Every tax planner faces the challenge of identifying a tax strategy that provides for tax deferral and tax-favored distributions. Many taxpayers look to the Roth IRA, but the Roth is a limited option for high-net-worth taxpayers, who must contend with income eligibility restrictions, contribution limits, UBTI, and prohibited transaction limitations. One option with significant benefits for such taxpayers is the Malta Pension Plan, a vehicle that provides tax deferral and tax-favored distributions in a manner that is more powerful than a Roth IRA.
Since the enactment of the Tax Cuts and Jobs Act (TCJA) on December 22, 2017, interest in the use of qualified retirement plans has increased. However, qualified retirement plans are not without their limitations and complications. For the closely held business owner, the controlled group and affiliated service group rules serve to limit the ability of business owners to discriminate in their own favor or to create duplicate pension arrangements to multiply the benefits of pre-tax contributions and tax deferral.
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