By |Published On: August 1st, 2017|Categories: 1042 QRP Solutions|

Medical scientists have identified a disorder, known as Traumatic 1042 Election Distress, that can afflict business owners who pursue Section 1042 sales of their company stock to an ESOP. The researchers(1) recently concluded their clinical study, based on observations of hundreds of patients over the past 30 years. Their newly published findings identify common stress patterns observed among these business owner patients. The disorder is curable if diagnosed early.

Learn to recognize these symptoms:

The Six Stages of Traumatic 1042 Election Distress

  1. Overwhelmed: “There is so much complexity in forming an ESOP. I need to focus on one thing at a time. After all, I have 12 months to figure out my 1042 rollover options;”
  2. Denial: “QRP seems simple enough. I should be able to recognize a ‘domestic operating company’ when I see one. Nothing to worry about.”
  3. Anger: “Floating rate notes are the recommended option?(2) I have to buy them and then borrow against them to get at my money? You’ve got to be kidding me!”
  4. Fear and Worry: “What if I wake up one day and realize the bonds are never going up in value? What if the issuer goes bust or else redeems the bonds before I am gone? What if I get a margin call?
  5. Hope: “Maybe if I follow my stock broker’s advice and monetize these bonds, he can reinvest the money, beat the market and earn back what I left on the table!”
  6. Stress and Anxiety: “How much money am I leaving on the table? There must be a better way—Call 9-1-1!!
  7. Depression: “Still, I suppose it’s better than recognizing capital gains. I hope I don’t outlive my bond’s maturity date! Why doesn’t this sit well with me?”

If you or someone you know is suffering symptoms such as these, then get a second opinion. Alpha Architect has a track record of treating business owners who suffer from traumatic 1042 election distress, typically resulting in full patient recoveries. We have pioneered a low-cost, passive equity index alternative to floating rate notes that is designed to optimize the after-tax, after-fee returns that can be achieved through a 1042 rollover. Contact a trained professional today (ask for Doug). We believe that for all the good that you are doing for your employees and communities, you should also do well for yourself.

Here is a simple outline of our 1042 solution.

Surgeon General Warning: Any 1042 QRP rollover strategy that is contingent on the investor suffering an early demise in order to achieve his estate planning goals can be hazardous to your health, your wealth or both.

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About the Author: Doug Pugliese

Doug Pugliese
Mr. Pugliese is a Director of Portfolio Services at Alpha Architect, where he heads up the firm’s ESOP 1042 solutions practice. In this role, Doug is responsible for assisting clients to implement tax efficient strategies for monetizing their business holdings to create diversified, investible wealth. Previously, he was director, Wealth Transition Strategies, at SEI Private Wealth Management, a multifamily office, where he focused on advising business owners. Prior to joining SEI, Mr. Pugliese was employed by Marshall & Stevens, Inc., a financial consultancy, where he was an Executive Managing Director and Principal, managing activities in the Northeast region, including the firm’s New York and Philadelphia offices. Previously, Mr. Pugliese was a Managing Director in the Investment Banking Division at Bear, Stearns & Co. Inc. During his twelve years’ tenure there he developed and executed strategic merger & acquisition and financing transactions worth more than $12 billion and was based in the Firm’s New York and London offices. Prior to that, Mr. Pugliese served as an officer and pilot in the United States Navy. Mr. Pugliese received his B.A. in Economics and Spanish Literature (with honors) from the University of Pennsylvania and his MBA from the Stern School of Business at New York University, where he was a Dean’s Scholar and a Stern Scholar.

Important Disclosures

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Third party information may become outdated or otherwise superseded without notice.  Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency has approved, determined the accuracy, or confirmed the adequacy of this article.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. Our full disclosures are available here. Definitions of common statistics used in our analysis are available here (towards the bottom).

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