Capital Deductible Capital Raising


Capital Deductible is Pre-Tax Capital Raising

There is a U.S. bias, in this area, on deductible contributions. That bias makes the assumption that all contributions from all sources to a retirement plan have some form of taxability up front. All of that is true.

Because of that bias when a U.S. person looks at a foreign retirement plan they immediately object to its structure because of remuneration level caps. Therefore, in the context from which a U.S. bias person is looking, thinking about contribution limits would mean this is an unworkable proposition.

The answer to that thought is that this is a non-qualified plan, so, therefore the only relevance to remuneration level is if you are looking for U.S. deductibility. If you are looking for non-U.S. deductibility, well then, you proceed. That’s where you get deductibility – outside the USA; not within the USA. (reference: Change to Ownership Overseas) That is the whole point. We are not looking for deductible at the employee end but rather at the foreign employer end. At the employer end you need to have a retirement benefits service agreement government regulated, FATCA registered and IRS recognized 402(b) foreign occupational retirement plan administrator who is FATCA registered and IRS recognized as ”deemed compliant” and authorized to sign a W-8BEN-E box 29e.

The 402(b) is the remuneration and deferred compensation legal entity. The funding is set aside not on the ”employer” books but on the books of a retirement plan administrator who is 402(b) compliant.

In other words it is not that the ”employer” is withholding it for future pay , the employer is actually setting it aside and paying it over to the 402(b) deferred compensation administrator. Meaning that it is not yours (employee) until it is yours. When it is yours you are subject to tax on it but not before.


There is tax-deductible capital now that is FATCA compliant, and it is done through a section of the Internal Revenue Code. It is a package through experienced U.S. Custodians and International law firms. It is a straightforward IRS code mechanism by which pre-tax profit is taken out of the business, put into a retirement plan for owners and staff shareholders compliant to Section 83 rules..

It is reinvested back into their own hedge fund (or their own company stock) and if people want to leave, well then, they can leave it there to continue to accumulate tax deferred or withdraw it as reportable. It also provides a good way of managing that company’s share register because sometimes when people leave you don’t want to sell their shares so you can just buy them out from within the retirement plan. Therefore, it is very stable.


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