In February 2018, Ken Crabb became the subject of an IRS promoter investigation over the Restricted Property Trust (RPT), a tax-planning structure designed for high-earning business owners. The IRS questioned whether Crabb was liable under IRC Section 6700, a provision targeting promoters of abusive tax shelters.
For six years, Crabb faced negative press, hard questions by clients, and pressure and scrutiny from the financial planning community. Despite that, he did not walk back the strategy, modify it to appease critics, or distance himself from the RPT. He held his position.
In February 2024, the IRS closed the investigation without penalties, charges, or findings of wrongdoing. For Crabb, this won unprecedented trust in the Restricted Property Trust (RPT).
What the RPT Actually Is, And Why It Drew Scrutiny
The Restricted Property Trust is an employer-sponsored benefit plan. It allows business owners operating through S-Corps, C-Corps, LLCs, or partnerships to make fully tax-deductible contributions to a plan that funds a whole life insurance policy. A portion of each contribution is taxable to the participant, while the rest grows tax-deferred inside the policy.
The structure relies on a concept called “substantial risk of forfeiture.” Participants must commit to a minimum five-year funding period. If the employer fails to make the annual contribution, the plan’s assets are forfeited to a designated charity. That forfeiture risk is what prevents the RPT from being classified as deferred compensation. This is also what makes the tax treatment possible.
The RPT operates under separate IRC tax code sections from qualified plans. It does not affect 401(k) contributions. It is fully discriminatory, meaning it can be offered exclusively to owners and executives without any non-discrimination testing.
The Problem With Being First
Innovative tax strategies always attract scrutiny. The more effective the structure, the more carefully regulators examine it. This is not unique to the RPT. Throughout tax history, strategies that push the edges, even those that are fully compliant, draw IRS attention before they are widely accepted.
The challenge for Crabb was that the IRS investigation was public. Many competitors used it, and the press reported on it without always contextualizing the legal mechanics behind the RPT. Enrolled clients faced uncertainty, while advisors who had recommended the strategy to clients had to make difficult calls about how to respond.
Ken Crabb was consistent in his belief that the RPT was built on sound legal principles. He was confident the investigation would confirm that.
Six Years of Holding the Line
Throughout the six years, Crabb did not settle or restructure the RPT to preemptively appease the IRS. He engaged legal representation with direct experience inside the IRS National Office of Chief Counsel and let the investigation run its course.
When the case closed, Crabb’s personal attorney made this observation: In over a decade working within the IRS’s most senior legal office, he had never seen a promoter investigation of this magnitude start and end without any ramifications.
It means the IRS examined the RPT thoroughly and found no grounds for action.
“It was a brutal six years,” Crabb said, “but it’s great to have that investigation in the rearview mirror so we can now focus 100% on delivering the Restricted Property Trust to successful taxpayers all over America.”
What the RPT Delivers for Business Owners
The RPT is a structured, documented plan with clear rules, defined tax treatment, and specific eligibility requirements. Features include:
- Fully deductible contributions (100% tax-deductible for the business).
- Partial taxation to the participant (typically, only 30% to 40% of the contribution is taxable income to the individual).
- Tax-deferred growth (policy cash value grows inside a whole life insurance contract).
- Death benefit coverage (If a participant dies before completing the funding period, a death benefit completes the plan for beneficiaries).
- No impact on qualified plans (RPT contributions do not affect 401(k) or other qualified plan funding).
- Creditor protection (plan assets are held in trust and protected from creditors).
The Vision: Building Long-Term Wealth With the RPT
Ken Crabb built the Restricted Property Trust on a specific legal foundation. When that foundation was challenged, he did not flinch. Six years later, the IRS closed its investigation with nothing to show for it.
For high-income business owners looking for a compliant, conservative way to reduce current income taxes, build long-term wealth, and provide meaningful death benefit coverage, the Restricted Property Trust remains one of the most structurally sound options available.
Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or investment advice, a recommendation, or an offer to buy or sell any financial product. Consult a qualified tax, legal, or financial professional for advice specific to your situation.
