Jul 02

Greek Financial Crisis Expected to Trigger Strong Demand For Alternative Asset Investments With Self-Directed IRA

Greek debt crisis causing real fear amongst retirement investors increasing demand for alternative asset investments

IRA Financial Group, the leading provider of alternative asset investments with a Self-Directed IRA LLC, expects to see a strong surge in demand from individual retirement investors looking to purchase alternative assets with their retirement funds in light of the Greek financial crisis. As widely reported by the world media, with Greek banks and the country’s stock market closed for the week and fear that Greece will default on its debt, investors around the world are worried that should Greece leave the euro and say it can’t pay its debts, which stand at more than 300 billion euros, the global economic recovery could be derailed and questions would grow over the long-term viability of the euro currency itself. “There is a sense of real fear amongst our self-directed IRA clients about what a Greek default could mean to the US equity markets, “stated Adam Bergman, a tax partner with the IRA Financial Group. “Many of our clients are happy that their retirement funds are well diversified and own hard assets, such as real estate in light of the Greek financial crisis, “ stated Mr. Bergman.

Greek Financial Crisis Expected to Trigger Strong Demand For Alternative Asset Investments With Self-Directed IRAIRA Financial Group’s self-directed IRA LLC solution involves the establishment of a limited liability company (“LLC”) that is owned by the IRA (care of the IRA custodian) and managed by the IRA holder or any third-party. As manager of the IRA LLC, the IRA holder will have control over the IRA assets to make real estate and other investments tax-free and without custodian consent. “Having the ability to diversify ones retirement portfolio with alternative assets, such as real estate, in light of the Greek debt crisis is expected to increase demand for the Self-Directed IRA LLC, “stated Mr. Bergman.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading “checkbook control” Self Directed IRA Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please contact us @ 800-472-0646.

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Jun 29

“Checkbook Control” Self-Directed IRA LLC Can Help Protect IRA Assets from IRA Custodian Malfeasance

Self-Directed IRA LLC structure offers the IRA holder the ability to hold IRA assets at a local bank and far away from any potential IRA custodian misbehavior.

IRA Financial Group, the leading provider of “checkbook control” self-directed IRA LLC announces the result of its client survey which examined the financial risks involved in using a full service IRA custodian to make self-directed IRA investments versus a “checkbook control” IRA LLC. In the case of a full service IRA custodian, the IRA holder is required to keep all IRA assets with the IRA custodian and is required to go through the IRA custodian to make all investments. Accordingly, any misconduct associated with the IRA custodian can potentially put an individual’s IRA assets held with the IRA custodian in financial risk. Whereas, in the case of a “checkbook control” self-directed IRA LLC, all the IRA funds are held at a local bank in the name of the LLC and not with an IRA custodian. “Our clients have found that having their IRA funds at a local bank they know and trust has given them the comfort of knowing their IRA assets are better protected against any potential Self-Directed IRA custodian malfeasance”, stated Jacky Ospina, a retirement tax specialist.

There are essentially two ways to make non-traditional investments, such as buying real estate or precious metals with a self-directed IRA: (1) An IRA custodian controlled self-directed IRA, which typically involves a special financial institution or IRA administrator will serve as the custodian of the IRA. With a custodian controlled Self-Directed IRA, the IRA funds are generally held with the IRA custodian and the IRA custodian, at the IRA holder’s direction, will then invest those IRA funds accordingly. The IRA custodian is involved in every facet of the self-directed IRA transaction from signing checks to documentation and the account fees are typically asset and transaction based. (2) A “checkbook control” self-directed IRA LLC that offers the IRA holder with more control and cost efficiency when making IRA investments.

“Checkbook Control” Self-Directed IRA LLC Can Help Protect IRA Assets from IRA Custodian Malfeasance Under the self-directed IRA LLC “checkbook control” structure, the IRA is set up as a self-directed account that’s capitalized by funds rolled over from a current retirement account. Then, a LLC is created in which your new IRA purchases all the membership units/interests. At that point, the IRA funds are held in an LLC bank account and are ready to invest at your discretion. A “checkbook control” Self Directed IRA allows one the ability to eliminate any risks associated of having their IRA funds placed at risk due to the financial failure of any IRA custodian. “Because most of the Self-Directed IRA custodians are smaller trust companies than a major bank or financial institution, there is some potential risk that ones IRA assets can be in jeopardy in the case of any IRA custodian misconduct,” stated Ms. Ospina.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading “checkbook control” Self Directed IRA Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Jun 26

Self Directed IRAs Offer Protection From Creditors

Retirement accounts have become many Americans’ most valuable assets. That means it is vital that you have the ability to protect them from creditors, such as people who have won lawsuits against you.

In general, the asset/creditor protection strategies available to you depend on the type of retirement account you have (i.e. Traditional, IRA, Roth IRA, or 401(k) qualified plan, etc), your state residency, and whether the assets are yours or have been inherited.

Using a Self-Directed IRA LLC will offer you the ability to make a wide range of traditional as well as non-traditional investments, such as real estate, in addition to offering you strong asset and creditor protection. In addition, by using an LLC wholly owned by your IRA, you will also gain another layer of limited liability protection. In this regard, using a Self-Directed IRA LLC to make investments offers you far greater asset and creditor protection versus making the investment personally. For this reason, growing and investing your retirement funds through a Self-Directed IRA LLC is a great tool to protect your retirement assets from creditors, inside or outside of bankruptcy.

