Sep 19

IRA Financial Group Clients Invested Over $2.6 Billion Since 2010 in Real Estate Helping to Spur U.S. Real Estate Market

Over the last five years IRA Financial Group’s self-directed IRA and Solo 401(k) Plan investors have taken advantage of attractive real estate opportunities

IRA Financial Group, the leading provider of self-directed IRA LLC & Solo 401(k) plan solutions, announces that since 2010 its self-directed IRA and solo 401(k) plan clients have invested over $2.6 billion in real estate. “By using cash in their retirement funds, our clients have has great success in finding and closing on real estate transactions as well as taken advantage of the tax benefits of owning real estate in a retirement account, “ stated Adam Bergman, a tax partner with the IRA Financial Group. “We are proud that our self-directed IRA and Solo 401(k) plan clients have had a significant impact on the growth in the U.S. real estate markets,” stated Mr. Bergman.

The primary advantage of using a self directed IRA LLC or Solo 401(k) Plan to make investments is that the income and gains from the retirement account investment are tax-deferred or tax-free in the case of a Roth IRA or Roth Solo 401(k) Plan. In addition, with a self-directed IRA or Solo 401(k) plan, investments can be made by simply writing a check.

IRA Financial Group Clients Invested Over $2.6 Billion Since 2010 in Real Estate Helping to Spur U.S. Real Estate MarketWith 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 throughout the United States in a tax-deferred account by simply writing a check. “Even with real estate prices increasing, our clients have been able to find attractive real estate opportunities for their retirement account, “ stated Susan Glass, a tax specialist with the IRA Financial Group. “Of the over $2.6 billion that our self-directed retirement clients have invested in the last five years, the majority of the clients have seen their investments grow in value, something we are quite proud of, “ stated Mr. Bergman.

According to Mr. Bergman, “ IRA 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. A 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. “By using a “checkbook control” self-directed IRA LLC or Solo 401(k) Plan our clients have been able to make hundreds of millions of dollars in real estate purchases without incurring high IRA account fees, “ 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 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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Sep 16

Transferring and Self-Directing Your SIMPLE 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). An 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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Sep 15

Why You Should Open a Self-Directed IRA

Why Should I Establish a Self-Directed IRA?

A self-directed IRA LLC will offer you the ability to make traditional (stocks, mutual funds) as well as non-traditional investments (real estate, precious metals, etc.) tax-free and without custodian consent. Tired of seeing all your hard earned retirement assets lose value in the stock market? Upset that the value of your IRA or 401(k) has taken a dive over the last four years? Protect and better diversify your retirement portfolio with a self-directed IRA LLC. Take control of your retirement future and have the opportunity to make the investments you want when you want them.

With IRA Financial Group’s Self-Directed IRA LLC, a special purpose limited liability company (“LLC”) is created which is owned 100% by the IRA and managed by you or any third-person. The advantage of using an LLC to make the investment is that an LLC is treated as a passthrough entity for tax purposes meaning the owner of the LLC would be subject to the tax not the LLC itself. However, as per Internal revenue Code Section 408, IRAs are exempt from tax. As a result, in most cases, all income and gains generated by the IRA LLC would flow back to the IRA tax-free. In addition, the LLC investment vehicle allows the IRA owner to take more control of his or her retirement funds by keeping the IRA funds at a LLC bank account and not with a far away custodian offering “checkbook control” and greater flexibility to make investments quick and without delay.

With an IRA Financial Group self-directed IRA LLC, work with our in-house retirement tax professionals and gain the ability to protect your retirement future from a turbulent stock market or future inflation by having the opportunity to re-allocate your retirement portfolio into different asset classes, such as real estate, precious metals, private business, peer-to-peer lending, foreign currency or options. Don’t let Wall Street blow your retirement – diversify your retirement portfolio with a self-directed IRA LLC.

How Does IRA Financial Group’s Self-Directed IRA Differ from a Custodian Controlled IRA?

