Sep 28

Fund Your IRA with Lunch Money

In a fun read over at, they talk about using the money you would normally spend on lunch each day to fund your IRA.  The author says that if you saved $3.50 each workday and invested it at an 8% return, you would have close to $100,000 in 30 years!

This article over at Time Moneyland, says that the typical workday lunch costs between $7-13, so you’re savings could be a lot more than that!  If you ate out five days a week, you’re looking at $2500 per year wasted on lunch!  Only eat out three days?  That’s still $1500!

Everyone’s looking to make cuts in their life to save money, so why not start brown-bagging it?  And instead of blowing that money on useless things, use it to fund your retirement.  This money would go a long way to reach your employer’s 401k match.  If you’re already doing that, are you saving with an IRA plan as well?  Since money is so tight nowadays, that answer is no more often than not.

If you skip the lunch and save $7 a day (which is $1750 a year) and invest that into a Roth IRA with a 6% return for the next 30 years, you would have close to $150,000…tax free!  This does ignore inflation, but it goes both ways since the cost of lunch would rise as the value of the dollar decreases.

Just one final thought to add to this great article.  Even if you don’t eat out for lunch, you are probably wasting money on things you don’t absolutely have to have.  Eat out often?  Hit a movie every week?  Smoke a pack a day?  Buy brand name (insert product here)?  There are plenty of things you can do to be able to afford to retire when you want!

The IRA Financial Group is waiting to hear from you for any questions you have.  Call us at 800.472.0646 and speak to a tax expert to help you better prepare for retirement.

Sep 26

Exceptions to Early IRA Withdrawal Penalties

Everyone knows how useful an Individual Retirement Account (IRA) is, but many people avoid it because of the penalties assessed with early withdrawals.  However, these people also don’t know about the exceptions to these rules.

The penalties are there so you don’t dip into your retirement savings unless you absolutely have to.  The government wants you to save as much as you can so that you’re as best prepare for your golden years that you can be.  However, they also know there are times when you have no other choice but to take distributions from your IRA.

One of the more widely used exceptions is that for disability.  If you become disabled and are unable to work, the IRS will allow penalty-free distributions.  Take note that there is a process to qualify, so make sure you do before withdrawing from your IRA.

Secondly, there is an exception on the amount of health care costs above the 7.5 percent adjusted gross income threshold.  If you suffer a serious injury or illness, you may get penalty-free withdrawals.

Next, if you become unemployed, you may use your IRA to make health insurance payments after you out of work for more than 12 weeks.

Payments made to family members to pay for higher education are also exempt from early withdrawal penalties.

A more complicated exception is called the 72(t) or SEPP.  This allows an early retiree to take equal and periodic distributions.  Once the 72(t) distribution is started it cannot be stopped.  Qualifiers must take the same amount for five years or until age 59 1/2, whichever is longer. “This can create problems for people who retire early. The combination of poor markets and distributions can endanger long-term income possibilities, so be very careful when considering the 72(t)”, says Tom and John Mills in an article here.

Other exceptions include beneficiary withdrawals and money taken by an IRS levy.

It’s best to talk to a financial advisor before withdrawing from your IRA before you are age 59 1/2 to see if you can take penalty-free withdrawals.  The experts at the IRA Financial Group are here to answer any questions you have.

Don’t forget to follow us on Twitter!  @BergmanIRA


Sep 24

Investing in Gold & Silver With an IRA

Here is a basic walk through when it comes to investing in precious metals with your IRA:

Why gold and silver?  The main reason is that it will protect your purchasing power.  Another major one is safety in case there is a repeat of the economic crisis of 2008.

Why not invest in Exchange Traded Funds (ETFs) that invest in gold and silver?  ETFs are certainly easier to buy and sell and have lower annual fees.  However, purchasing metals and securing them in an insured, private vault provides maximum safety.

Why not a personal safe deposit box?  Per the IRS code, you cannot take delivery until taxes are paid.

How do I open an account?  Find a self-directed IRA custodian, fill out the paperwork involved and submit that and the initial fee to the custodian who will open the account.