Federal Protection for IRAs for Bankruptcy

Like 401(k) qualified plans, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA” or the “Act”) effective for bankruptcies filed after October 17, 2005, gave protection to a debtor’s IRA funds in bankruptcy by way of exempting them from the bankruptcy estate. The general exemption found in sec­tion 522 of the Bankruptcy Code, 11 U.S.C. §522, pro­vides an unlimited exemption for IRAs under section 408 and Roth IRAs under section 408A. IRAs created under an employer-sponsored section 408(k) sim­plified employee pension (a “SEP IRA”) or a sec­tion 408(p) simple retirement account (a “SIMPLE IRA”), as well as pension, profit sharing, or qualified section 401(k) Plan wealth transferred to a rollover IRA.

Traditional and Roth IRAs that are created and funded by the debtor are subject to an exemp­tion limitation of $1 million in the aggregate for all such IRAs (adjusted for inflation and subject to increase if the bankruptcy judge determines that the “interests of justice so require”). It is understood that a rollover from a SEP or SIMPLE IRA into a rollover IRA receives only $1 million of protection since such a section 408(d)(3) rollover is not one of the rollovers sanctioned under Bankruptcy Code section 522(n).

Protection of IRAs from Creditors Outside of Bankruptcy

In general, ERISA pension plans, such as 401(k) qualified plans, are afforded extensive anti-alienation credi­tor protection both inside and outside of bankrupt­cy. However, these extensive anti-alienation protections do not extend to an IRA, including a Self-Directed IRA, arrangement under Code section 408. Therefore, since an individually estab­lished and funded Traditional or Roth IRA is not an ERISA pension plan, IRAs are not preempted un­der ERISA. Thus, for anything short of bankruptcy, state law determines whether IRAs (including Roth IRAs) are shielded from creditors’ claims.

Note – on June 12, 2014, the Supreme Court unanimously upheld a Seventh Circuit decision that said inherited IRAs do not enjoy the protections of IRAs in bankruptcy proceedings.

The following table will provide a summary of state protection afforded to IRAs, including Self-Directed IRAs, from creditors outside of the bankruptcy context.