With IRA Financial Group “checkbook control” self-directed IRA LLC, making an investment is as simple as writing a check. No longer will you have to pay high IRA custodian fees or have to endure long delays and risk losing your deal as a result of having to have every IRA transaction pre-approved by the custodian. IRA Financial Group’s Self-Directed IRA LLC, is an IRS approved structure that allows you to use your retirement funds to make real estate and other investments tax-free and without custodian consent. The Self-Directed IRA involves the establishment of a limited liability company (“LLC”) that is owned by the IRA (care of the IRA custodian) and managed by you or any third-party. As manager of the IRA LLC, you will have control over the IRA assets and be able to make investments directly from your LLC bank account, which can be opened at any local bank. See an investment you want to make – simply write a check or wire the funds straight from your IRA LLC bank account. Don’t waste time and money relying on a custodian to make your IRA investments. The IRS gives you the ability to have more control and authority over your IRA assets – don’t let a custodian control your retirement future – get an IRS approved “checkbook control” self-directed IRA LLC. Work with our in-house retirement tax professionals to establish your IRS compliant self-directed IRA LLC.

A Self-Directed IRA LLC “Checkbook Control” structure offers one the ability to use his or her retirement funds to make almost any type of investment including real estate on their own without requiring the consent of any custodian tax-free!

Take Control of Your Retirement Funds Tax-Free!

The Self-Directed IRA structure has become a popular choice for gaining total investment control (“Checkbook Control”) over your IRA funds and making investments tax-free.

IRA Financial Group’s Self-Directed IRA LLC with “checkbook control” solution is tax court and IRS approved. A special purpose Self Directed IRA LLClimited liability company (“LLC”) is established that is owned by the IRA account and managed by the IRA account holder – which is YOU. The IRA Custodian then transfers the IRA Holder’s retirement funds to the new IRA LLC’s bank account, which can be opened at any local bank providing the IRA holder with “checkbook control” over his or her IRA funds. When you find an investment that you want to make with your IRA funds, as manager of the LLC, you will simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. All investment income and gains would flow back to your Self-Directed IRA Tax-Free! The Self Directed IRA LLC with “checkbook control” allows you to eliminate the delays and costs associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

A World of Investment Opportunities

Tired of being forced to invest in stocks or mutual funds? Have an investment opportunity, such as real estate or a business investment that you would love to make with your IRA funds? Then the Self-Directed IRA LLC is your solution.

With a Self-Directed IRA LLC, you will be able to invest in almost any type of investment opportunity that you discover, including: domestic or foreign real estate (rentals, foreclosures, raw land, tax liens etc.), private businesses, precious metals (i.e. gold or silver), hard money & peer to peer lending as well as stock and mutual funds; your only limit is your imagination. The income and gains from these investments will flow back into your IRA tax-free.

Purchasing Real Estate Tax Free with a Self Directed IRA Real Estate LLC

The IRS has always permitted an IRA to purchase or hold domestic or foreign real estate or raw land. Making a real estate investment is as simple as writing a check with a Self Directed IRA – also known as a Self Directed IRA Real Estate LLC. The Self Directed IRA Real Estate LLC structure, which works the same way as the Self Directed IRA LLC structure, is used for tax-free investing IRA funds in real estate.

Purchasing Real Estate Tax Free with a Self Directed IRA Real Estate LLC

Since you are the manager of your Self-Directed IRA Real Estate LLC, you have the authority to make investment decisions on behalf of your IRA. One major advantage of purchasing real estate 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.

Stress-Free Investing

With a Self-Directed IRA structure, you will have the power to act quickly on a potential investment opportunity. When you find an investment that you want to make with your IRA funds, as manager of the LLC, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

Save on Custodian Fees

A Self-Directed IRA LLC structure will help you save a significant amount of money on custodian fees. With a Self-Directed IRA LLC you no longer have to pay excessive custodian fees based on account value and transaction fees. Instead, your IRA funds will be transferred tax-free via a passive custodian to a new LLC bank account where you as manager of the LLC can make investments, such as real estate tax-free and without custodian consent. The IRA custodian is not involved in any way with the IRA investment. In fact, the IRA custodian is not even aware of the type of investments that are being made since you, as manager of the LLC, are in total control of your IRA funds.

Shelter Income Tax-Free with a Self-Directed Roth IRA LLC

The Self-Directed Roth IRA LLC structure, which works the same way as the Self-Directed IRA LLC structure, is used for investing Roth IRA funds in real estate and other investments tax-free! Using a Self-Directed Roth IRA LLC to make investments will allow all the income and gains associated with the Roth IRA investment to grow tax-free and not be subject to tax upon withdrawal or distribution. The Self-Directed Roth IRA LLC presents a number of exciting tax planning opportunities.