How do I fund the account?  You can fund it with a rollover from an existing 401k or IRA, or you may make contributions under current IRA rules.

Now what?  From there, you tell the IRA custodian what you want to purchase and what dealer you wish to use.  Since there are few restrictions as to what you may purchase, you tell the deal what types of silver and gold bars and/or coins you would like to purchase.  They are then shipped to a bonded, insured private storage facility and stored.  Your custodian will send you statements showing transactions and estimated fair market value of your holdings.

What is the cost?  Depending the size and custodian, cost ranges from $200-400 per year.

Why so much?  Fees, IRS regulations, accounting, profit and expenses.  Gold and silver have increased 15-20% per year for the last decade.  How have your brokerage accounts, mutual funds and money market accounts performed?  Do you feel safer if your funds were not held in the banking or financial system?  These fees might seem more reasonable after answering these questions.

As GE Christenson of points out, “An IRA that invests in physical gold and silver is NOT for everyone, but it may be appropriate for a portion of your retirement funds.  It will probably be safer in the event of another financial meltdown, but it will be more expensive than a traditional IRA and it is less convenient and flexible.  Choose what works for you”.

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.  Visit our website today at!

Sep 21

Last Chance to Set Up SIMPLE IRAs

This is the last month in 2012 to set up a Savings Incentive Match Plan for Employees IRA (SIMPLE IRA)  This is arguably the best retirement plan for small businesses in the US.  It’s easy to set up, maintain and is quite inexpensive.  Have a small business with a costly retirement plan (or none at all)?  A SIMPLE IRA may be the best option for you.  (Note: You must have 100 employees or less.)

There are two basic options for the plan:matching and non-elective.  Each plan type allows owners and employees to contribute up to $11,500 ($2500 more if you are 50 or older).  In the non-elective option, business owners contribute 2-3% to every qualified employee in the plan.  The employee does not have to contribute anything.  This plan is not as widely used as the matching one.

The matching plan is used more for two reasons.  First, the owner only has to match employees who contribute themselves.  If an employee does not, the owner does not have to match.  This helps the business owner maximize his own tax deferral without becoming top heavy.  Secondly, the owner only has to match 1% of the employee’s gross income for the first two years.  It’s then a 3% match for the next three years.  Once you reach the sixth year, they can go back to a 1% match again.

There are some other options to choose from such as excluding new employees for two years and those that don’t have at least $5,000 compensation for the year.

Enrollment in a SIMPLE IRA is easy, maintenance fees range from $10-60 per employee and no Form 5500s to file.  It truly is a SIMPLE plan to use for small business owners.

Need help setting up your own SIMPLE IRA?  Contact one of the tax expert at the IRA Financial Group today!

Sep 19

Millionaires Pay No Taxes!

Since Roth IRA income is not used in calculating the amount of your Social Security income the government will tax, you could be a millionaire and not have to pay federal income taxes!

The federal government will tax up to 85% of your Social Security benefits based on a formula used for determining your provisional income.  Income includes pension, taxable interest income and traditional IRA distributions.

Here’s a really simple example:  Your wife and yourself are each 68 years of age.  You have no pension income and the only guaranteed income you have is Social Security.  Combine that totals $3500 per month.  You also have a Roth IRA worth $2 million earning 3%.  Now let’s say you just take the earnings out of your tax-free IRA.  That’s $60,000 per year.  Add that to the $42,000 a year you receive in Social Security and you have $102,000 per year, with none of your Social Security benefits being touched by the government and you would pay zero dollars in federal income tax.

If however, you had a traditional IRA instead of a Roth, then 85% of your Social Security benefits would be taxed.  After your standard deduction and personal exemptions, you would owe around $10,856 in taxes.  Now you only get to keep $91,077 of your $102,000!

Investing in or converting to a Roth IRA may be the right move for you!  Visit our website at to talk with a tax expert to see if a Roth IRA is right for you!

Sep 14

Tapping Into Your IRA

Once you reach retirement, the best course of action when it comes to income is to spend down or use your taxable assets first, followed by your tax-deferred assets (such as 401(k)’s and traditional IRAs) and finally your tax-free assets (like a Roth IRA).  The real question is whether or not you should only withdraw exactly what you need to live on from those tax-deferred accounts.

