All Forum Posts by: Josh St Laurent

@Chris Schwartz I see, because in your example the profit would be 40k non taxable to the seller, the taxes shouldn't be an issue when distributing to family members. Your family member that owns the house could simply write a check, send EFT/wire etc. to the other family members once the property is sold. If they exceed 19k to one person they'll want to file a gift tax form with their CPA at the end of the year, if they're married that 19k doubles so it's unlikely you'll run into any tax complications doing what you're doing.

Hope that clarifies things but lmk if I can answer anything else!

MACRS is the standard way to depreciate the property. You'd use the cost basis (what you paid) + improvements (40k) and subtract the current land value since that can't be depreciated (25k). If you are wanting to maximize depreciation you could talk with your CPA or someone who specializes in cost segregation studies. For some situations depreciations helps a ton to offset income. For others who don't qualify for REPS or have a W2 job/long term rental the depreciation might not be able to be used at all. Worth looking into for your own situation in case it helps your financial position or tax strategy. 

@Craig A., you've gotten some solid advice already so I'll try to add some things to think about without repeating what has already been said. 

Like @Max Gallagher mentioned the first thing a CFP would do is try to minimize the million dollar tax liability. There are things that be done before AND after the business sale to offset some of that. The goal would be to help him keep as much of that million as possible instead of giving it to Uncle Sam.

Second step would be to figure out what he needs that money to do for him. Sounds like maybe retirement is next so generating income with the dollars could be what you explore with him. 

I think a money market could be a good temporary place to put the money but to your point you will want FDIC insurance. The cash plus program you described is what's called a deposit sweep program which just means they are using multiple banks to make deposits at since traditionally each bank will be limited to 250k in FDIC. So if a firm says we'll provide FDIC insurance up to a million it just means they'll be spreading your deposits across four banks.

Personally I don't like having $ over FDIC limits even though it's unlikely that a bank will fail, it's just not worth the risk.

With that being said there's not really a scenario coming to mind your Dad would want to keep that amount all in cash anyway, you'd want to work with a financial planner or RICP to strategize the best place for where to put that money to work. 

Hope this helps!

@Chris Schwartz, good to hear your family member is loving the retirement home, that can be a challenging new chapter for many families. 

A lot of potential directions you can go here, but my first question that could eliminate all other options is: Did she live there 2 of the last 5 years?  If so, she qualifies for a section 121 exclusion, which means she is selling her primary residence and won't owe capital gains tax on up to 250k in growth over her basis (It wouldn't be an issue if it sells for 250k).  So if she's lived there 2 of the last 5 years, and wants to sell the house after you are done renovating, taxes shouldn't be an issue.

@Vilmor II T. if you plan to use the money to buy property in the next year look into a simple high yield savings account. Longer than a year and you could consider a brokerage account to invest the money, just make sure not to take more risk than you're comfortable with. 

@Thomas Rutkowski, you did a great job explaining how IULs work. I watched your YouTube video on The Double Play to better understand your perspective. I’m glad you brought up the hammer-nail analogy—do you ever feel that, since insurance is the only product you offer, everyone ends up being sold insurance?

On LinkedIn, you describe yourself as a Life Insurance Guru. Out of curiosity, what does it take to become a guru? Is there specific education or training involved, or is it more about experience in the field?

For context, I don’t have a stake in whether people do or don’t buy IULs—I just want to get to the truth. So I’ll ask again: is there something we’re all missing? Do you have insights as a guru that aren’t covered in graduate-level finance or CFP curricula?

One thing I’d like to clarify—I’ve seen you suggest that I don’t fully understand infinite banking. I’ve read Nelson Nash’s books, watched videos (including yours), and continually seek out alternative viewpoints with an open mind. I’d love for you to teach me something new.

Last semester, in the Risk Management & Insurance Planning course I taught, we did a deep dive into IULs, analyzing policy illustrations to examine the risks, upsides, and downsides. I love getting into the weeds on strategies like this.