State State Statute Special Statutory Provision State Traditional IRA Exemption from Creditors State Roth IRA Exemption from Creditors
Alabama Ala. Code §19-3B-508 Yes No
Alaska Alaska Stat. §09.38.017 The exemption does not apply to amounts contributed within 120 days before the debtor files for bankruptcy. Yes Yes
Arizona Ariz. Rev. Stat. Ann. § 33-1126C The exemption does not apply to amounts contributed within 120 days before a debtor files for bankruptcy. Yes Yes
Arkansas Ark. Code Ann. §16-66-220 Yes Yes
California Cal. Civ. Proc. Code § 704.115 Yes – IRAs are exempt only to the extent necessary to provide for the support of the judgment debtor when the judgment debtor retires and for the support of the spouse and dependents of the judgment debtor, taking into account all resources that are likely to be available for the support of the judgment debtor when the judgment debtor retires. No
Colorado Colo. Rev. Stat. §13-54-102 Yes Yes
Connecticut Conn. Gen. Stat. §52-321a Yes Yes
Delaware Del Code Ann. § 10-4915 Yes Yes
D.C. D.C. Code § 15-501(a)(9) & (10) Yes Yes
Florida Fla. Stat. Ann. §222.21 The debtor’s IRAs are exempt from creditors, but one Florida court has held that inherited IRAs are not exempt from creditors (Robertson v. Deeb, 16 So. 3d 936 (Fla. 2d Aug. 14, 2009). Yes Yes
Georgia Georgia Code Ann. § 44-13-100(a)(2.1) IRAs are exempt only to the extent necessary for the support of the debtor and any dependent. Yes No
Hawaii Hawaii Rev. Stat. § 651-124 The exemption does not apply to contributions made to a plan or arrangement within three years before the date a civil action is initiated against the debtor. Yes No
Idaho Idaho Code §§ 11-604A, 55-1011 Yes No
Illinois I.L.C.S. § 5/12-1006 Yes Yes
Indiana Ind. Code Ann. § 55-10-2(c)(6) Yes No
Iowa Iowa Code Ann. § 627.6(8)(e), (f) Yes Yes
Kansas Kan. Stat. Ann. § 60-2308 Yes Yes
Kentucky Ky. Rev. Stat. Ann. § 427.150(2)(f) The exemption does not apply to any amounts contributed to an individual retirement account if the contribution occurred within 120 days before the debtor filed for bankruptcy. The exemption also does not apply to the right or interest of a person in individual retirement account to the extent that right or interest is subject to a court order for payment of maintenance or child support. Yes Yes
Louisiana La. Rev. Stat. Ann. §§ 20:33(1), 13:3881(D) No contribution to an IRA is exempt if made less than one calendar year from the date of filing bankruptcy, whether voluntary or involuntary, or the date rights of seizure are filed against the account. The exemption also does not apply to liabilities for alimony and child support. Yes Yes
Maine Me. Rev. Stat. Ann. Tit. 14, § 4422(13)(E) Exempt only to the extent reasonably necessary for the support of the debtor and any dependent. Yes Yes
Maryland Md. Code Ann. Cts. & Jud. Proc. § 11-504(h)(1) Yes Yes
Massachusetts Mass. Gen. L. Ch. 235 § 34A; 236 § 28 The exemption does not apply to an order of court concerning divorce, separate maintenance or child support, or an order of court requiring an individual convicted of a crime to satisfy a monetary penalty or to make restitution, or sums deposited in a plan in excess of 7% of the total income of the individual within 5years of the individual’s declaration of bankruptcy or entry of judgment. Yes Yes
Michigan Mich. Comp. Laws Ann. §§ 600.5451(1), 600.6023(1)(k) The exemption does not apply to amounts contributed to an individual retirement account or individual retirement annuity if the contribution occurs within 120 days before the debtor files for bankruptcy. The exemption also does not apply to an order of the domestic relations court. Yes Yes
Minnesota Minn. Rev. Stat. Ann. § 550.37(24) Protection limited to $60,000 (adjusts for inflation). Yes Yes
Mississippi Miss. Code Ann. § 85-3-1(e)Applies to solo 401k plans Yes Yes
Missouri Mo. Ann. Stat. § 513.430.1(10)(e) and (f) Exemption limited to extent reasonably necessary for support. Yes Yes
Montana Mont. Code Ann. §§ 19-2-1004, 25-13-608, 31-2-106 Yes Yes
Nebraska Neb. Rev. Stat. § 25-1563.01 For IRAs – Limited to the extent reasonably necessary for support.Individual Retirement Accounts are generally protected from attachment and garnishment to the extent the funds contained therein are reasonably necessary for the support of the debtor or any dependent of the debtor. Novak v. Novak, 245 Neb. 366, 513 N.W.2d 303 (1994). Yes Yes
Nevada Nev. Rev. Stat. § 21.090(1)(q) The exemption is limited to $500,000 in present value held in an IRA. Yes Yes
New Hampshire N.H. Code Ann. § 511:2, XIX Yes Yes
New Jersey N.J. Stat. Ann. § 25:2-1(b) Yes Yes
New Mexico N.M. Stat. Ann. §§ 42-10-1, 42-10-2 Yes Yes
New York N.Y. Civ. Prac. L. and R. § 5205(c) Yes Yes
North Carolina N.C. Gen. Stat. § 1C-1601(a)(9) Yes Yes
North Dakota N.D. Cent. Code § 28-22-03.1(3) Retirement funds that have been in effect for at least one year, to the extent those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986. The value of those assets exempted may not exceed one hundred thousand dollars for any one account or two hundred thousand dollars in aggregate for all account. Yes Yes
Ohio Ohio Rev. Code Ann. § 2329.66(A)(10)(b) and (c) SEP and SIMPLE IRAs are not protected. Yes Yes
Oklahoma 31 Okla. St. Ann. § 1(A)(20) Yes Yes
Oregon 42 Pa. C.S. §§ 8124(b)(1)(vii), (viii), (ix) Yes Yes
Pennsylvania 42 Pa. C.S. §§ 8124(b)(1)(vii), (viii), (ix) 100%, except for amounts (1) contributed within 1 year (not including rollovers), (2) contributed in excess of $15,000 in a one-year period, or (3) deemed to be fraudulent conveyances. Yes Yes
Rhode Island R.I. Gen. Laws § 9-26-4(11), (12) Yes Yes
South Carolina S.C. Code Ann. § 15-41-30(12) IRA exemption limited to the extent reasonably necessary for support. For Solo 401(k) Plans, not limited to the extent reasonable necessary for support. Yes Yes
South Dakota S.D. Cod. Laws §§ 43-45-16

S.D. Cod. Laws §§ 43-45- 17

Exempts “certain retirement benefits” up to $1,000,000. Yes Yes
Tennessee Tenn. Code Ann. § 26-2-105 Distributions 100% exempt to the extent they are on account of age, death, or length of service and debtor has no right or option to receive other than periodic payments at or after age 58. Yes Yes
Texas Tex. Prop. Code § 42.0021 Yes Yes
Utah Utah Code Ann. § 78-23-5(1)(a)(xiv) The exemption does not apply to amounts contributed or benefits accrued by or on behalf of a debtor within one year before the debtor files for bankruptcy. Yes Yes
Vermont 12 Vt. Stat. Ann. § 2740(16) Yes Yes
Virginia Va. Code Ann. § 34-34 Limited to interest in one or more plans sufficient to produce annual benefit of up to $25,000 (pursuant to actuarial table in statute). Yes Yes
Washington Wash. Rev. Code § 6.15.020 Yes Yes
West Virginia W. Va. Code § 38-10-4(j)(5) Principal 100% protected. Exemption for distributions limited to the extent reasonably necessary for support. Yes No
Wisconsin Wisc. Stat. Ann. § 815.18(3) Yes Yes
Wyoming Wy. Stat. Ann § 1-20-110(a)(i), (ii). No statutory exemption for IRAs. – only mentions retirement plans No statutory exemption for IRAs. – only mentions retirement plans No No

 

IRA Asset Protection Planning

The different federal and state creditor protection afforded to 401(k) qualified plans and IRA, including Self-Directed IRAs, inside or outside the bankruptcy context presents a number of important asset protection planning opportunities.

