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All Forum Posts by: Matt Ruttenberg

Matt Ruttenberg has started 12 posts and replied 107 times.

Post: Infinite banking system

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77

@Josh St Laurent

I have to agree with @Thomas Rutkowski on this subject.

I understand you’re looking at it from an outside perspective and have done some comprehensive research. However, you can’t compare these with a traditional investment vehicle, like index funds.

They are 2 complete different asset classes and should be used for two completely different reasons, in conjunction with each other.

Personally, I don’t like using the coined phrase IBC. It makes it sounds like a bogus sales pitch. And it kind of is. I think it cheapens the entire concept.

However, one main point of these is using IRS section 7702 (tax code referencing the tax deferral within the policy) to manage taxes in the long term.

This is the same tax code whether you call it IBC, Executive Bonus Plan, or Split Dollar Arrangement (like with Jim Harbaugh at U of Michigan just used) or even Deferred Compensation. It’s all the same tax code and all the same design.

The point of the design is that it uses as little death benefit as possible to keep costs as low as possible. The death benefit is an ancillary benefit.

And the loan rates SHOULD be a net 0%. Anything above that is poorly designed. With this design, commissions are 1/3 of what they would be if it wasn’t optimally designed. That’s how you weed out the bad agents/advisors. This is far less of an income than an advisor charging 1% AUM on that kind of money.

For high income entrepreneurs, they could comparably use a Cash Balance Plan and use high contribution rates as well. However, the actuary and administrative costs are included in those which cost 4-5k annually, and is invested at a very conservative rate as well.

If you’ve studied the long term RMDs on a fully funded Cash Balance Plan, it’s super high. I’ve seen individuals with $400,000 in just RMDs annually because of the amount of pre-tax money in their portfolio.

Yes, it’s not as “lean” as an index fund in a brokerage account, but it should complement to all of that to help manage taxes. Not to mention the tax-free death benefit and other protections it allows.

In business, there’s always a net cost, the question is how much are you in the black, or in the red.

These are legitimate strategies. No, I don’t think everyone should use them, but should never be thrown away unless truly understanding them.

There are too many people “villainizing” the entire lot in this industry when there are legitimate advisors who use it properly.

Post: Infinite banking system

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77

@Tim Flickinger

Yes, this is a specialty of mine for both RE

Investors and high income businesses owners.

Very important on how your policy is structured. Feel free to reach out.

Post: Questions Regarding my Real Estate Strategy

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77

@Michael Moreno

I agree with Chris. Paying off your mortgage is not wise. You referenced “financial freedom”, which tends to be Dave Ramsey lingo.

Paying off your mortgage ASAP won’t make you money, it just saves you the mortgage interest is all.

Think bigger than that, put your money to work for you and buy income producing assets or invest in other ways that earns more than what you’re paying for on your mortgage.

Post: Using Life insurance policies to flip houses

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77
Quote from @Jerry Bailey:

I have zero knowledge and I’m interested in learning. Currently have life insurance policies. I was told that you could use your life insurance policies to borrow money for renovating property. If there is any information available please advise. Thank you in advance!


 You can absolutely take loans against them.  However I would reach out to the carrier to see how they could affect the policy since we don't know the specifics of your policy.  My guess is it's not an completely optimized policy for this strategy, but it might be ok.

Feel free to reach out with any questions at all regarding how all this works.

Post: Florida Licensed Life Insurance Agent

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77
Quote from @Carlos Arjona:

I'm looking to connect with a FL licensed insurance agent that has experience with term life insurance policies. I've been researching different options for family planning and would like to get a sense of what products/carriers make the best sense. Thanks!


 I own an agency and can help.  Licensed in 20+ states.  I have some tools and info I can send.

Post: Life Insurance Needs

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77
Quote from @Samuel Coronado:

I am looking for a $2 million life insurance policy, preferably term but willing to entertain others like IUL. 30 year old male. Reasonably good health. 

Feel free to reach out and I can run quotes. I own an agency for the Financial Independent and REI community. I can explain, and help you decide on both types. If you NEED life insurance, term is the best option most likely.

Here are a few term quotes to reference, but need more health information to get an accurate quote.  Feel free to reach out.

Post: LIRP in lieu of ROTH...

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77
Quote from @Megan Arzt:

I have done some initial research and found this a rather controversial subject but here goes...

I am currently a pass through entity and file as such. This means that all of my income is passive and that I can't contribute to any sort IRA or 401k. It has been recommended to me that I get a life insurance policy (lirp) and over fund it. My understanding is that it is after tax money but that down the road what I take out is tax free. Sort of like a ROTH. Also, I don't need the life insurance...no one relies on me. I'd be using as a way to lower taxes down the road. Once all my mortgages are paid off I'll be in the highest tax bracket for sure.

