Dec 30

Some FAQs Regarding IRA Financial Group’s Self Directed IRA

What type of Services do you provide with the Self Directed IRA LLC structure?

IRA Financial Group's Self-Directed IRA FAQsIRA Financial Group provides Full Service Custom Retirement Solutions for significantly less than any company in the industry!

Our one time low fee includes the following services:

  • Establishment of LLC including Filing Fees
  • Filing LLC Articles of Organization with the state
  • Establishment of Self-Directed IRA including set-up fees
  • Drafting of customized Self Directed IRA LLC Operating Agreement
  • Drafting of customized Self Directed IRA LLC Subscription Agreement
  • Free consultation with in-house retirement tax professional on the Self Directed IRA LLC structure and prohibited transaction rules
  • Assistance with the transfer of funds to an FDIC insured IRA Custodian
  • Assistance in the establishment of business bank account
  • Assistance in completion of documents to transfer funds to LLC
  • Free tax consultation on the UBTI and UDFI rules

IRA Financial Group will take care of everything. The whole process can be handled by phone, email, fax, or mail. Our expert tax and ERISA professionals are on site greatly reducing the set-up time and cost.

Why are your fees so affordable?

The IRA Financial Group was created by a group of former tax and ERISA professionals who worked for a number of the largest law firms in the country like White & Case LLP, Dewey LeBoeuf LLP, and Thelen LLP.

When choosing the IRA Financial Group, you will have direct and unlimited access to our in-house tax and ERISA professionals. Each client of the IRA Financial group is assigned a retirement tax professional in order to ensure that the tax structure established is in compliance with IRS rules.

Our in-house tax and ERISA professionals will take care of setting up your Self-Directed IRA LLC. Our tax and ERISA professionals are onsite greatly reducing the setup time and cost. You will find that our fee for this service is significantly less than other companies that perform the same or similar services.

Do I have to pay your entire fee for the Self Directed IRA LLC structure upfront to get started?

No. We take only a small deposit to cover State LLC filings fees and disbursements so that we can immediately get started on the completion of the IRA rollover or transfer paperwork. Our one time low fee is paid at the end of your process once your IRA funds are transferred to your LLC checking account.

Please contact one of our Self-Directed IRA Experts at 800-472-0646 for more information.  Be sure to follow us on Twitter and like us on Facebook!

Dec 26

Purchasing Coins With Your IRA

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.

You can purchase certain coins with your self directed IRAWhen 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.

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 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 Act; and IRC section 408(m)(3).

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

Internal Revenue Code Section 408(m):

(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

(B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7) requires for metals which may be delivered in satisfaction of a regulated futures contract if such bullion is in the physical possession of a trustee described under subsection (a) of this section.

Subsection (a) states:

(a) Individual retirement account

For purposes of this section, the term “individual retirement account” means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets the following requirements:

(1) Except in the case of a rollover contribution described in subsection (d)(3) in section 402 (c), 403 (a)(4), 403 (b)(8), or 457 (e)(16), no contribution will be accepted unless it is in cash, and contributions will not be accepted for the taxable year on behalf of any individual in excess of the amount in effect for such taxable year under section 219 (b)(1)(A).

(2) The trustee is a bank (as defined in subsection (n)) or such other person who demonstrates to the satisfaction of the Secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section.

(3) No part of the trust funds will be invested in life insurance contracts.

(4) The interest of an individual in the balance in his account is non-forfeitable.

(5) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.

(6) Under regulations prescribed by the Secretary, rules similar to the rules of section 401 (a)(9) and the incidental death benefit requirements of section 401 (a) shall apply to the distribution of the entire interest of an individual for whose benefit the trust is maintained.

Hence, it is clear that in the case of physical metals, such as gold, the metals must be held in the physical possession of a U.S. trust (i.e. bank or depository), however, the “physical possession” requirement does not appear to relate to the possession of coins. A more detailed analysis will follow below.

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.

How do I hold IRS Approved Coins with a Self-Directed IRA LLC?

Now that you have a clear idea of the types of coins that the IRS allows to be purchased using retirement funds, the next questions becomes how can the coins be held without violating IRS rules?