If, for example, you have left an employer where you had a qualified plan, rolling over assets from a qualified plan, like a 401(k), into an IRA may have asset protection implications. For example, if you live in or are moving to a state where IRAs are not protected from creditors or have in excess of $1million dollars in plan assets and are contemplating bankruptcy, you would likely be better off leaving the assets in the company qualified plan.

Note – If you plan to leave at least some of your IRA to your family, other than your spouse, the assets may not be protected from your beneficiaries’ creditors, depending on where the beneficiaries live. IRA assets left to a spouse would likely receive creditor protection if the IRA is re-titled in the name of the spouse. However, you will likely be able to protect your IRA assets that you plan on leaving to your family, other than your spouse, by leaving an IRA to a trust. To do that, you must name the trust on the IRA custodian Designation of Beneficiary Form on file.

The IRA Asset & Creditor Protection Solution

By having and maintaining an IRA, you will have $1 million of asset protection from creditors in a bankruptcy setting. However, the determination of whether your IRA will be protected from creditors outside of bankruptcy will largely depend on state law. As illustrated above, most states will afford IRAs full protection from creditors outside of the bankruptcy context.

Why Work With the IRA Financial Group?

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP. Over the years, we have helped thousands of clients establish IRS compliant Self-Directed IRA LLCs specifically for asset and creditor protection purposes. With our work experience at some of the largest law firms in the country, our retirement tax professionals’ tax and IRA knowledge in this area is unmatched.

To learn more about using a “Checkbook Control” Self-Directed IRA LLC to make real estate and other investments without tax, please contact one of our Self-Directed IRA Experts at 800-472-0646 for more information.

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Jun 25

“Borrowing” From a Roth IRA

If you contribute to a Roth IRA and you’re in a pinch for a little cash, there are instances where ya can withdraw from your account tax- and penalty-free.  While technically you cannot borrow from your Roth (since you can’t pay it back), these options can get you the quick cash you need.  Note: when at all possible, you should never take withdrawals from your retirement accounts.  The longer the money in them stays untouched, the better the earning power it will have when it’s time to retire.

"Borrowing" From a Roth IRAIRS Publication 590 outlines the order of distributions from Roth IRAs.  You can withdraw any of your Roth contributions at any time and for any reason without penalty or tax.  Since Roth IRAs are funded with after-tax dollars, you’ve already paid any taxes on those contributions, therefore the money is yours anytime you wish.  If you’ve had the account for more than five years, anything converted before then is also yours free and clear.  If the account is less than five years and you are under age 59 1/2, you will be subject to a 10% early withdrawal penalty.  Lastly, if you are over age 59 1/2 and your first Roth IRA has been open for more than five years, all earnings are now tax- and penalty-free as well.

Your other option concerns Rollovers.  You can withdraw any amount from your Roth IRA and use it at your discretion for up to 60 days.  You can then rollover the amount withdrawn into a different Roth IRA.  This is the only way to replace money “borrowed” from a Roth IRA.  There are two considerations to remember when performing an IRA Rollover.  First, as stated, you have 60 days to “return” the money to a new IRA.  Whatever amount is not returned to a new IRA will be treated as a distribution and any penalties or taxes will be due.  Secondly, you can only perform one of these rollovers during any twelve month period.  Up until last year, you could essentially roll over your money from one account to another and another, etc.  In Bobrow v Commissioner in 2014, the tax court ruled that the rollover limit is for each IRA owner and not each IRA.

It’s never prudent to borrow money from your IRA, however it may be necessary at times.  Be aware of any penalties you may face so you know exactly what this move will cost you.  If you have any questions, please contact one of the IRA Experts at the IRA Financial Group @ 800.472.0646.

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Jun 23

Transferring a SIMPLE IRA to a Self Directed IRA

Individuals may generally transfer IRA or rollover eligible qualified retirement plan assets into a self-directed IRA LLC structure. Individuals may also roll over after-tax retirement funds to a Self-Directed SIMPLE IRA.

What is the most Common Way to Fund a Self-Directed SIMPLE IRA ?

Transfers and rollovers are types of transactions that allow movements of assets between like IRAs – Traditional IRA to Traditional IRA, including Savings incentive match plan for employees of small employers (SIMPLE). A SIMPLE IRA transfer is the most common method of funding a Self-Directed SIMPLE IRA LLC.

Note – SIMPLE IRA assets may be rolled over to a Self-Directed SIMPLE IRA anytime, however, SIMPLE IRA assets may be rolled over to a 401(k) qualified retirement plan, 403(b) plan, governmental 457(b) plans or a Traditional IRA only after a two (2) year waiting period is met. Though, a 401(k) qualified retirement plan, 403(b) plan, or governmental 457(b) plan may not be rolled into a SIMPLE IRA. Also, a Roth IRA cannot be rolled into a SIMPLE IRA.

