Defer the tax until later.

The PAT policy is transferred from your retirement plan to you at the end of the third year creating a tax liability.  You can pay the tax immediately or, with the "defer tax" option, you can spread out the tax liability over your lifetime.   Hence you can transfer the entire actual value ($330,000) out of your plan and not create any current tax outlay.

Use future plan withdrawals to pay the “deferred tax”

You can pay the deferred tax by taking annual withdrawals from your plan.  

Take out your annual withdrawals without tax outlay.  

When you take money out of your plan, you face an income tax on the amount withdrawn.  However, it may be possible to find an offsetting deduction to eliminate the tax obligation.  With the PAT program, we look forward to showing you this attractive option.  

      

 




Bottom line

By using the PAT program, you can transfer $s out of your plan without current tax outlay.  In the prior example, you allocate $300,000 to PAT which grows to $330,000 and is removed from your plan without current tax outlay.  The $330,000 continues to grow tax free, even though now outside of your tax sheltered plan.  Furthermore, the growth can also be estate tax free if structured correctly.

Although the deferred tax, created by the end of the 3rd year PAT share distribution, must eventually be paid, the tax payments can be deferred.  And the payments can be funded using future plan distributions.  Furthermore, the distributions taxable nature can be offset by an attractive deduction.