What Is a 501k Plan & 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.

And the Palm Beach Group further confuses people by calling it a “501(k)” when there already is a provision of IRS code–Section 501(k)–that relates to tax treatment of child care organizations, and has nothing to do with the 501(k) the Palm Beach Group is talking about! (It should also not be confused with Section 501(b) which relates to financial institutions and privacy.)

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 learn all you need to know about the 501(k) when you 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.
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In this 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. You can also see what they got right—and wrong—about this 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.

Spoiler Alert: The 501(k) plan Palm Beach Group talks about is a time-tested, safe wealth-building strategy based on high cash value, low commission, dividend-paying whole life insurance that’s been used by wealthy, successful people, presidents and famous entrepreneurs for well over a century. But almost anyone can use it to take control of their money and finances – regardless of age or income – as you’ll discover when you download this FREE Special Report.

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

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.

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

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.”

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 …

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Want more information about America’s most popular (and scariest?) retirement plan? Just click here to see all of the search results for “401(k)” on our site.

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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.

[this account] has become a tax shelter for the rich... it gives the affluent tax advantages far beyond those available to middle-income people through a 401(k) or IRA.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 for free in this Special Report and on our website since 2001.

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

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

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

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 agent has great discretion in how he structures your plan. Done one way, he gets paid about what life insurances agent traditionally get paid.

But done with your best interests in mind, the agent’s compensation is slashed by 50% ‑ 70%, and that “extra” money goes into building your policy’s cash value. Bank On Yourself Professionals 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 agent 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 agent with extensive training in this area who cares about your welfare, you want to talk with a Bank On Yourself Professional. It may surprise you to know that only about one out of every 20 insurance agents who apply to become Bank On Yourself Professionals 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 Professional (a life insurance agent with advanced training on this concept) who will prepare your Analysis and personalized recommendations.



    • 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:


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

      And if you’d simply like more information about the 501(k) or Bank On Yourself Strategy, download our free Special Report right here.

  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.


  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). It has NOTHING to do with retirement. The whole premise of The Palm Beach Groups’ book therefore loses 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 remember that 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. It sure makes you wonder if the Palm Beach Group used the term “501(k)” intentionally… or out of ignorance/laziness.

  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.

      • Spot on Mike Johnson. 401 & SS have nothing in common, other than boastful accountant’s and greedy executives. It’s only a matter of time before 401 and SS are a thing of the past. Have done research for nearly two years on the premise of 501 and all it’s mechanic’s and have yet to find anything disconcerting about it’s longterm advantages. I was very skeptical at the beggining, but now have a good understaning about it’s finacial integrity. Much opportunity to create many income streams, without as much risk as with CD’s and IRA’s. There is more to this program than could be explained in this article. I seriously recommend further involvement for all.

  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 Professional?

  10. To everyone inquiring here:

    I have a Bank On Yourself account and have had for about 8 years. It is everything that BoY represented to me when we began.

    I’m not an employee of BOY. However, as a satisfied customer, I whole-heartedly endorse what they are doing. I even posted this link on Palm Beach Research Group’s spam on my Facebook page. They kept trying to call me a spammer and get my posts blocked but I continued. Why? Because our money is too damned hard to come by to have it frittered away by those who are just trying to make money on us rather than serve our needs.

    I’d be happy to discuss this with anyone who’d like to talk to me privately. I can’t help you with getting your account set up because I don’t work for BOY. I’m just one danged happy customer!

  11. I want access at any time. I want a monthly statement!
    I want a telephone number where I can
    access my advisor at anytime

    • With Bank On Yourself, you will be able to access your cash value by answering just two questions:  How much do you want?  Where should we send it?

      You can access your account information online at any time.

      You’ll receive an email address for your Bank On Yourself Professional and a phone number where they can be reached during regular business hours.

      You can take advantage of a no-obligation Bank On Yourself Analysis that will show you how you could benefit from a Program tailored to your unique financial situation, goals and dreams, here.

  12. My question is, after I enroll with my money I have already paid taxes on and when I make a withdrawal will I be responsible to paying taxes again?

  13. I appreciate your reviewing the Palm Beach Group article. I’m on the Newsmax email list so I get their promotions all the time. Sometime I’m interested in seeing what they have to offer but I really don’t want to sit through their presentations waiting for them to get to the point.

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