Rollover Chart

Click the image below to view the Rollover Chart.

IRA Rollover Chart

SIMPLE IRA Transfers to a Self-Directed IRA

A SIMPLE IRA-to SIMPLE IRA transfer is one of the most common methods of moving assets from a SIMPLE IRA to Self-Directed SIMPLE IRA LLC. A transfer usually occurs between two separate financial organizations, but a transfer may also occur between SIMPLE IRAs held at the same organization. If a SIMPLE IRA transfer is handled correctly the transfer is neither taxable nor reportable to the IRS. With a SIMPLE IRA transfer, the SIMPLE IRA holder directs the transfer, but does not actually receive the IRA assets. Instead, the transaction in completed by the distributing and receiving financial institutions. In sum, in order for the SIMPLE IRA transfer to be tax-free and penalty-free, the IRA holder must not receive the SIMPLE IRA funds in a transfer. Rather, the check must be made payable to the new IRA custodian. Also, there is no reporting or withholding to the IRS on an IRA transfer.

The retirement tax professionals at the IRA Financial Group will assist you fund your Self-Directed SIMPLE IRA LLC by transferring your current SIMPLE IRA funds to your new Self-Directed SIMPLE IRA structure tax-free and penalty-free.

How the SIMPLE IRA to Self-Directed IRA Transfer Works?

Your assigned retirement tax professional will work with you to establish a new Self-Directed SIMPLE IRA account at a new FDIC and IRS approved IRA custodian. The new custodian will then, with your consent, request the transfer of your SIMPLE IRA assets from your existing IRA custodian in a tax-free and penalty-free IRA transfer. Once the IRA funds are either transferred by wire or check tax-free to the new SIMPLE IRA custodian, the new custodian will be able to invest the SIMPLE IRA assets into the new SIMPLE IRA LLC “checkbook control” structure. Once the funds have been transferred to the new SIMPLE IRA LLC, you, as manager of the SIMPLE IRA LLC, you would have “checkbook control” over your retirement funds so you can make traditional as well as non-traditional investments tax-free and penalty-free.

60-Day Rollover Rule

An individual generally has sixty (60) days from receipt of the eligible rollover distribution from a SIMPLE IRA account to roll the funds into a Self-Directed SIMPLE IRA LLC structure. The 60-day period starts the day after the individual receives the distribution. Usually, no exceptions apply to the 60-day time period. However, in cases where the 60-day period expires on a Saturday, Sunday, or legal holiday, the individual may execute the rollover on the following business day.

An individual receiving an eligible rollover distribution may rollover the entire amount received or any portion of the amount received. The amount of the eligible rollover distribution that is not rolled over to an IRA is generally included in the individual’s gross income and could be subject to a 10% early distribution penalty if the individual is under the age of 591/2.

How the 60-Day Rollover Works with a Self-Directed SIMPLE IRA

The retirement tax professionals at the IRA Financial Group will assist you in rolling over your 60-day eligible rollover distribution to a new FDIC and IRS approved IRA custodian. Once the 60-day eligible rollover distribution has been deposited with the new IRA custodian within the 60-day period, the new custodian will be able to invest the SIMPLE IRA assets into the new IRA LLC “checkbook control” structure. Once the SIMPLE IRA funds have been transferred to the new IRA LLC, you, as manager of the SIMPLE IRA LLC, you would have “checkbook control” over your retirement funds so you can make traditional as well as non-traditional investments tax-free and penalty-free.

Self-Directed IRA Transfer Experts

The retirement tax professionals at the IRA Financial Group will assist you in transferring your SIMPLE IRA tax-free and penalty-free to a “checkbook control” self-directed SIMPLE IRA LLC solution. Each client of the IRA Financial Group will work directly with an assigned retirement tax professional to establish the Self-Directed SIMPLE IRA LLC solution and make sure that the self-directed IRA transaction is structured in the most tax efficient manner and is not in violation of any IRS rules.

To learn more about the Self-Directed IRA transfer or direct or indirect rollover rules, please contact a tax professional at 800-472-0646.

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Jun 22

IRA Financial Group Self-Directed IRA & Solo 401(K) Clients Invested Over $310 Million in 2015 Helping to Spur U.S. Real Estate Market

Self-directed IRA and Solo 401(k) Plan investors taking advantage of attractive real estate opportunities

IRA Financial Group, the leading provider of Self-Directed IRA LLC & Solo 401(k) plan solutions, announces the result of a client survey that showed that as of May 1, 2015 its self-directed and solo 401(k) plan clients invested over $310 million in the real estate related investments. “With the increased popularity of real estate as an alternative asset investment, our clients have had great success in finding and closing on real estate related transactions so far in 2015, “ stated Jacky Ospina, a retirement specialist with the IRA Financial Group. “We are proud that our Self-Directed IRA and Solo 401(k) Plans clients have helped contribute to the growth in the U.S. real estate markets in 2015,” stated Ms. Ospina.

The primary advantage of using a Self Directed IRA LLC or Solo 401(k) Plan to make investments is that investments can be made by simply writing a check. In addition, all income and gains associated with the IRA investment grow tax-deferred.