Unlike precious metals, the Internal revenue Code and the legislative history does not include a requirement that IRS approved coins be held in the “physical possession of a U.S. trustee.” If so, the requirement would have been so stated in the tax code. Accordingly, it appears that IRS approved coins can be purchased by a Self-Directed IRA LLC and not be held at a depository or U.S. Bank. However, based on conversations between IRA Financial Group tax counsel and representatives of the IRS and Department of Labor, we suggest that our clients try to hold IRS approved coins at a bank safe deposit box, depository, or some sort of third-party vault in the name of the IRA LLC.  The reason for this is that it is another level of separation between the IRA holder – a disqualified person – and the IRA LLC assets (the coins), which the IRS plan asset rules will attribute to the IRA even though the coins will be owned by the LLC. Irrespective of the fact that it appears that IRS approved coins are not required to be held in the “physical possession of a U.S. trustee”, holding the coins in the physical possession of a disqualified person puts the onus on the IRS holder, as the disqualified person, to prove that no self-dealing or conflict of interest event occurred in the case of an IRS inquiry.  For any IRA Financial Group client that wishes to hold IRS approved coins in their physical possession, our retirement tax professionals suggest that an affidavit be drafted stating that the IRS approved coins are being hold solely for the benefit of the IRA and not for any personal or other benefit.  We also suggest that the affidavit be signed and notarized.

In summary, the “physical possession” threshold seems to only apply to IRS approved precious metals under Internal Revenue Code Section 408(m), although the tax code does not state anywhere that the coins could be held in the possession of a disqualified person.  For this reason, the retirement tax professionals at the IRA Financial Group suggest that individuals seeking to hold IRS approved coins hold the coins at a bank safe deposit box in the name of the LLC or some sort of vault or depository. However, holding the coins personally does not appear to violate Internal Revenue Code Section 408. That being said, for all individuals wishing to hold IRS approved coins personally, the retirement tax professionals at the IRA Financial Group suggest having some sort of affidavit stating that the coins will not be held for any personal benefit and will, thus, not violate any of the Internal Revenue Code Section 4975 self-dealing or prohibited transaction rules.

To learn more about purchasing and holding coins with a Self-Directed IRA LLC, please contact an IRA expert from the IRA Financial Group @ 800.472.0646!

Dec 23

Demand for Private Mortgages Helping Self-Directed IRA LLC Investors Generate Strong Returns in 2013

Tightening of Mortgage lending rules by banks in 2013 helping to create attractive private mortgage market for self-directed IRA investors

IRA Financial Group, the leading provider of self-directed IRA LLC solutions, announces the finding of a recent survey, which showed that self-directed IRA LLC clients have reaped string returns from taking advantage of opportunities in the private mortgage market. Due to the lack of bank mortgages available and the added restrictions imposed by banks on borrowers, many home buyers and real estate developers have turned to private mortgages for a source of funding.

Demand for Private Mortgages Helping Self-Directed IRA LLC Investors Generate Strong Returns in 2013In 2013, the self-directed IRA LLC solution was used by many IRA Financial Group clients looking to take advantage of the attractive returns available for private financing of real estate transactions. “We have experienced significant demand for a specialized self-directed IRA product that focuses on the private lending industry, specifically in the real estate industry, “ stated Jacky Ospina, a retirement tax specialist with the IRA Financial Group. “In 2013, a significant number of IRA Financial Group clients have used their checkbook IRA LLC solution to provide private mortgages to home buyers and real estate developers at very attractive rates, “ stated Ms. Ospina.

The primary advantage of using a Self Directed IRA LLC to make private mortgages is that the loan can be made by simply writing a check. In addition, all income and gains associated with the self directed IRA hard money loan would grow tax-deferred.

With IRA Financial Group’s self directed IRA LLC for private lending transactions, traditional IRA or Roth IRA funds can be used to buy real estate throughout the United States and globally in a tax-deferred account by simply writing a check. “With mortgage rates increasing, our clients are finding attractive returns in the private lending market, “ stated Ms. Ospina.

IRA Financial Group’s Self-Directed IRA LLC for private lending transactions, is an IRS approved structure that allows one to use their retirement funds to make hard money and real estate loans 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 IRA LLC, the IRA owner will have control over the IRA assets to make traditional as well as non-traditional investments, such as hard money loans by simply writing a check

Using IRA Financial Group’s self directed IRA LLC with “checkbook control” solution to make hard money loan investments offers hard money lenders the ability to make loans i quickly without any custodian delay. “By using a “checkbook control” self-directed IRA LLC our clients have been able to make hard money loans quickly and without any custodian delay,” 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 visit our website at http://www.irafinancialgroup.com or call 800-472-0646.  Plus, check us out on Facebook & Twitter!

