of global hedge funds not available to S.E.C. registered broker/dealers.

In terms of asset protection, with the 401k if at any time you divorce, then your spouse receives half of the total amount that is in your pension. Although, if you die your spouse receives the full amount of your account under forced heirship rules but the forced heirship rules requires you to liquidate your pension regardless of market conditions. Plus, if you retire and don’t begin to withdraw from your pension by age 70.5 you will annually be charged a tax as if you did begin regular withdrawals, which means you will pay tax even if you never make a withdrawal. The IRS 402b Recognized offshore investment account that is excluded from probate, inheritance tax and estate tax.

The very worst problem with a 401k is that you do not hold title to those assets in YOUR pension fund and therefore the Government could at any time decide to make demands as to how you invest those assets. Also, if you have court judgments against you, either from a private party or the government, the court can access your assets upon your withdrawals.

With an IRC 402(b) Regulated, Registered, Recognized Qualified Foreign Retirement Fund you obtain statutory, government registered asset protection. The RAPS Fund is not subject to claims or counter-claims in legal suites and is not subject to new parties joined, summons, or discovery, or subject to depositions, interrogatories, judgments.

Which one of the two above do you feel would meet your criteria? Be protected at the intergovernmental regulator level without ‘’red flags’’ from the treasury or IRS, invest offshore in an IRC 402(b) Foreign Retirement Fund.