With IRA Financial Group’s self directed IRA LLC & Solo 401(k) Plan solutions, traditional IRA or Roth IRA funds can be used to buy real estate by simply writing a check. “Even with real estate prices increasing, in 2015 our clients have been able to find attractive real estate opportunities for their retirement account, “ stated Adam Bergman, a tax partner with the IRA Financial Group. “

IRA Financial Group Self-Directed IRA & Solo 401(K) Clients Invested Over $310 Million in 2015 Helping to Spur U.S. Real Estate MarketIRA Financial Group’s Self-Directed IRA and Solo 401(k) Plan for real estate investors, also called a real estate IRA with checkbook control or a Self-Directed real estate 401(k) Plan, is an IRS approved structure that allows one to use their retirement funds to make real estate and other investments tax-free and without custodian consent. As a result, the Self-Directed IRA and Solo 401(k) Plan provides the retirement account holder with greater control over his or her retirement assets allowing the individual to make traditional as well as non-traditional investments, such as real estate tax-deferred and with much lower annual fees.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading “checkbook control” Self Directed IRA and Solo 401(k) Plan provider. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Jun 18

New Podcast – Tips For Holding Precious Metals and Coins In a Self-Directed IRA

IRA Financial Group’s Adam Bergman discusses how you can hold IRS approved coins and precious metals in your Self-Directed IRA.

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Click Here to Listen

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Jun 16

Investment Diversification Primary Reason Individuals Turning to Self-Directed IRA

The ability to better diversify ones retirement assets and having the ability to buy hard assets like real estate adding to popularity of self-directed IRA

IRA Financial Group, the leading provider of self-directed IRA LLC solutions, conducted an internal client survey recently, which asked a select number of self-directed IRA clients throughout the United States what the main reason for establishing a self-directed IRA. Over 82% of the clients responded that adding investment diversification to their retirement portfolio was the primary reason they established a self-directed IRA LLC account in 2015. “Retirement investors have not forgotten the lessons learned from the 2008 financial crisis and want to be better prepared for the next financial meltdown”, stated Adam Bergman, a tax partner with the IRA Financial Group.

The primary advantage of using a Self Directed IRA LLC to make investments is that offers a string level of investment diversification. Diversification is a technique that is believed to reduce risk by allocating investments among various financial instruments, industries and other asset categories. It aims to maximize returns by investing in different areas that would each react differently to the same event.

Investment Diversification Primary Reason Individuals Turning to Self-Directed IRAWith IRA Financial Group’s self directed IRA LLC solution, traditional IRA or Roth IRA funds can be used to make traditional as well as alternative assets, such as real estate. IRA Financial Group’s Self-Directed IRA LLC, also called a real estate IRA with checkbook control, is an IRS approved structure that allows one to use their retirement funds to make real estate and other investments tax-free and without custodian consent. The Self-Directed IRA LLC involves the establishment of a limited liability company (“LLC”) that is owned by the IRA (care of the Roth IRA custodian) and managed by the IRA holder or any third-party. As manager of the checkbook control IRA LLC, the IRA owner will have control over the IRA assets to make traditional as well as non-traditional investments, such as real estate.

Using IRA Financial Group’s self directed IRA LLC with “checkbook control” solution to make real estate investments offers a number of very interesting investment opportunities, including the ability to diversify ones retirement portfolio with real estate, precious metals, and other alternative investment options.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading “checkbook control” Self Directed IRA Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Jun 15

Calculating Tax on UDFI From IRA Investments

When a tax-exempt organization like an IRA or charity borrows money for a transaction on a nonrecourse basis, the IRA or charity must complete IRS Form 990-T and Schedule E and report the income, as the income is likely subject to tax. In general, a tax-exempt organization like a charity or IRA is permitted to borrow funds on a nonrecourse basis (a loan that is not personally guaranteed by the borrower), however, a prorate percentage of the income or gains associated with the nonrecourse loan will be considered “unrelated debt financed income” which will likely trigger the “unrelated business taxable income” tax. Note: A recourse loan, a loan that the IRA holder will be required to personally guarantee is not a permitted transaction and is treated as a prohibited transaction pursuant to Internal Revenue Code Section 4975 as the loan would require the IRA holder to personally guarantee the obligation of the IRA.

IRS Form 990-T, Schedule E applies to all organizations except sections 501(c)(7), (9), and (17) organizations. Hence, the Schedule E would apply to IRAs.

Calculating Tax on UDFI From IRA InvestmentsWhen debt-financed property is held for exempt purposes and other purposes, the IRA must allocate the basis, debt, income, and deductions among the purposes for which the property is held. It is important to remember to not include in Schedule E amounts allocated to exempt purposes. With respect to an IRA, income considered exempt is all passive categories income, such as interest, capital gains, rental income, royalties, dividends, and interest. Thus, the majority of transactions involving IRAs are not subject to tax and Schedule E reporting.

When completing the IRS Form 990-T, Schedule E, below please find instructions:

Column 1. Any property held to produce income is debt-financed property if at any time during the tax year there was acquisition indebtedness outstanding for the property. In other words, if at anytime during the year there was an outstanding loan on the property, the property would be considered debt-financed. When any property held for the production of income by an organization is disposed of at a gain during the tax year, and there was acquisition indebtedness outstanding for that property at any time during the 12-month period before the date of disposition, the property is debt-financed property. Securities purchased on margin are considered debt-financed property if the liability incurred in purchasing them remains outstanding.