Dec 20

The SEP Self-Directed IRA LLC Solution

What is a SEP?

A SEP is a simplified employee pension plan. Any employer can establish a SEP. An employer can maintain both a SEP and another plan. Annual contributions an employer makes to an employee’s SEP-IRA cannot exceed the lesser of (i) 25% of compensation, or $50,000 for 2012. However, special rules apply when figuring out the maximum deductible contribution for a self-employed individual (typically 20% of compensation).

What is a SEP Self-Directed IRA LLC?

A Self Directed SEPIRA LLC “Checkbook Control” structure is an IRS approved and Tax Court certified structure that offers one the ability to use his or her SEP IRA funds to make almost any type of investment on their own without requiring the consent of any custodian. 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 SEP IRA funds… then the Self Directed SEP IRA LLC is your solution.

By gaining “checkbook control” over your SEP IRA funds you will gain the following advantages:

“Checkbook Control”: You will no longer have to get each investment approved by the custodian of your account. Instead, as manager of the SEP self directed IRA LLC, all decisions are truly yours. To make an investment, simply right a check and use the funds straight from your Self Directed SEP IRA LLC bank account.

The SEP IRA is a great retirement plan option for small business ownersFor example, Jen, who is self-employed, has established a SEP Self Directed IRA LLC. Jen’s SEP IRA care of the custodian is the sole member of the LLC and Jen will be appointed as manager of the LLC. Jen has opened her Self Directed SEP IRA LLC bank account at a local bank. The name of Jen’s Self-Directed SEP IRA LLC is ABC LLC. Jen wishes to use her IRA funds to purchase a home from Jack, an unrelated third-party (non-disqualified person). Jack is anxious to close the transaction as soon as possible. With a “checkbook control” Self Directed SEP IRA LLC, Jen, as manager of the LLC, can simply write a check using the funds from the ABC LLC bank account or can wire the funds directly from the account to Jack. Jen, as manager of the LLC, no longer needs to seek the consent of the custodian before making the real estate purchase. With a regular Self Directed IRA without “checkbook control”, Jen would likely not be able to make the real estate purchase since seeking custodian approval would have likely taken too much time.

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

Low Custodian Fees: A Self-Directed SEP IRA LLC “Checkbook Control” structure will help you save a significant amount of money on custodian fees. With a Self Directed SEP IRA LLC with “checkbook control” you no longer have to pay excessive custodian fees based on account value and transaction fees. Instead, with a “checkbook control” Self-Directed SEP IRA LLC, an FDIC backed IRS approved passive custodian is used.

The custodian in the “checkbook control” Self Directed SEP IRA LLC structure is referred to as a “passive” custodian largely because the custodian is not required to approve any SEP IRA related investment and simply serves the role of satisfying IRS regulations. By using a Self Directed SEP IRA LLC with “checkbook control” you can take advantage of all the benefits of self-directing your retirement assets without incurring excessive custodian fees and custodian created delays.

All the Passive Custodians we work with are FDIC backed and IRS approved. Once your custodian has transferred your retirement funds to the IRA Passive Custodian, the IRA Passive Custodian will immediately transfer your funds to your new SEP IRA LLC which can be opened at any local bank, where you as manager of the SEP IRA LLC will have “Checkbook Control” over those funds.

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

Tax-Free Gains: With the Self-Directed SEP IRA LLC “Checkbook Control” structure, all income and gains from the SEP IRA investments will generally flow back to your ISEP RA LLC tax-free. Because an LLC is treated as a pass-through entity for federal income tax purposes and the SEP IRA, as the member of the LLC, is a tax-exempt party pursuant to Internal Revenue Code Section 408, all income and gains of the LLC will flow-through to the IRA tax-free!

Direct Access: With a Self-Directed SEP IRA LLC “Checkbook Control” structure, you, as manager of the SEP IRA LLC, will have direct access to your SEP IRA funds allowing you to make an investment quickly and efficiently. There is no need to obtain approvals from your custodian, or deal with time delays in awaiting approval from your custodian or paying any review fees.

Limited Liability: By using a Self-Directed SEP IRA LLC with “Checkbook Control”, your SEPIRA will benefit from the limited liability protection afforded by using an LLC. By using an LLC, all your SEP IRA assets held outside the LLC will be shielded from attack. This is especially important in the case of SEP IRA real estate investments where many state statutes impose an extended statute of limitation for claims arising from defects in the design or construction of improvements to real estate.