The primary advantage of using a Self-Directed Roth IRA LLC to make investments is that all income and gains associated with the Roth IRA investment grow tax-free and will not be subject to tax upon withdrawal or distribution.

Asset & Creditor Protection

By using a Self-Directed IRA LLC with “Checkbook Control”, the IRA holder’s IRA will be protected for up to $1 million in the case of personal bankruptcy. In addition, most states will shield a Self-Directed IRA from creditors’ attack against the IRA holder outside of bankruptcy. Therefore, by using a Self-Directed IRA LLC, the IRA will be generally protected against creditor attack against the IRA holder.

Limited Liability Protection

By using a Self-Directed IRA LLC, your IRA will benefit from the limited liability protection afforded by using an LLC. By using an LLC, all your IRA assets held outside the LLC will be shielded from attack.

Don’t trust an investment advisor or real estate professional to establish your IRS compliant self-directed IRA structure!

Work directly with our in-house retirement tax professionals to setup an IRS compliant Self-Directed IRA LLC with “checkbook control”. IRA Financial Group was founded by retirement tax professionals that worked at some of the largest law firms in the United States, including White & Case LLP and Dewey & LeBoeuf LLP. Each client has direct access to our in-house retirement tax professionals to ensure that the Self-Directed IRA LLC structure is customized to satisfy the client’s retirement and investment objectives.

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 LLC solutions. 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.

IRA Financial Group – Founded by Retirement Tax Professionals who know the Law!

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Sep 11

Advantages of using a Self-Directed Roth IRA

The main advantage of a Roth IRA over a Traditional IRA is that if you qualify to make contributions, all distributions from the IRA are tax-free. Furthermore, unlike traditional IRAs, you may contribute to a Roth IRA for as long as you continue to have earned income (for a traditional IRA – you can’t make any contributions after you reach age 70 1/2).

Self-Directed Traditional IRA

Self-Directed Roth IRA

Tax deductible contributions

Contributions are not tax deductible – contributions made to a Roth IRA are from after tax dollars

Distributions may be taken by age 59 1/2 and are mandatory by 70 1/2.

No Mandatory Distribution Age – with a Roth IRA you are not required to ever take distributions

Taxes are paid on amount of distributions (10% excise tax may apply if withdrawn prior to age 591/2)

No taxes on distributions if rules and regulations are followed

Available to everyone; no income restrictions

  • Single filers, Head of Household or Married Filing Separately (and you did not live with your spouse during the year) with modified adjusted gross income up to $114,000 can make a full contribution.  Contributions are phased-out starting at $114,000 and you cannot make a contribution if your adjusted gross income is in excess of $129,000.
  • Joint filers with modified adjusted gross income up to $181,000 can make a full contribution.  Once again, this contribution is phased-out starting at $181,000 and you cannot make a contribution if your adjusted gross income is in excess of $191,000.

Funds can be used to purchase a variety of investments (stocks, real estate, precious metals, notes, etc.)

Funds can be used to purchase a variety of investments (stocks, real estate, precious metals, notes, etc.)

IRA investments grow tax-free until distribution (tax deferral)

All earnings and principal are 100% tax free if rules and regulations are followed – No tax on distributions so maximum tax-deferral

Income/gains from IRA investments are tax-free

Income/gains from IRA investments are tax-free

Purchasing a real estate property and taking possession of the property after 59 1/2 would be subject to tax

Purchasing a domestic or foreign real estate property then taking possession after 59 1/2 would be tax-free

 

To learn more about the advantages of converting a Traditional IRA to a Self-Directed Roth IRA LLC please contact one of our IRA experts at 800-472-0646.

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Sep 09

The Checkbook Control Advantage

Experience the Self-Directed IRA LLC “Checkbook Control” Advantage

Many traditional IRA custodians advertise themselves as offering a Self-Directed IRA, but what that really means is that you will need approval from your custodian before making an investment. Whereas, in the case of a truly Self-Directed IRA, a limited liability company (“LLC”) is established that is owned by the IRA account and managed by the IRA account holder providing the IRA holder with “checkbook control” over his or her funds.

In general, there are three categories of self-directed IRA structures distinguishable by the level of control the custodian exercises over your IRA investments.