Acquisition indebtedness is the outstanding amount of principal debt incurred by the organization to acquire or improve the property:

1. Before the property was acquired or improved, if the debt was incurred because of the acquisition or improvement of the property; or

2. After the property was acquired or improved, if the debt was incurred because of the acquisition or improvement, and the organization could reasonably foresee the need to incur the debt at the time the property was acquired or improved.

With certain exceptions, acquisition indebtedness does not include debt incurred by:

1. A qualified (section 401) trust in acquiring or improving real property. See section 514(c)(9).
2. A tax-exempt school (section 170(b)(1)(A)(ii)) and its affiliated support organizations (section 509(a)(3)) for indebtedness incurred after July 18, 1984

3. An organization described in section 501(c)(25) in tax years beginning after December 31, 1986.

4. An obligation, to the extent that it is insured by the Federal Housing Administration, to finance the purchase, rehabilitation, or construction of housing for low and moderate income persons, or indebtedness incurred by a small business investment company licensed after October 22, 2004, under the Small Business Investment Act of 1958 if such indebtedness is evidenced by a debenture issued by such company under section 303(a) of that Act, and held or guaranteed by the Small Business Administration (see section 514(c)(6)(B) for limitations).

5. A retirement income account described in section 403(b)(9) in acquiring or improving real property in tax years beginning on or after August 17, 2006.

Column 2. Income is not unrelated debt-financed income if it is otherwise included in unrelated business taxable income. For example, the IRA should not include income that is attributable to a business investment held through an LLC so that the income is not taxed twice..

Column 4. Average acquisition indebtedness for an IRA investment is for any tax year is the average amount of the outstanding principal debt during the part of the tax year the property is held by the IRA. To figure the average amount of acquisition debt, determine the amount of the outstanding principal debt on the first day of each calendar month during that part of the tax year that the IRA holds the property. You would then have to add these amounts together, and divide the result by the total number of months during the tax year that the IRA held the debt-financed property.

Column 5. The average adjusted basis for debt-financed property is the average of the adjusted basis of the property on the first and last days during the tax year that the IRA held the property. One would then need to determine the adjusted basis of property, using the rules under Internal Revenue Code Section 1011 (section contains rules on how to calculate the basis of a property taking into account income, losses, expenses, etc). The property’s basis would then need to be adjusted for the depreciation for all earlier tax years, whether or not the organization was exempt from tax for any of these years. Similarly, for tax years during which the IRA is subject to tax on unrelated business taxable income, the property’s basis must be adjusted by the entire amount of allowable depreciation, even though only a part of the deduction for depreciation is taken into account in figuring unrelated business taxable income.

If, however, no adjustments to the basis of property under section 1011 apply, the basis of the property would be the cost.

Column 7. The amount of income from debt-financed property included in unrelated trade or business income is figured by multiplying the property’s gross income by the percentage obtained from dividing the property’s average acquisition indebtedness for the tax year by the property’s average adjusted basis during the period it is held in the tax year. This percentage cannot be more than 100%.

Column 8. For each debt-financed property, deduct the same percentage (as determined above) of the total deductions that are directly connected to the income of the debt-financed property. However, if the debt-financed property is depreciable property, figure the depreciation deduction by the straight-line method only and enter the amount in column 3(a).

For each debt-financed property, attach statements showing separately a computation of the depreciation deduction (if any) reported in column 3(a) and a breakdown of the expenses included in column 3(b).

When a capital loss for the tax year may be carried back or carried over to another tax year, the amount to carry over or back is figured by using the percentage determined above. However, in the year to which the amounts are carried, do not apply the debt-basis percentage to determine the deduction for that year.

Example 1. An IRA, via a self-directed IRA LLC, owns a four-story building, and is subject to a nonrecourse loan. The building generates $10,000 of rental income. Expenses are $1,000 for depreciation and $5,000 for other expenses that relate to the entire building. The average acquisition indebtedness is $6,000, and the average adjusted basis is $10,000. Both apply to the entire building

To complete Schedule E for this example, describe the property in column 1. Enter $10,000 in column 2 (since the entire amount is for debt-financed property), $1000 and $5,000 in columns 3(a) and 3(b), respectively, $6,000 and $10,000 in columns 4 and 5, respectively, 60% in column 6, $6,000 in column 7, and $1,800 in column 8 (60% of $1,000 and $5000 of depreciation/expenses). Thus, the IRA holder would be subject to tax on $6,000 of unrelated business taxable income, $10,000 of income multiplied by 60% – amount of average acquisition indebtedness of debt financed property ($10,000) over average adjusted basis of average debt-financed income ($6,000).