Asset & Creditor Protection: By using a Self-Directed SEP IRA LLC with “Checkbook Control”, the SEP 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 SEP IRA from creditors attack against the IRA holder outside of bankruptcy. Therefore, by using a Self-Directed SEP IRA LLC, the IRA will be generally protected against creditor attack against the SEP IRA holder.

To learn more about the Self Directed SEP IRA LLC solution, contact one of our SEP IRA Experts at 800-472-0646 today!

Dec 19

Checkbook Control IRA Legal

The ability to invest retirement funds in a newly established special purpose entity owned 100% by an IRA and managed by the IRA holder has been deemed legal by the Tax Court and IRS for over 18 years.  However, only until recently, did the Tax Court confirm that the use of a newly established  limited liability company (“LLC”) wholly owned by an IRA and managed by the IRA holder would not trigger a prohibited transaction. On October 2013, the Tax Court in T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M) (“TC Memo 2013-245”)  held that establishing a special purpose limited liability company (“LLC”) to make an investment did not trigger a prohibited transaction, as a newly established LLC cannot be deemed a disqualified person pursuant to Internal Revenue Code Section 4975.

Experience the Self-Directed IRA LLC “Checkbook Control” AdvantageThe 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 IRS later confirmed the ruling in Swanson by releasing IRS Field Service Advice Memorandum 200128011 (“FSA 200128011”).

The Debate is Finally Over – TC Memo 2013-245 Sets the Record Straight on the Legality of the Checkbook IRA

The impact of TC Memo 2013-245 is enormous because it directly supports the position that a retirement account can fund a newly established LLC without triggering a prohibited transaction.  TC Memo 2013-245 is decisive because it will silence anyone who claims that using a special purpose LLC to make IRA investments would trigger a prohibited transaction and is not permitted by the IRS.

The “Checkbook Control” IRA structure is a tax court and IRS approved retirement solution.  The legality of the structure is unquestioned as it has been recognized by the U.S. Tax Court in Swanson v. Commissioner and later confirmed by the IRS in Field Service Advice Memorandum 200128011 and most recently by TC Memo 2013-245. In many respects the Tax Court’s ruling in TC Memo. 2013-245 is more important than the Swanson ruling and IRS advisory opinion.  Firstly, TC Memo. 2013-245 is the first case that directly reinforces the legality of using a newly established LLC to make IRA investments without triggering an IRS prohibited transaction.

When establishing a “checkbook control” IRA structure, it is crucial that one works with a tax attorney or a company operated by tax professionals who can establish a “checkbook control” IRA solution that ully complies with IRS rules.  As discussed in Swanson and later affirmed in the IRS advisory opinion as well as in TC Memo 2013-245, a correctly established “checkbook control” IRA will not be considered a prohibited transaction. While an IRA custodian is required to establish a “checkbook control” IRA solution, an IRA custodian is not allowed to offer legal advice on whether an

IRA transaction is prohibited, the very issue the IRS focuses on.  TC Memo. 2013-245 demonstrates the importance of working with specialized tax professionals who have the necessary expertise regarding the IRS prohibited transaction rules before establishing a self-directed IRA “checkbook control” structure.  If Mr. Ellis has worked with a trained tax professional to establish his “checkbook control” IRA LLC, he would have been told that he could establish a checkbook IRA to make investments, but he would not be permitted to receive a salary from the IRS owned entity.

To learn more about the legality of the “checkbook control” IRA structure, please contact a tax expert at 800-472-0646 or visit www.irafinancialgroup.com

Dec 18

Contributing to an IRA After a 401k Rollover

If you decide to rollover a 401(k) plan funds into an IRA (what is known as a rollover contribution), this does not effect your annual IRA contribution.  Plus, this keeps the tax benefits of deferred growth and puts all your retirement assets in one account making them easier to manage.

You may still contribute to an IRA after a 401(k) rolloverRollover contributions do not count towards your annual contribution limit of your IRA.  This would limit the amount of money you can rollover in a given year.  For example, the limit for IRA contributions for 2013 is $5,500 ($6,500 if you are at least age 50).  If you have $50,000 in your 401(k) plan that you wish to rollover, it would take a decade to move all the funds to your IRA.  Since annual limits don’t effect rollovers, you can move all your money into your IRA at one time.