1. Financial Institution Self-Directed IRA

With a financial institution self-directed IRA, you are able to direct your IRA investments, however, you are generally limited to investing in the financial products offered by the financial institution. For example, a financial institution such as Vanguard or Fidelity will allow you to select the type of investments for your IRA, but your choices would generally be limited to the financial products they offer, such a stocks, mutual funds, and bonds. With a financial institution self-directed IRA, you will not be permitted to make non-traditional investments such as real estate, precious metals, private business investments, foreign currency, options, etc.

2. Custodian Controlled Self-Directed IRA Without “Checkbook Control”

With a custodian controlled Self-Directed IRA without “Checkbook Control”, many types of nontraditional investments, such as real estate, are generally permitted, however, custodian consent is required in order to enter into and execute the transaction. This typically results in long delays and high custodian fees associated with the transaction. For example, before engaging in an IRA investment, you will be required to receive the consent of the custodian. To this end, you will be required to provide the custodian with the transaction documents for review as part of their transaction review process. As a result, it is common to experience time delays as well as high annual fees as well as additional transaction fees. For example, it is common for a moderately active investor with $50,000 in assets with a Self-Directed IRA custodian without checkbook control to end up paying from $400 to $600 in aggregate annual fees (i.e. account value fee, transaction fees, approval letters).

In addition, there is no guarantee that the custodian will approve your investment even though the investment would not violate IRS rules. Overall, with a custodian controlled self-directed IRA, even though you will generally be permitted to make most non-traditional IRA investments, time delays and high custodian fees are the common characteristics of using a custodian controlled self-directed IRA.

Experience the Self-Directed IRA LLC “Checkbook Control” Advantage3. Self-Directed IRA LLC with “Checkbook Control”

With a truly Self-Directed IRA, you will have total control over your IRA funds and you will no longer have to get each investment approved by the custodian of your account. Instead, all decisions are truly yours. When you find an investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. A truly Self-Directed IRA allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

With a Self-Directed IRA LLC, a limited liability company (“LLC”) is established that is owned by the IRA account and managed by the IRA account holder. The IRA Holder’s IRA funds are then transferred by the Custodian to the LLC’s bank account providing the IRA holder with “checkbook control” over his or her IRA funds.

The Self-Directed IRA LLC “Checkbook Control” Structure has been in use for over 30 years. The notion of using an entity owned by an IRA to make an investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in holding against the IRS, ruled that the capitalization of a new entity by an IRA for making IRA related investments was a permitted transaction and not prohibited pursuant to Code Section 4975. The Swanson Case was later affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011.

With a Self-Directed IRA LLC with “Checkbook Control”, when you find an investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

 

Financial Institution Self-Directed IRA

Custodian Controlled Self-Directed IRA Without “Checkbook Control”

Self-Directed IRA LLC with “Checkbook Control”

Traditional investments options (stocks, mutual funds, etc.)

Yes

Yes

Yes

Nontraditional Investment options (i.e. real estate, precious metals, tax liens, etc)

No

Yes

Yes

Unlimited Investment Options

No

No

Yes

All Investments must be approved by the custodian

N/A

Yes

No

True “checkbook control”

No

No

Yes

Direct Access to your Retirement Funds

No

No

Yes

Limited Liability

No

No

Yes

High annual account fees

No

Yes

No

Transaction fees

No

Yes

No

Bankruptcy Protection of up to $1 million

Yes

Yes

Yes

For more information about the “Checkbook Control” advantage of the Self-directed IRA, please contact an IRA Expert from the IRA Financial Group @ 800.472.0646!

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Sep 08

IRA Financial Group Introduces No Tax Self-Directed IRA Rollover Program for Real Estate Investors

Rolling over IRA or 401(k) Plan funds to buy real estate can now be done without tax or penalty

IRA Financial Group, the leading provider of “checkbook control” self-directed IRA LLC solution announces a tax-free Self-Directed IRA Rollover solution for real estate investors with IRA or 401(k) funds. The self-directed IRA rollover solution allows retirement investors to rollover their pre-tax and after-tax IRA or 401(k) funds into a real estate IRA solution. “Our Self-Directed Real Estate IRA Rollover solution allow retirement investors to roll over existing retirement funds tax and penalty free to buy real estate, “stated Jacky Ospina, a retirement tax specialist with the IRA Financial Group.

