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Investing in an eQRP vs. an IRA

I was at the Real Estate Guys Secrets to Syndication conference last month, and Damion Lupo, began talking about how much of a problem it is when people decide to invest but then realize their money is locked away in retirement accounts that penalize and tax you if you withdraw from it early.

They lack control of their own money.


He then went on to educate us about something called an eQRP.


What Is An eQRP?

The term eQRP stands for Enhanced Qualified Retirement Plan. It allows people to have checkbook control of their retirement accounts whether they have employees or not.

Checkbook control means exactly as it sounds. You’re able to write a check from an eQRP account to purchase assets. Unlike a 401k, there’s no middle man involved, you’re in control.


It seems that this type of investment account has increased in popularity for this hands-on control reason. This in turn allows people to decide for themselves where their money will be invested.


For instance, if someone wants to invest in alternative investments such as real estate (direct properties, syndications, debt funds), precious metals, notes or oil & gas then they can do so with an eQRP.


What’s A Qualified Retirement Plan (QRP)?

A QRP is a retirement plan recognized by the IRS where investment income accumulates tax-deferred.


Here are the common plans we’re used to:

  • Individual Retirement Accounts (IRAs)

  • Pension Plans

  • Keogh Plans

Most of the plans offered through your employer are examples of these qualified plans.

Specifically, these plans meet the specifications laid out in Section 401(a) of the U.S. tax code.


There are several types of plans including:

  • defined-contribution plans

  • defined-benefit plans

Defined-contribution plans include 401(k) and 403(b) plans.


#1 No Unrelated Debt Financing Tax (UDFI) with Leveraged Real Estate

Since the eQRP conforms to IRS rules, it qualifies for special tax breaks as the IRS will tax you if you use your IRA for real estate investing if there’s debt involved.

This includes syndications as the majority of the time there’s debt on the property.

This tax is called UBIT (Unrelated Business Income Tax). Because IRAs are governed under section 408 they are not exempt and are subject to this tax, which is up to 37% on all the gains you made.

By using an eQRP, you can avoid this tax as it conforms to IRS rules under Section 401.


#2 Fewer Plan Restrictions

The eQRP plans have fewer restrictions when compared to a 401(k).

For example, most 401(k) plans have limits written into them. They restrict:

  • what you can do

  • what you can’t do

  • what you can invest in

  • when you can access your money

With an eQRP, YOU have total control over what you invest in such as real estate, precious metals, etc.


#3: 10X Higher Contribution Limits vs IRA

Annual contribution limits to IRA accounts are $6,000 per year. If you’re over 50, the limit goes up to $7,000.

Do the math. If you max this account out over the next 30 years, you’ll likely need to keep working. It’s NOT going to get you anywhere near what you’ll need for retirement.

The contribution limits for an eQRP are:

  • $56,000 per person

  • up to $112,000 with your spouse max and even more if you’re over 50

  • An extra $6,000 per person over age 50 per year can be contributed – this is the catch-up bump.

As you can see, that’s quite a bit more than IRA contribution limits.


#4 Multiple Investment Options

Typically retirement account options limit us to cash, stocks, bonds and mutual funds.

There are multiple investment options available in the eQRP accounts:

Syndications • Real Estate • Physical Gold and Silver • Small Business Startups, LLCs • Trust Deeds and Mortgage Notes • Single Family and Multi Unit Homes • Securities • CDs • Stocks, Bonds, Mutual Funds • Co-Ops • Commercial Property • Improved or Unimproved Land • Commodities and Futures • Cryptocurrency • Contracts of Sale • Leases


#5 Borrow Money Anytime

You’re able to use an eQRP similar to a private bank line of credit.

It’s always available which allows you to write yourself a check as needed.


#6 Total Checkbook Control

The eQRP allows the owner to also become the trustee which is responsible for funding the investments.

As trustee of the plan, you no longer have to get approval for each and every investment you’d like to make. You’re in control over your own money. (Shouldn’t that be the case anyway?)


#7 One Consolidated Account

Another benefit that these plans provide is the ability to consolidate all other outstanding retirement accounts like 401(k)’s and IRAs into one place and manage those funds more efficiently.

Furthermore, if you have a spouse who also is contributing to multiple retirement accounts of their own, those accounts can also be moved into the plan.

The transfer of funds are both tax-free and penalty free.


Who is Damion Lupo?

American Sensei. Yokido Founder. 5th Degree Black Belt.

Financial Mentor and host of Financial Underdogs Podcast.

Creator of Black Belt Wealth.

Best selling author in personal finance. Rewriting the rules and plan for retirement.

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