Of course, regular IRA contribution applies no matter what, so not everyone is eligible to contribute to an IRA.  If you will turn age 70 1/2, before the end of the year, you are not allowed to contribute to an IRA.  Further, you need earned income during the year to contribute to an IRA.  If you did not work during the year, you cannot contribute to an IRA.  If you earned less than the maximum allowable contribution, you can only contribute up to that amount.

If you contribute to an IRA when you are not eligible to, or you contribute more than allowed for the year, you will get hit with a 6% penalty on the excess contribution by the IRS.  This penalty will be in effect every year until you fix the mistake.  Also, don’t forget if you have a Roth IRA as well, contributions to that account count towards the annual limit.  If you maxed out your contributions to your Roth, you cannot contribute to your traditional plan.

One last thing to note: if you plan on moving the money from your IRA to another employer-sponsored plan, you should not contribute to the account even though you are allowed.  When moving money from one employer plan to an IRA to another employer plan, you may receive additional tax benefits.  This type of IRA is known as a “conduit IRA”.  If you contribute additional money into this type of IRA, it makes it ineligible for any additional benefits.

If you have any questions about this or other IRA matter, please contact a tax expert from the IRA Financial Group @ 800.472.0646 today!  Be sure to check us out on Twitter and Facebook!

Dec 16

The Self Directed IRA LLC Operating Agreement

The LLC Operating Agreement is the core document that is referred to when issues concerning the LLC need to be resolved. The LLC Operating Agreement is the most important document for your Self Directed IRA. It is extremely important that you create an Operating Agreement for your Self Directed IRA LLC.

The Self Directed IRA LLC Operating AgreementThe standard LLC Operating Agreement will not meet the requirements for your Self-Directed IRA LLC. In general, a self directed IRA LLC Operating Agreement should include special tax provisions relating to “Investment Retirement Accounts” and “Prohibited Transactions” pursuant to Internal Revenue Code Sections 408 and 4975. In addition, since the LLC will be managed by a manager and not the member, the Operating Agreement would need to include special management provisions.

It is extremely important to have a properly prepared Operating Agreement to fit the needs of your LLC and meet the requirements of the Internal Revenue Service for a Self Directed IRA LLC. In fact, a copy of the LLC Operating Agreement will be required by the Custodian and also by the bank where you will have your LLC’s checking account.

IRA Financial Group will generate a special purpose self-directed IRA LLC Operating Agreement that has been approved by all IRA passive custodians. The special purpose self-directed IRA LLC operating agreement has been drafted by tax professionals who worked at some of the largest law firms in the country such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP. With our work experience at some of the largest law firms in the country, our tax knowledge in this area is unmatched.

Our low one time service fee includes not only the special purpose self-directed IRA LLC operating agreement, but also includes the setting up of the entire Self Directed IRA LLC structure for you, including LLC formation, acquiring a Tax ID#, assisting with the completion of all transfer documents, and self-directed IRA tax advisory service from our in-house tax and ERISA professionals.

Please contact one of our IRA Experts at 800-472-0646 for more information.  Be sure to like us on Facebook and follow us on Twitter!

Dec 13

Why Your Child Needs an IRA

You probably have retirement accounts for yourself, but what about your children?  If they have earned income, they can contribute to an IRA and because of their age, they have many decades of growth and compounding ahead of them.  Here are the types of IRAs you can open for your children and the benefits of them.

Your child needs an IRA now!There are two types of IRAs you can open for your child: traditional and Roth.  The major difference between the two is when you pay the taxes on your contributions.  A traditional plan is funded with pre-tax money.  Therefore, you get an immediate tax break along with tax-deferred savings.  You are taxed at your current tax rate when you withdraw the money during retirement.  On the other hand, Roth IRAs are funded with after-tax money.  You don’t see an immediate tax break, but withdrawals during retirement are generally tax-free (which includes earnings too).  Since your child is young and probably doesn’t earn a whole lot of money, the benefits of a traditional plan are not very much. If you claim your child as a dependent, he or she may have to file an income tax return if he or she earns more than the amount set forth by the IRS ($6,100 for 2013).  Earning under this amount will keep your child in the 0% tax bracket and therefore the up-front tax benefit is nil.  A Roth plan is much better since the immediate tax break is not as important as tax-free growth for young investors.