IRA Financial Group Introduces No Tax Self-Directed IRA Rollover Program for Real Estate Investors Individuals may generally roll over their retirement savings between retirement accounts, such as an IRA and 401(k) qualified retirement plans without tax or penalty. Individuals may roll over only the pre-tax assets from a pre-tax IRA, such as a Traditional IRA, SEP, or SIMPLE IRA. After tax assets, such as a Roth IRA may not be rolled over to a qualified retirement plan or a Traditional IRA, only to a Roth IRA.

IRA Financial Group’s rollover self-directed IRA real estate LLC program 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. “Many investors don’t realize that you can rollover retirement funds from a prior retirement account and use those funds to buy real estate without having to pay tax or penalty, “ 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 provider of “checkbook control” Self Directed IRA solutions. 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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Sep 03

The IRA Rollover Rules

Individuals may generally rollover their retirement savings between eligible defined contribution plans, defined benefit plans and pre-tax IRAs, including SEP IRAs and SIMPLE IRAs to a Self-Directed IRA. Eligible defined contribution plans include qualified 401(k) retirement plans under Internal Revenue Code Section 401(a), 403(a), 403(b), and governmental 457(b) plans. Individuals may also roll over after-tax retirement funds to a Roth Self-Directed IRA.

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

Transfers and rollovers are types of transactions that allow movements of assets between like IRAs – Traditional IRA to Traditional IRA and Roth IRA to Roth IRA. An IRA transfer is the most common method of funding a Self-Directed IRA LLC or Self-Directed Roth IRA.

IRA Transfers to a Self-Directed IRA

An IRA-to-IRA transfer is one of the most common methods of moving assets from one IRA to another. A transfer usually occurs between two separate financial organizations, but a transfer may also occur between IRAs held at the same organization. If an IRA transfer is handled correctly the transfer is neither taxable nor reportable to the IRS. With an IRA transfer, the 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 IRA transfer to be tax-free and penalty-free, the IRA holder must not receive the 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 IRA LLC by transferring your current pre-tax or after-tax IRA funds to your new Self-Directed IRA or Self-Directed Roth IRA structure tax-free and penalty-free. In order

How the Self-Directed IRA Transfer Works?

Your assigned retirement tax professional will work with you to establish a new Self-Directed IRA account at a new FDIC and IRS approved IRA custodian. The new custodian will then, with your consent, request the transfer of 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 IRA custodian, the new custodian will be able to invest the IRA assets into the new IRA LLC “checkbook control” structure. Once the funds have been transferred to the new IRA LLC, you, as manager of the 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.

How to Fund a Self-Directed IRA LLC - the IRA Rollover RulesMoving 401(k) Plan & Qualified Retirement Plan Assets to a Self-Directed IRA

The 2001 Economic Growth and Tax Relief Reconciliation Act expanded the rollover opportunities between employer-sponsored retirement plans, such as 401(k) Plans and IRAs. Since 2002, individuals may rollover both pre-tax and after-tax 401(k) Plan fund assets from a 401(a), 403(a), 403(b), and governmental 457(b) plans into a Traditional IRA tax-free and penalty-free.

In general, in order to rollover qualified retirement plans to a Traditional IRA there must be a plan-triggering event. A plan-triggering event is typically based on the plan documents, but they generally include the following: (i) the termination of the plan, (ii) the plan participant reaching the age of 591/2, or (iii) the plan participating leaving the employer.

A Direct Rollover to a Self-Directed IRA

A direct rollover transpires when a plan participant, who has access to his or her retirement funds, moves the eligible qualified retirement plan funds to an IRA custodian. In other words, a direct rollover is between a qualified retirement plan and an IRA, whereas, a transfer is between IRA financial institutions. In general, employer 401(k) plan providers must offer the direct rollover option if it is reasonable anticipated that the total amount of eligible rollover distributions to a recipient for the year would be more than $200.

How to Complete a Direct Rollover

Your assigned retirement tax professional will work with you to establish a new Self-Directed IRA account at a new FDIC and IRS approved IRA custodian. With a direct rollover from a defined contribution plan, the plan participant must initiate the direct rollover request. What this means is that the plan participant must request the movement of 401(k) plan funds to the new IRA custodian, not the IRA custodian, like with an IRA transfer. Your assigned retirement tax professional will assist you in completing the direct rollover request form which will allow you to move your 401(k), 403(a), 403(b), 457(b), or defined benefit plan assets to your new IRA account.