I guess I'm looking insight into whether this is a good idea or not, and also what pros and cons there are that I may be overlooking. TIA


From a retirement plan perspective, you're right.  You need either W-2, K-1 (partnership), or 1099 to contribute to a qualified account.  You could attempt to switch your passive income to active, but then you lose write off's, and that's a different decision altogether.

I'm a 401k administrator, and when we have clients with passive income (who are often RE investors), we need to go with a non-qualifed option instead of a qualified option (401k, profit sharing, etc.).  

You can use a life insurance platform (LIRP) to house the assets, which "mimics a Roth IRA". However, it needs to be designed very specifically to not endorse the death benefit, but more of the cash value growth. There are a few carriers that offer that design ability... most don't do it well.

Feel free to reach out and I can explain more in detail, but there is alot of information in the above link.

Post: Where to park your money between loans

Matt RuttenbergPosted
  • Specialist
  • Honolulu, HI
  • Posts 108
  • Votes 77
Quote from @Scott Loud:
Quote from @Lane Kawaoka:

@Scott Loud

I do this whole life insurance thing, and some folks call it "infinite banking." Basically, it's a way to store your cash while still having access to it for things like loans or investments. The key is finding a provider with insurance costs below 10% to maximize your benefits and lower your commissions you pay.

You start by setting up this whole life insurance policy, and you pay premiums into it. Over time, the policy builds cash value, and you can borrow against that cash value whenever you need it. It's a bit like having a savings account that grows over time, but with some tax advantages.

In my case, I use this strategy when I'm involved in syndication deals. It's super handy to have that cash readily available for investing in these opportunities without jumping through hoops or waiting for loan approvals. Happy to answer any questions or provide more insights!

 @Lane Kawaoka Thanks for the reply.  I have looked into that but I wasn't at the time thinking about using it in that avenue.  I need to look into this a little more.  


Lane, this is a good long term option, but not good for short term lumps sums of cash.  I would say it's a separate conversation for you.... or at least over 5-7 years you can spread out the premiums.

The reason is that the it needs to remain outside of the MEC (modified endowment contract) status, which is a ratio between premium and death benefit.  You could design a policy where you still maintain the tax-free loan capabilities, but the death benefit would be so high, the cost of the insurance itself would hinder the growth of the policy.

The concept is to "squash" the death benefit as low as possible to promote cash value growth, and that's usually done with spreading the contributions over a longer period of time.

I can run numbers for you if you'd like to reach out.

Quote from @David Wilhite:

There is this guy on IG @mr_brrrr and he makes a lot of content talking about using whole life insurance policies to fund a BRRRR strategy. Has anyone ever heard of doing the same thing with Indexed Universal Life insurance policies?


IULs are a more versatile design than the Whole Life and is a bit more flexible.  Whole Life is a fixed ROR, where the IUL has more potential for a higher ROR because of the caps.  The floor is usually 0% and usually has a cap of around 10% these days.  Think of WL as a more conservative option.

You're not looking to beat the markets with these either way... it's to fund other investments like RE or other businesses.

The basic concept is to "squash" the death benefit as much as possible with certain design options.  The IUL is technically a bunch of 1 year renewable term policies over your life time.  The Whole Life uses a term insurance rider to help with the design to keep it "tax-free" (it can get a bit complicated here)

At the end of the day, these are what you need to look for in either option:

1). Low death benefit - Cash Value is the priority... death benefit is second.  Mainly becuase the goal is just use the platform for the versatility and tax status.  Think of the death benefit as a bonus.

2). Loan provisions - needs to be a net 0% loan, or have a decent "working loan" where your cash value is still earning interest while you're using it to purchase more REI.

3) Strength of the company - very important to make sure they maintain their rate caps, loan provisions, etc.

There are a few other smaller things to look for, but it narrows down the companies to maybe 3 that are worth looking at, but this is the basic concept.

@Phil Avery

Sorry late to the show here.  Sounds like you're trying to fund the IUL through a lender, correct?

This is called premium financing, but usually requires closer to $100k a year as a minimum premium amount.  The lender will then be paid off in about 10-15 years or so.  So not a good fit for you looking for quicker CV.

You also will want to fund it over the course of 5-7 years, not as a lump sum do to MEC rules and wanting to maintain the tax benefits for the lending you're looking for.

These tend to be longer term strategies, but can be very lucrative if it's designed properly.  Feel free to reach out and I'll run the numbers to show you some examples.