The benefits of opening an IRA for your child is many.  First off, it teaches them to start putting aside money for retirement.  This is an important lesson that many young people don’t think about.  They don’t think about next week, let alone five decades into the future.  Further, it teaches them valuable lessons about finances and financial responsibility.  They can learn how taxes work, the concept of interest and compounding along with the differences between earning, saving and spending and how it effects their lives.

While they might not fully understand the concepts, they can appreciate how their money can grow if left alone.  A $1,000 contribution left untouched for 50 years that earns only 5% will grow to almost $11,500.  Throw in a measly $50 contribution each month and that number soars to over $137,000.  Teaching them now will ensure that they save later.

Also, all contributions (not earnings) can be withdrawn from a Roth IRA at any time for any reason and not be hit with taxes and/or penalties.  There are certain cases they allow you to tap your earnings (and all traditional IRA funds) as well, such as higher education expenses and first time home buying.

If your child is a minor when opening up the IRA, most financial institutions will allow you to open a Custodial or Guardian IRA.  As the custodian, you control the account until your child reaches age 18 (or 21 in some states).  At that point, your child takes over the account.  Since the account is opened in your child’s name, you must provide his or her social security number.  When assuming control of the account, your child should be told not to touch the assets in there until retirement.  It’s very tempting for a young adult to raid the account as soon as possible.

To learn more about both traditional and Roth IRAs, contact the tax experts at the IRA Financial Group @ 800.472.0646 or visit our website today!  Be sure to like us on Facebook and follow us on Twitter!

Dec 12

Funding a Self-Directed IRA With a Traditional IRA Rollover

In general, a self-directed IRA LLC may be funded by a transfer from another IRA account or through a rollover from an eligible defined contribution plans, defined benefit plans 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.

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 with a Traditional 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.

Moving 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 from the IRA Financial Group at 800-472-0646.

Dec 11

IRA Financial Group Introduces Special SEP IRA Rollover Self-Directed Solo 401(k) Plan

Self-Directed Solo 401(k) plan will accept tax-free SEP IRA rollovers

IRA Financial Group, the leading provider of solo 401k plans announces the introduction of its special SEP IRA rollover self-directed solo 401(k) plan for the self-employed and small business owner. The special self-directed solo 401(k) Plan will be geared towards self-employed individuals looking to rollover a SEP IRA into a self-directed retirement structure. “Our special open architecture self-directed solo 401(k) plan will allow SEP IRA holders to rollover their SEP IRA funds into a new solo 401(k) Plan without tax or penalty, “ stated Susan Glass, a retirement tax specialist with the IRA Financial Group.

IRA Financial Group Introduces Special SEP IRA Rollover Self-Directed Solo 401(k) PlanA solo 401(k) plan, also known as an individual 401k Plan, is an IRS approved retirement plan, which is suited for business owners who do not have any employees, other than themselves and perhaps their spouse. The “one-participant 401(k) plan” or individual 401(k) Plan is not a new type of plan. It is a traditional 401k plan covering only one employee. Unlike a Traditional IRA, which only allows an individual to contribute $5500 annually or $6500 if the individual is over the age of 50, a solo 401k Plan offers the Plan participant the ability to contribute up to $56,500 each year. Before the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) became effective in 2002, there was no compelling reason for an owner-only business to establish a solo 401(k) Plan because the business owner could generally receive the same benefits by adopting a profit sharing plan or a SEP IRA. After 2002, EGTRRA paved the way for an owner only business to put more money aside for retirement and to operate a more cost-effective retirement plan than a Traditional IRA or 401(k) Plan.

According to Ms. Glass, the main reason the solo 401(k) Plan has become more popular than a SEP IRA is that one can reach their maximum annual contribution of $51,000 quicker. In addition, a solo 401(k) plan has a catch-up contribution of $5500, which is not the case with a SEP IRA. Furthermore, a solo 401(k) plan has a Roth component and allows plan participants to borrow up to $50,000 or 50% of their account value whatever is less.

IRA Financial Group’s special SEP IRA rollover self-directed solo 401(k) Plan is designed to allow a SEP IRA rollover to a solo 401k plan without incurring any tax or penalty on the rollover.

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 and Dewey & LeBoeuf LLP.

IRA Financial Group is the market’s leading “Checkbook Control” Self Directed IRA and Solo 401k Plan Facilitator. We have 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 tax-free and 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.  Plus check us out on Twitter and Facebook!