A direct rollover may be accomplished by any reasonable means of direct payment to an IRA. Regulations state that the reasonable means may include, wire, mailing check to new IRA custodian, or mailing check made out to new IRA custodian to plan participant.

Reporting a Direct Rollover

When an individual directly rolls over a qualified retirement plan distribution to a Traditional IRA, the employer is generally required to report the distribution on an IRS Form 1099-R, using Code G in Box 7, Direct rollover and rollover contribution. The receiving IRA administrator would them be required to report the amount as a rollover distribution in Box 2 of IRS Form 5498.

Rollover Chart

Click the image below to view the Rollover Chart.

IRA Rollover Chart

An Indirect Rollover to a Self-Directed IRA

An indirect rollover occurs when the IRA assets or qualified retirement plan assets are moved first to the IRA holder or plan participant before they are ultimately sent to an IRA custodian.

60-Day Rollover Rule

An individual generally has sixty (60) days from receipt of the eligible rollover distribution to roll the funds into an IRA. 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 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 IRA assets into the new IRA LLC “checkbook control” structure. Once the funds have been transferred to the new IRA LLC, you, as manager of the 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 from an Employer Retirement Plan

In general, when a plan participant requests a distribution from an employer qualified retirement plan. IRS rules require the employer to withhold 20% from the amount of the eligible rollover distribution. If an individual receives an eligible rollover distribution and then elects to rollover the assets to an IRA custodian within 60 days, the individual can make up the 20% withheld by the employer retirement plan provider for federal income tax purposes.

Employer sponsored retirement plans are required to withhold at a rate of 20% on all eligible rollover distributions of taxable funds or assets, unless the participants elects to directly rollover the distribution to an IRA or to another eligible retirement plan. In other words, when taking an indirect rollover from an employer qualified retirement plan, the employer is required to withhold 20% of the eligible rollover distribution. The 20% withholding requirements is not applicable for IRA-to-IRA transfers or for direct rollover distributions.

Reporting Indirect Rollovers

When an individual takes a distribution from an employer sponsored retirement plan, such as 401(k) Plan, the employer should make the individual, even if the individual intends to roll the funds over to an IRA. The employer would be required to withhold 20% from the eligible rollover distribution since the funds will be rolled to the plan participant and not directly to the IRA or qualified retirement plan custodian. The employer (payer) would report the indirect distribution on IRS Form 1099-R, using the applicable distribution Code (1,4, or 7). If the funds are deposited with an IRA custodian within 60-days, the receiving IRA custodian would report the rollover assets on the IRS Form 5498 as a rollover contribution in Box 2.

Self-Directed IRA Transfer & Rollover Experts

The retirement tax professionals at the IRA Financial Group will assist you in determining how best to fund your Self-Directed IRA or Self-Directed Roth IRA LLC structure. Whether it’s by IRA transfer or direct or indirect rollover, each client of the IRA Financial Group will work directly with an assigned retirement tax professional to make sure his or her Self-Directed IRA LLC structure is funded in the most tax efficient manner.

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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Sep 02

Calculating Tax on Unrelated Debt Financed Income 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.

When 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 2011, a Solo 401(k) Plan subject to UBTI is taxed at the following rates:

  • $0 – $2,300 = 15%
  • $2,300 – $5,350 = $345 + 25%
  • $5,350 – $8,200 = $1,107.50 + 28%
  • $8200 – $11,200 = $1,905.50 + 33%

Over $11,200 = $2,895.50 + 35%

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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Aug 31

The Real Estate IRA

What is a Real Estate IRA LLC?

A Real Estate IRA LLC is generally also referred to as a Self Directed IRA LLC with “Checkbook Control”. A Real Estate IRA LLC or Self-Directed IRA LLC with “Checkbook Control” plan is an IRS and tax court approved structure that will allow you to use your IRA funds to purchase real estate or make almost any other type of investment tax- free!

With a Real Estate IRA LLC you will never have to seek the consent of a custodian to make a real estate investment or be subject to excessive custodian account fees based on account value and per transaction.

