Restricted Property Trusts: What Are They, and How Can I Benefit from One?

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Restricted Property Trusts: What Are They, and How Can I Benefit from One?


The restricted Property Trust, otherwise known as RPT, is an employer-sponsored plan that provides business continuity through death benefit, tax-free income distribution, and cash accumulation over time. The RPT is attractive to business owners who plan to get supplemental deferred compensation plans so that they might mitigate income taxes and appreciate assets further.

Is a Restricted Property Trust Right For You?

When considering if a restricted Property Trust is right for you, you want to look at the available resources. The first thing you need to be aware of is a $50,000 annual contribution minimum; attached to this, there is a minimum of a mandatory five-year funding commitment. Meaning that you need to be able to commit at least five years and at least $250,000 into this trust if you’re prepared for it.

Who is Eligible to Participate in a Restricted Property Trust?

Along these lines, you’ll want to think about how ideal a candidate you would be for an RPT. In general desirable stats to have to be a business owner with an income that is grossing around $500,000, preferably over, and as stated before, you will need to expect to be in business for at least the next five to seven years, ideally up to 10 if you want to maximize the benefits of entering into an RPT.

Benefits of a Restricted Property Trust

Going beyond the stipulations of restricted property trusts, there are also a lot of benefits to keep in mind. One of the first things many people reap is that contributions are 100% tax-deductible to the business. Meaning that while this is an expense, it is also an opportunity to get some tax deductions and invest in something that will benefit you in the long run without costing you as much money as other trusts. To note is that 30 to 40% of the contribution to the RPT is taxable to the individual, and this number changes based on the state you reside in.

Some other benefits include that your assets will be creditor-protected, and most RPT’s do not interfere with any other qualified plans or assets you have in motion.

RPT’s Gaining Popularity

One piece of information to keep in mind is that the sixth circuit determined that the demand for the program has increased by a lot due to recent activities involving the IRS and the US Court of Appeals. All this means is that if you consider the restricted Property Trust as a strategy for you and your business, the time to act is now!

Consult with a Tax Planning Professional

If you think you may benefit from a Restricted Property Trust, we recommend speaking with one of our tax planners to determine if it’s the right option for your business. We work with businesses across many industries including healthcare, restaurants, lawyers, Amazon DSPs, and more. For more information on our business financial planning services, call us today at (305) 517-3977 or fill out the form below.