Example 2. Assume the same facts as in Example 1, except the building is rented out as an unrelated trade or business for $20,000. To complete Schedule E for this example, enter $20,000 in column 2, $1,000 and $5,000 in columns 3(a) and 3(b), respectively (since the entire amount is for debt-financed property), $6,000 and $10,000 in columns 4 and 5 (since the entire amount is for debt-financed property), 60% in column 6, $12,000 in column 7, and $3,600 in column 8. Thus, the he IRA holder would be subject to tax on $12,000 of unrelated business taxable income, $20,000 of income multiplied by 60% – amount of average acquisition indebtedness of debt financed property ($10,000) over average adjusted basis of average debt-financed income ($6,000).

What is the Unrelated Business Taxable Income Tax Rate?

Internal Revenue Code Section 511 taxes “unrelated business taxable income” (UBTI) at the rates applicable to corporations or trusts, depending on the organization’s legal characteristics. Generally, UBTI is gross income from an organization’s unrelated trades or businesses, less deductions for business expenses, losses, depreciation, and similar items directly connected therewith.

A self-directed IRA subject to UBTI is taxed at the trust tax rate because an IRA is considered a trust. For 2015, a Solo 401(k) Plan subject to UBTI is taxed at the following rates:

  • $0 – $2,500 = 15% of taxable income
  • $2,501 – $5,900 = $375 + 25% of the amount over $2500
  • $5,901 – $9,050 = $1,225 + 28% of the amount over $5,900
  • $9,051 – $12,300 = $2,107 + 33% of the amount over $9,050
  • $12,300 + = $3,179.50 + 39.6% of the amount over $12,300

To learn more about using nonrecourse leverage with a self-directed IRA, please contact an IRA tax expert at 800-472-0646.

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Jun 12

How to Flip Houses with a Self Directed Roth IRA

Since the creation of IRAs back in the early 1970s, the IRS has always permitted an IRA to purchase, hold, or flip real estate.   In fact, it states it right on the IRS website. By using a Self-Directed Roth IRA to buy real estate, you will be able to purchase raw land, domestic or foreign real estate, residential or commercial property, flip homes, and much more tax-free and without requiring custodian consent!

Flipping a Home is as Simple as Writing a Check

With a Self-Directed Roth IRA with checkbook control, flipping homes or engaging in a real estate transaction is as simple as writing a check. As manager of your Self-Directed Roth IRA LLC, you will have the authority to make real estate investment decisions on behalf of your Roth IRA on your own without needing the consent of an IRA custodian. One of the true advantages of a checkbook control Roth IRA is that when you want to purchase a home with your self-directed Roth IRA, you can make the purchase, pay for the improvements, and even sell or flip the property on your own without involving the IRA custodian.  In other words, with a checkbook control Roth IRA LLC, you will have the power to flip homes or do multiple real estate transactions on your own without requiring the consent of a custodian. One additional important advantage of purchasing real estate with a Self-Directed Roth IRA is that all income and gains are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70 1/2). In the case of a Self-Directed Roth IRA LLC, all gains are tax-free.

Flip a Home without Requiring the Consent of a Custodian

A Self-Directed Roth IRA with checkbook control is the most efficient and cost effective vehicle for doing house flips with retirement funds.  With a Self-Directed Roth IRA with checkbook control, you will be able to use your IRA or 401(k) funds to purchase real estate and engage in flipping homes tax-free and without custodian consent.  A traditional IRA custodian (financial institution) will not allow you to purchase real estate using your IRA or retirement funds.  Therefore, in order to have the ability to engage in house flipping transactions using retirement funds, a Self-Directed Roth IRA LLC with Checkbook Control is the answer.

How to Flip Houses with a Self Directed Roth IRAControl the Entire House Flipping Transaction

Unlike a conventional Self-Directed Roth IRA which requires custodian consent and requires high custodian fees, a Self-Directed Roth IRA LLC with Checkbook Control will allow you to buy real estate by simply writing a check.  With a traditional custodian controlled Self-Directed Roth IRA, you will have total control to make a real estate purchase, pay for improvements, and then sell the property without ever talking to the IRA custodian.  Since all your IRA funds will be held at a local bank in the name of the Self-Directed Roth IRA LLC, all you would need to do to engage in a house flipping transaction is write a check straight from the Roth IRA LLC account or simply wire the funds from the Roth IRA LLC bank account.  No longer would you need to ask the IRA custodian for permission or have the IRA custodian sign the real estate transaction documents.  Instead, with a Checkbook Control Roth IRA, as manager of the Roth IRA LLC, you will be able to execute the real estate transaction by simply writing a check.

Use a Self-Directed Roth IRA and Flip a Home Tax-Free

One major advantage of flipping homes with a Self-Directed IRA is that all gains are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70 1/2). In the case of a Self-Directed Roth IRA LLC, all gains are tax-free. In other words, all gains attributable to the house flipping transaction will flow back to your IRA LLC tax-free!

IRA Financial Group will take care of setting up your entire Self-Directed Roth IRA LLC “Checkbook Control” structure. The whole process can be handled by phone, email, fax, or mail and typically takes between 7-21 days to complete, the timing largely depending on the state of formation and the custodian holding your retirement funds. Our IRA experts and tax and ERISA professionals are onsite greatly reducing the setup time and cost.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

To learn more about the advantages of using a Self-Directed Roth IRA LLC to purchase real estate and flip homes tax-free, please call an IRA Expert at 800-472-0646 or visit www.irafinancialgroup.com.

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