Mike Wilson at gives an example as follows:  A married couple, who are each 65 years old, each get $15,000 from Social Security (with no other income).  In 2012, there would be $20,000 worth of personal exemptions and a standard deduction to claim on your tax form 1040 bringing your taxable income to $10,000.

“Here’s where tapping the traditional IRA for more than you need might make good tax sense. Let’s assume you and your spouse need another $35,000 from your traditional IRA savings to meet your expenses for this year. That puts your taxable income for the year at about $45,000. In 2012, this amount of taxable income puts you in the 15-percent tax bracket. But you can actually withdraw about another $25,000 from your IRA and stay in the same tax bracket. Why in the world would you want to do that?”, says Wilson.

The thinking here is that you’ll now have paid the taxes on $25,000 worth of income you will need next year.  If taxes are to rise (which they surely will), you’ve saved yourself money in the long run.

Whatever your strategy is, it’s always best to talk to a tax expert to see what benefits you most.  Contact the IRA Financial Group and set up a consult today.

Sep 13

Free Website Devoted to Explaining the Legal Foundation Behind the Self-Directed Checkbook IRA LLC Solution

IRA Financial Group, the leading facilitator of “checkbook control” IRA LLC solutions announces the launch of – a website providing detailed information on the legal foundation behind the self-directed IRA LLC “checkbook control” solution.

“Over the last several months, several full service custodians have been trying to convince potential clients that the checkbook control IRA LLC could potentially come under attack,“ stated Adam Bergman, a tax attorney with the IRA Financial Group. “The purpose of the website is to provide the general public with the law and the facts behind the Tax Court and IRS position that a checkbook control IRA is not a prohibited transaction,“ stated Mr. Bergman.

The self directed IRA “checkbook control” 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. The legality of the Checkbook IRA structure has not come under question since the IRS conceded that investing IRA funds in a wholly owned entity is not a prohibited transaction in the U.S. Tax Court case Swanson V. Commissioner 106 T.C. 76 (1996).

The information provided in the free downloadable information kit is intended to provide a detailed overview of the legal foundation and basis for the IRS reaching the conclusion that the “checkbook control” IRA solution is a legal structure and not a prohibited transaction. “Our hope is that as one understands the case law and the IRS’s position on this “checkbook control” IRA solution, he or she will be better equipped to look through any misinformation being presented on the legality of the “checkbook control” IRA solution,“ stated Mr. Bergman.

Sep 12

5 Reasons for a Roth

The main retirement plan is an employer sponsored 401k.  If they match your contributions, you should invest up to the max, but then what?  Most experts agree that a Roth IRA should be the next option.  Here are five reason why:

1.  Lower Tax Rates.  Since you contribute after-tax dollars to fund a Roth, now is a great time to invest with tax rates as low as you’ll see them.  This is especially true if you think you’ll be in a higher tax bracket at retirement.  All distributions are tax-free in retirement assuming minimal conditions are met.

2. Available Money.  You may withdraw your principal at anytime tax-free and without penalty.  (Note: if you withdraw earnings before age 59 1/2, you will pay income tax and a 10% penalty.)  There are other penalty-free withdrawals such as first time home buyer and medical emergencies.

3. No RMDs.  With a traditional IRA, you must start taking required minimum distributions (RMD) once you reach age 70 1/2.  With a Roth, there are no RMDs.  This benefits someone who has enough money and doesn’t need as much from their retirement plan.  They can then pass it on to their heirs through an inherited IRA.

4. Investment Options.  You are very limited in what you may invest in with a 401k.  There are no such limitations with a Roth IRA.

5. Conversion rules.  You may convert your traditional IRA into a Roth no matter your income.  While you won’t be able to contribute if you exceed income limits, paying the tax now is advantageous.

As you can see, there are plenty of reasons (and no excuses!) to open a Roth IRA today!  Let the tax experts at the IRA Financial Group help you today.  Visit our website at today!