A recent example: I was a judge for a financial planning competition hosted by NAPFA (The National Association of Personal Financial Advisors)—a leading organization for fee-only fiduciary advisors. One student incorporated an infinite banking strategy into their plan, and their clients ended up with the lowest projected net worth compared to their peers.

It’s also important to acknowledge a key distinction in our industries. You’re an insurance agent who sells commission-based products in a notoriously underregulated industry, while I’m a Registered Investment Advisor (RIA) in 49 states. I'm regulated by FINRA and the SEC and have a fiduciary duty to act in my clients’ best interests. Our professional incentives are fundamentally different, which makes a meaningful discussion about financial strategy even more critical.

I also have to ask: Are you ever curious about financial strategies other than insurance? In another post on this same forum, I noticed that you had never heard of the Mega Backdoor Roth, which is an incredibly powerful strategy for the right client. Given that, have you ever considered pursuing your CFP?

I’m not saying infinite banking can’t be done—I’m saying it’s not the best strategy. Rather than going back and forth in a forum (which isn’t productive for anyone), why don’t we hop on a Zoom call? I’d be happy to walk you through some alternative wealth-building and tax-saving strategies, and who knows—maybe I’ll learn something new from you as well.

@Max Gallagher good call on the umbrella policy!

I get where you're coming from, through the eyes of your CPA who has to process and file all of the tax forms and keep track of the basis in the Roth IRA it is less work and red tape to just take it from a brokerage account but at the end of the day it's a viable strategy to use the Roth the way you're describing. Just not what it was initially designed for. Only other thing that comes to mind would be a lender may look at that money less favorably because they recognize that a brokerage account is liquid while in their mind they may think the Roth account is not because they have a basic balance sheet understanding retirement accounts and aren't trained on rules of Roth accounts, MBD etc.

@Matthew Harrigan You've gotten some great advice on here so far from @Max Gallagher and @Daniel Murphy.  Simplicity can be the best thing sometimes, and they mentioned liquidity; that's going to be one of if not the most important factors when you're weighing Roth vs. brokerage accounts. 

With an MBDR, you could theoretically save 70k per year (for 2025) in Roth dollars, growing tax-free.  When you turn 50, you can do even more (77,500 for 2025). 

So, if you like the idea of the tax-free bucket, you can wait until 59.5 to take "normal" withdrawals, but here are a few creative ways to use the tax-free money early without penalty:

You can do MBDR in your company's 401k plan and leave after age 55 and no longer worry about the 10% penalty (Rule of 55)
Utilize 72T - Pay yourself the same amount every month until you are at least 59.5
Move the money to a self-directed IRA (SDIRA), where you can use the Roth IRA to purchase RE
10k of earnings can be pulled tax-free for first home purchase
The principal can always be withdrawn tax-free
Not really anything anyone plans for, but there are some exceptions for medical expenses as well that can be a nice plan Z if you blow through other emergency funds

I do this in my company's solo 401k because it gives me the most control over the funds, but it can easily be done in a company 401k if their plan rules support it.  I'm sure I'm missing stuff here but there's some food for thought.

Don't take my word for it!  I thought some third-party viewpoints could be helpful here:
https://www.personalfinanceclub.com/is-iul-a-scam-yes/
https://allaboutmoney.substack.com/p/indexed-universal-life-...
https://www.jrcinsurancegroup.com/5-iul-scams-to-watch-out-f...

As always, I love learning, so if you insurance agents know some secret, let us all know!  I've read Nelson Nash's books Becoming Your Own Banker and Building Your Warehouse of Wealth to educate myself on alternative viewpoints.  Are there other books you suggest?  Should I take the NNI course on Infinite Banking?  Will I learn more than the CFP and a Masters degree in finance?  You all have so much conviction on the product you are selling!

I'm looking forward to learning more about what I am missing here.