What Is a 501k Plan and Is It an Alternative for Saving for Retirement?

Let me cut through the hype and give you the scoop: The 501(k) plan is just the latest name the Palm Beach Research Group has given to the concept most people know as Bank On Yourself, which is based on a high cash value dividend-paying whole life insurance policy.

The Palm Beach Group has been bombarding subscribers to various email lists about a “warning” issued by the “Father of the 401(k),” Ted Benna.

The Palm Beach Research Group wants you to watch a long video interview they did with Ted Benna, where he reveals three dangers he sees coming that could impact your 401(k) and IRA accounts. He says these dangers could slash your savings by 40%. And you’re promised that by watching this long interview you’ll learn about “a non-government sponsored 501(k) plan” that may “be the only way left for most Americans to retire today.”

This secret plan is touted as a 401(k) alternative “account,” where Benna and some prominent members of Congress have put some of their savings, to shield them from these three dangers.

Unfortunately, even after you watch the lengthy interview with Ted Benna, you still won’t know what this “account” actually is—until you fork over $75 to $149 to subscribe to the Palm Beach Letter and get your copy of their “new” book, The 501(k) Plan: How to Fully Fund Your Own Worry-Free Retirement—Starting at Any Age.

You can’t judge this book by its cover

“New” book? As it turns out, this is not a new book at all! They simply slapped a new title on a book they published a couple years ago about alternative retirement investments, and added a foreword by Ted Benna. The old book was called The Big Black Book of Income Secrets. In fact, at least once in the “new” book, they forgot to change the name and they call their “501(k) Plan” book The Big Black Book of Income Secrets.

You can read my review of this “new” book under its original title, The Big Black Book of Income Secrets, here. My review points out all the red flags regarding the strategies covered in the book that should cause you concern. In addition, many of these strategies are not new at all, and some are exceedingly complex.

The Palm Beach Group Used to Call the “501(k) Plan” “President Reagan’s Secret 702(j) Retirement Account,” and Before That, the “770 Account”

These are all names they gave to what most people know as the Bank On Yourself concept I’ve been talking about since 2001. They’re using sleight of hand, hoping to keep you from getting the full scoop for free. You can download my 20-page Report on this strategy—5 Simple Steps to Bypass Wall Street, Beat the Banks at Their Own Game and Take Control of Your Financial Future—right here for FREE.

When you download this free report, you’ll get the full story about the “501(k) Plan”—minus the misinformation and hype—that Palm Beach Group wants you to pay good money for. See what they got right—and wrong—about the Bank On Yourself concept in my blog posts about the 770 account and President Reagan’s Secret 702(j) Retirement account.

Why Does the Palm Beach Research Group Keep Changing the Names of Its Products and Strategies?

Because if you knew the earlier names they gave to their books and strategies, you could just Google them and get the scoop—for free. Google would direct you to Bank On Yourself and then the Palm Beach Research Group couldn’t trick you into paying as much as $3,000 or more for each for their newsletter and advisory services.

Something Happened That the “Father of the 401(k)” Never Foresaw

Photo of Ted Benna, Widely Credited as the “Father of the 401(k)”
Ted Benna, Widely Credited as the “Father of the 401(k)”

Ted Benna is widely credited with finding a way to capitalize on provisions of the Internal Revenue Code Section 401(k) to create a way for working men and women to augment their retirement savings, beyond the pensions many workers received.

But Big Business and Wall Street perverted the 401(k) concept in ways that Benna couldn’t possibly foresee, and in 2011 Ted Benna said he had created “a monster” that should be “blown up.”

Our hats are off to this man with integrity and the courage of his convictions.

Photo of Ted Benna, Widely Credited as the “Father of the 401(k)”
Ted Benna, Widely Credited as the “Father of the 401(k)”

3 Big Takeaways from Ted Benna’s Presentation on the 501(k) Plan

There are three key points that Ted Benna made in his recent interview for Palm Beach Group:

1. The first was the danger that government-sponsored retirement plans could be “repealed”

Benna says, “There could be a repeal of the tax advantages these plans offer. So either you won’t be able to put any more money pre-tax into accounts like 401(k)s and traditional IRAs, or the amount you can put in each year will be drastically reduced.”

2. Benna says he believes the next stock and bond market crash is imminent and could wipe out up to 40% of the typical portfolio

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He says, “If you’re retired—or on the verge of retirement—and you’re trying to plan a few years down the road, this is something you’ve got to pay serious attention to. Because, if you’re planning your retirement expecting your portfolio will grow at, say, 5% or 6% a year, what happens if another ’08 comes our way next month? What happens to your retirement accounts? … I lost more than I like to admit in my own 401(k) 10 years ago. So I try to learn from my mistakes.”