To establish a Real Estate IRA LLC with “Checkbook Control” structure, a limited liability company (“LLC”) is established that is owned by the IRA and managed by the IRA account owner (you). The passive custodian then transfers the IRA owner’s funds to the new IRA LLC bank account. As the manager of the IRA LLC, the IRA owner will have the authority to make real estate investment decisions on behalf of the IRA providing the IRA owner with “checkbook control” over his or her IRA funds.

When you find a real estate investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self Directed IRA LLC with “checkbook control” allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right real estate investment opportunity presents itself. “Checkbook Control” is especially important when it comes to making real estate or tax liens investments, since custodian delays could cause you to lose an investment opportunity.

Real Estate is an IRS Approved Investment

The IRS has always permitted real estate to be held inside IRA retirement accounts. Investments with a Real Estate IRA are fully permissible under the Employee Retirement Income Security Act of 1974 (ERISA). IRS rules permit you to engage in almost any type of real estate investment, aside generally from any investment involving a disqualified person.

Types of Real Estate Investments That Can be Made Using a Self-Directed IRA LLC

With a Self-Directed IRA LLC with “checkbook control,” you will have the ability to invest in almost any type of real estate investment.

Below is a partial list of allowable real estate investments:

  • Residential or commercial real estate
  • Raw land
  • Foreclosure property
  • Mortgages
  • Mortgage pools
  • Deeds
  • Tax liens
  • Domestic real estate
  • Foreign real estate
  • Vacation homes
  • Rental units
  • Condos or coops
  • Farm land

A Real Estate IRA LLC Offers Growth Potential

A Self-Directed Real Estate IRA LLC can offer the opportunity to greatly accelerate the growth in your retirement portfolio. With a Real Estate IRA LLC you can take advantage of the high growth real estate investment sector while benefiting from the tax-free IRA benefits.

As an alternative to the stock market, income-producing real estate properties can provide consistent income as well as long-term gains through appreciation.  There are no limitations on the types of properties that can be held by a Real Estate IRA LLC. A few real estate investment possibilities include domestic or foreign residential or commercial real estate, industrial buildings, raw land, and farm land. You can also invest in real estate related notes, liens & options.

Real Estate IRA in Today’s Market

The residential and commercial real estate market has taken a dramatic downturn generally due to the sub-prime mortgage meltdown. While it’s a bad real estate market for current owners and landlords, it’s a great investment market for real estate investors with capital. The Real Estate IRA LLC is perfect for any person looking to diversify their retirement funds by investing in the high growth real estate market. With a Real Estate IRA LLC, you can act quickly on a great real estate investment opportunity. When you find a real estate investment that you want to make with your IRA funds, as manager of the new IRA LLC, simply write a check or wire the funds straight from your Self Directed IRA LLC bank account to make the real estate investment. The Self Directed IRA allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

Use Leverage with your Real Estate IRA LLC

The Real Estate IRA LLC can be utilized when making a real estate investment all in cash, or may be used when using a non-recourse loan to fund an investment. A non-recourse loan is the only type of loan allowed for a Self Directed IRA. A nonrecourse loan is a secured loan (debt) that is secured by a pledge of collateral, but for which the borrower is not personally liable. Whereas, a recourse loan is a loan for which the borrower is personally liable. Recourse loans are no permitted when using IRA funds. Note – if nonrecourse leverage used, the debt-financed portion of the investment will likely trigger a tax under the Unrelated Debt Financed Income rules (UDFI).

A Real Estate IRA Eliminates or Reduces Custodian Costs

With a Self-Directed Real Estate IRA LLC with “Checkbook Control”, you, as manager of the IRA LLC, can act quickly on a great real estate investment opportunity. With a Real Estate IRA LLC, when you find a real estate investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA LLC allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right real estate investment opportunity presents itself.

Gaining “Checkbook Control” is Quick & Easy

The IRA Financial Group will take care of setting up your entire Real estate 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 in-house tax and ERISA professionals are on site greatly reducing the set-up time and cost. Most importantly, each client of the IRA Financial Group is assigned a tax professional to help with the establishment of the Self-Directed IRA LLC Checkbook Control structure. You will find that our fee for this service is significantly less than other companies that perform the same or similar services.

The Real Estate IRA LLC “Checkbook Control” Process

STEP 1: A Self-Directed IRA account is established with an IRS approved and FDIC backed passive custodian.

