Maximizing Your Tax Deductible Dollars and Insuring Your Future

Miguel Palma, CPA, looks forward to going to work every morning because he knows what he does makes a difference in people’s lives. “I used to think that success meant having all the money in the world. Now, I see that success is having the time to do the things you most care about.” Miguel tries to align himself with clients who view the world as he does; clients he can really look forward to serving.

Miguel’s aim is to focus on minimizing the annual tax liability while providing financial planning for REALTORS”. “I call it my secret ‘weapon,” he quips. “A pension plan that will shelter $60,000 to $375,000 for most real estate professionals.” It’s a pension plan that allows you to buy life insurance with pre-tax dollars; a pension plan that eliminates the risk of the stock market; a pension plan that shelters its assets from lawsuits, creditors and other risks. Lots of people have never heard of it, but it’s been around since the fifties. The plan is called a 412(e)(3).
A 412(e)(3) plan is a defined benefit plan, funded exclusively with life insurance or annuity contracts. It does not have a high rate of earnings (the guarantee is only 3%), but it allows huge tax deductions, and Miguel advises his clients to focus on those deductions. Since the plan generates significant deductions some individuals in the higher tax brackets may experience a return on investment of approximately 50% per year. The greater their marginal tax rate the greater the return on investment for their pension plan. Miguel’s clients are looking for retirement money that will be there when they need it. They want that guarantee. For many, the significant stock market declines have shrunk their retirement investments. And most aren’t buying as much property as they should for investment purposes. “Buying property as investment is fine, it is sound because it adds diversification to a portfolio” Miguel says, “but owning property docs not eliminate the income tax liability of a 1099. ‘What generates tax deductions are business related expenses.”

The 412(e)(3) is a business related expense. “Most Realtors have a tendency to make a lot of money,” Miguel says, “but also have a tendency to spend that money on non-durable goods, with a focus on cars. I can achieve the same deduction for them and put the money to better use.” He suggests his clients set the money aside in a pension plan that will achieve the same deduction and have their future insured.

A Certified Public Accountant since 1995, Miguel Palma spends a great deal of time talking about maximizing tax deductible dollars at local real estate groups, which in turn has earned him many referrals. He calls it his “speaking wave” which eventually leads to business. And that eventually leads to the thing that Miguel judges as success-making a difference in people’s lives.

Palma Financial Services, Inc. is located in Dublin, CA, 94568 serving the East Bay and Alameda County.