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3. 401(k)s and IRAs have been “hijacked” by Wall Street

“The third danger is fees. This is more of a ‘hidden’ danger. And it’s already here. It’s hidden because it’s not as drastic as, say, a 40% drop in stocks or bonds. But, over the long run, it’s just as deadly. … The average household is paying $155,000 in fees over the course of their lifetime. That’s a significant amount of cash. And all this money is going to Wall Street.”

Benna makes the point that excessive fees charged by mutual fund companies and plan administrators are robbing you of up to half of your nest egg.

I’ve been warning of these dangers and others for years. For starters, see …

Want more information about America’s most popular (and scariest?) retirement plan? Just go to the Bank On Yourself website and type 401(k) in the little box that says “Search Bank On Yourself.”

Benna Says the 501(k) Plan, Better Known as Bank On Yourself, Avoids the Dangers That Traditional Retirement Plan Accounts Face

He’s right. In fact, I’ve been saying that for years.

Benna says that for these reasons and more (including the tax advantages), he has, in his words, “put most of my money in the 501(k).”

Ted’s got it right. The 401(k) is a troubled concept. In fact, the idea of individual wage earners investing their life savings in the stock market is a troubled concept.

And, as Ted eloquently explained, a plan such as Bank On Yourself (which Ted Benna and the Palm Beach Research Group have chosen to dub the 501(k) Plan) neatly sidesteps all those problems, and provides some additional advantages, as well.

So What Exactly Is a “501(k) Plan”?

“501(k) Plan” is just the latest mysterious-sounding name the Palm Beach boys have given to their strategy that copies Bank On Yourself. And Bank On Yourself, as we are always happy to explain, is a safe savings and wealth-building strategy based on a specific type of high cash value dividend-paying whole life insurance.

No, it’s not the kind of permanent life insurance that most self-proclaimed financial gurus love to hate. There are major differences. But it is a form of supercharged permanent life insurance.

Want proof that’s what the Palm Beach Group is talking about? In the transcript of their long interview with Ted Benna, Palm Beach includes a quote, attributed to the Wall Street Journal. Note that they’ve removed the Journal’s identification of the product and replaced it with their own vague words, “this account.”

A look at the Wall Street Journal report they’ve quoted shows what the Journal actually said back in 2010: “Permanent life insurance has ‘become a tax shelter for the rich.’”

We include that Wall Street Journal quote only to demonstrate what the Palm Beach Research Group is talking about. You will realize that permanent life insurance is not a tax shelter merely “for the rich” when you read our article, “The Truth About Whole Life Insurance and Why It’s More Than a ‘Rich Man’s Roth’.”

In the interview Ted Benna did for the Palm Beach Research Group, he discussed what you’ll find in The 501(k) Plan book they are promoting. He said you’ll learn the details of this “account” and how to open one, in the first chapter of the book.

And Chapter 1 of the book is all about “Income for Life,” which is yet another name the Palm Beach Group gave to the concept and strategy more commonly known as Bank On Yourself.

It’s crystal clear. The Palm Beach Group would like to sell you information we believe you’re entitled to have for free. And we’ve been giving that information away since 2001.

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How to Open Your Own “501(k) Plan” or Account

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Get instant access to the FREE 18-page Special Report that reveals how super-charged dividend paying whole life insurance lets you bypass Wall Street, fire your banker, and take control of your financial future.

… or what you now realize is better known as a Bank On Yourself plan.

You need to talk with a life insurance advisor who has been trained in the special requirements of high cash value life insurance policy design. But the Palm Beach Group makes an outrageously untrue claim, on page 46 of their book, The 501(k) Plan:

The government regulates the fees life insurance agents can charge you. So from a cost perspective, it doesn’t matter whom you choose. You’ll pay the same.”

Let me set the record straight: It absolutely matters who you choose to help you open your 501(k) plan …

The government does not regulate the fees, and even if the amount you pay were the same from company to company, which it is not, the advisor has great discretion in how he structures your plan. Done one way, he gets paid about what life insurances advisors traditionally get paid.

But done with your best interests in mind, the advisor’s compensation is slashed by 50% ‑ 70%, and that “extra” money goes into building your policy’s cash value. Bank On Yourself Authorized Advisors are committed to this concept and are willing to accept a compensation cut, knowing you’ll be so pleased with the performance of your plan that you’ll refer your advisor to your family and friends, as well. In fact, that happens all the time.

Talk to Someone with Your Interests in Mind to Start Your 501(k) or Bank On Yourself Plan

To talk with an advisor with extensive training in this area who cares about your welfare, you want to talk with a Bank On Yourself Authorized Advisor. It may surprise you to know that only about one out of every 20 insurance advisors who apply to become Bank On Yourself Authorized Advisors are actually accepted. The training and commitment required are that tough.