STEP 2: Retirement funds are transferred to the new Self-Directed IRA account tax-free!

STEP 3: A Limited Liability Company (LLC) is formed with the IRA account owner designated as Manager and the IRA as owner (member) of the LLC.

STEP 4: At the direction of the IRA owner, the passive custodian invests the IRA funds into the newly formed IRA LLC. One or more IRAs can be used to fund the IRA, including Traditional, Roth, and SEP IRAs.

STEP 5: The Manager of the new IRA LLC (the IRA owner) directs all, or a portion, of the IRA funds held in the new LLC bank account for investment.

STEP 6: The LLC makes a real estate investment using IRA funds and all income and gains generally flow back to the LLC tax-free!

Get Started with your “Checkbook Control” Real Estate IRA LLC today!

Please contact one of our IRA Experts at 800-472-0646 for more information.

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Aug 28

Purchasing American Eagle Coins with a Self-Directed IRA LLC

The IRS does not list the type of assets or investments that may be purchased with retirement funds but does indicate which categories of assets or investments are not permitted.

The categories of transactions that are not permitted to be purchased using a Self-Directed IRA LLC can be found in Internal Revenue Code Sections 408 & 4975.

When it comes to coins or metals, Internal revenue Code Section 408 is generally the provision that applies. In general, collectibles such as artworks, rugs, stamps, certain coins, beverages and antiques, etc. are not allowed within a Self-Directed IRA LLC pursuant to Internal Revenue Code Section 408.

Using a self-directed IRA to purchase American Eagle coins tax-free

Using a self-directed IRA to purchase American Eagle coins tax-free

Internal Revenue Code Section 408 is specific as to what defines a collectible. Some notable exceptions are allowed for certain gold (such as American Eagle) and silver coins and any coins issued by a state. Legislation in 1997 (Technical and Miscellaneous Revenue Act of 1988 – TAMRA) further liberalized the rules for IRAs by making reference to specific definitions of acceptable coins in USCS, title 31; IRC sections 5112(a), (e) and (k); the Commodity Exchange coins that would not be treated as a collectible to “certain gold and silver coins issued by the United States Government.”

This change, in general, resulted in a windfall for individual collectors as well as coin and precious metal dealers (all of the coins allowed must be minted by the U.S. government or the states).

The Law

Below please find the relevant sections in Internal Revenue Code Section 408(m) that relate to     purchase of coins:

(3) Exception for certain coins and bullion

For purposes of this subsection, the term “collectible” shall not include—

(A) any coin which is—

(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112 (a)

of title 31, United States Code,

(ii) a silver coin described in section 5112 (e) of title 31, United States Code,

(iii) a platinum coin described in section 5112 (k) of title 31, United States Code, or

(iv) a coin issued under the laws of any State, or

31 U.S.C. § 5112 refers to Denominations, specifications and design of coins.

(a)The Secretary of the Treasury may mint and issue only the following coins:

(1) a dollar coin that is 1.043 inches in diameter.

(2) a half dollar coin that is 1.205 inches in diameter and weighs 11.34 grams.

(3) a quarter dollar coin that is 0.955 inch in diameter and weighs 5.67 grams.

(4) a dime coin that is 0.705 inch in diameter and weighs 2.268 grams.

(5) a 5-cent coin that is 0.835 inch in diameter and weighs 5 grams.

(6) except as provided under subsection (c) of this section, a one-cent coin that is 0.75 inch in diameter and weighs 3.11 grams

(7) A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold.

(8) A twenty-five dollar gold coin that is 27.0 millimeters in diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold.

(9) A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold.

(10)   and contains one-tenth troy ounce of fine gold.

(e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in

quantities sufficient to meet public demand, coins which—

(1) are 40.6 millimeters in diameter and weigh 31.103 grams;

(2) contain .999 fine silver;
(3) have a design—

(A) symbolic of Liberty on the obverse side; and

(B) of an eagle on the reverse side;

(k)The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

Hence, American Eagle coins are not treated as collectibles pursuant to IRC 408(m) and may be purchased using retirement funds, including a self-directed IRA LLC.

To learn more about purchasing and holding coins with a Self-Directed IRA LLC, please contact one our tax self-directed IRA tax professionals at 800-472-0646.

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