So go to the source that’s been open and straightforward with you from Day One, Bank On Yourself. Request a FREE Analysis and custom-tailored recommendations at no cost or obligation. You’ll get a referral to an Bank On Yourself Authorized Advisor (a life insurance advisor with advanced training on this concept) who will prepare your Analysis and personalized recommendations.

Comments

    • The 501(k) Plan, otherwise known as Bank On Yourself, is NOT a one-size-fits-all plan. There’s no pre-set amount a person would put into a plan, because the plan would be customized to YOUR unique situation, goals and dreams.

      If you’d like to take advantage of a free, no-obligation Bank On Yourself Analysis, go to:

      https://www.bankonyourself.com/analysis-request-form

      The Bank On Yourself Authorized Advisor we refer you to will be happy to answer any other questions you may have.

  1. THANK YOU for clarifying the Palm Beach boys $ club. I am with you. When I saw the advertisement from the PB boys, I went to the end immediately and saw the required fees…I trashed it! You guys are doing it right. Thank you

  2. Well done Pamela. Excellent research/investigation , on our behalf, into this important matter.. Thanks a million…

  3. My company offers this plan, and most of our clients love the “501(K)” plan as a matter of fact. The 401(k) plan is outdated and there is just too many fees that people don’t even realize.

    Henry

  4. I am still not sure I understand the 501K. It is an insurance policy, savings account, or something else? Taxes included? Self directed? unsure what it is.

  5. Subsection (k) of section 501 of the Internal
    Revenue Code [501(k)] provides that certain child care organizations can be treated as educational organizations under IRC 501(c)(3). This provision effectively enabled child care centers to qualify for exemption under IRC 501(c)(3) without having to demonstrate that they meet the Service’s definitions of “educational” or “charitable.” It has NOTHING to do with retirement. The whole premise of your book therefore loses any credibility: A 401(k) plan is such because the plan complies with IRS 401K. There would be no reason for a whole life policy to comply with 501k. This is all just marketing stupidity.

    • EXACTLY!  But we didn’t write this book about the 501(k) retirement plan!  The Palm Beach Group did, and the name is total hype for all the reasons I mentioned in this blog post.

  6. I don’t think Ted Benna is the father of the 401K he might of came up with the name 401K and some of the mechanics of it but the true 401K plan was created by a (FDR) Franklin D Roosevelt and it was named Social Security.
    It was designed that the employee and the Employer would contribute equal amounts into the Social Security plan. It was set up for the worker to have at his retirement a sum of income to fall back on. It was set up for those who worked and put into it. Problem is FDR passed on before he was able to see its completion and to secure if from those elected officials who decided in the 1950’s (democrats) to start using our SS money for other things, then added all kinds of garbage to it that drained away our money and now all we have is IOU’s. If left alone our SS bank would be in the multi “trillions” and those of us who put into it would be having a nice retirement. FDR had planned to secure it and invest it but never got to share those idea’s do to his death.
    So Ted might of invented the name 401K but the ground work was already done called Social Security. So now you see what happens when Liberals in the government do to I call steal your hard earned dollars. Our elected officials took our SS and destroyed it and we should demand they repay it with interest and put it back to its original state when FDR created it that means remove ALL that is attached to it. Disability kids etc. All these attachments should have their own plans if truly needed.

    • Your anger is a little misplaced. FDR helped to pass Social Security legislation, much to his credit. It has been modified over the years to include too many things not related to retirement, which is a shame. People with nothing should be given a helping hand, but with different legislation.
      But the 401-k provision of the tax code had nothing to do with Social Security. It was originally created in the 1970’s as a way to allow high-earning executives to stash more money away for their futures. Some creative accountant at a large corporation perverted it as a way to get rid of their pension plan, and eventually every company got on board. It was all about making the little guy foot the bill for his own retirement and save the corporations a boatload of money.

  7. I once attended a seminar where the largest 401K producer in the country spoke. He was leaving the office of a very large corporation with the CEO of the company. He asked the CEO if he would trust the receptionist in their lobby with investing his retirement funds. The CEO replied “Hell no.” The advisor then said, “well, how do you expect her to understand how to invest her 401K retirement dollars?” Pretty much sums it up. Get a good advisor to help you decide which funds are best based on your personal circumstances. Personally, real estate investments have served me best over the years replacing a pension from a failed airline.

  8. Is this 501k still going to havd to have Retirement
    Distributions taken out? ( St of Il)

    Also, As a retired 72 yr old. Senior Citizen, I have concerns about my money lasting . Does this Bank on Yourself have any Roth- like features?
    At this age what amount would a person have to invest to stay afloat? into the 90’s+?

    What would happen if there is another recession or if the US dollar tanks globally? Is this as secure as
    gold and silver?

  9. Are there any other fees connected to ordering this
    information ? or fees discussing decisions to be made with a trained Bank on Yourself Advisor?

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