Feb 28

Did You Know You Can Invest in Precious Metals in Your IRA?

Thanks to significant advertising by precious metals dealers, it has become widely known that Gold, Silver and other precious metals (Platinum & Palladium) can be purchased with retirement account funds. By Self-Directing your IRA LLC investments into precious metals, your profits are tax-deferred back into your retirement account. More importantly, if you have full checkbook control over your Self-Directed IRA LLC, the purchases can be made on the spot as fast as you can write a check. Precious metals are the original currency of early civilizations and therefore a store of value, literally for thousands of years.

The purchase of Bullion is a surprisingly safe investment. The transaction is fast and its characteristics make precious metals a perfect investmentPrecious Metals for the individual with full checkbook control of an IRA Financial Group IRA LLC. In fact, the use of a Self-Directed IRA LLC is one of the most tax efficient ways to finance your Gold/Silver purchase.

Only a handful of institutions are skilled in these specialized account structures and only one has been founded by and is exclusively operated by attorneys – IRA Financial Group. Simply put, we are the “gold standard” for Compliance, Leadership, Customer Service, and Technological Innovation. We carefully advise you on handling this type investment in a manner that places these assets closer to your emergency access while remaining solidly within the spirit and letter of the law.

What Type of Precious Metals and Coins are IRS Approved Investments?

Internal Revenue Code Section 408(m) lists the type of precious metals and coins that are permitted investments using IRA funds:

  • One, one-half, one-quarter or one-tenth ounce U.S. gold coins (American Gold Eagle coins are the only gold coins specifically approved for IRAs). Other gold coins, to be eligible as IRA investments, must be at least .995 fine (99.5% pure) and be legal tender coins.
  • one ounce silver coins minted by the Treasury Department;
  • any coin issued under the laws of any state;
  • a platinum coin described in 31 USCS 5112(k); and
  • gold, silver, platinum or palladium bullion (other than bullion that is made into a coin) of a certain fineness that is in the physical possession of a trustee that meets the requirements for IRA trustees under Code Sec. 408(a).

The Technical and Miscellaneous Revenue Act of 1998 allowed IRA owners to invest their IRA assets in certain platinum coins as well as certain gold, silver, platinum, or palladium bullion provided the precious metals are held in the physical possession of the financial organization or depository. With respect to state minted coins, the coins must be held in the possession of a third-party other than the IRA holder. The Technical and Miscellaneous Revenue Act of 1998 does not state that the third-party holding the state minted coins must be a bank, but the holder must not be the IRA holder. Regarding American Eagle coins, there does not seem to be a “physical possession” requirement as precious metals or a restriction on possession by the IRA holder as in the case of state minted coins.

How do I hold Physical Gold in a Self-Directed IRA LLC?

Internal Revenue Code Section 408(m) identifies what types of coins and precious metals are permitted to be purchased using a Self-Directed IRA.

Section 408(m) also states that bullion (IRS approved gold, silver, or palladium) must be held in the physical possession of a trustee described under subsection (a). The “physical possession” requirement seemingly only applies to bullion not approved coins.

A trustee is defined in Internal Revenue Code Section 408(a) as 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.

Internal Revenue Code Section 408(n) defines a bank as any bank (as defined in section 581) or an insured credit union (within the meaning of paragraph (6) or (7) of section 101 of the Federal Credit Union Act).

Section 541 defines a bank as a bank or trust company incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia) or of any State, a substantial part of the business of which consists of receiving deposits and making loans and discounts, or of exercising fiduciary powers similar to those permitted to national banks under authority of the Comptroller of the Currency, and which is subject by law to supervision and examination by State, Territorial, or Federal authority having supervision over banking institutions. Such term also means a domestic building and loan association. The Code seems to suggest that metals cannot be held in a foreign bank account since it would not satisfy the definition of a bank. The question then becomes what does “physical possession” mean.

IRC Section 408(m) clearly states that gold, silver, or palladium bullion must be held in the physical possession of a U.S. trustee, otherwise known as a U.S. bank or financial institution.

Thus, the question then becomes, if a an IRA holder holds precious metals in a safe deposit box at a U.S. bank in the name of the Self-Directed IRA LLC is that in the “physical possession” of a U.S. trustee or bank. Well the argument goes that the precious metals are certainly not in the physical possession of the IRA holder since they will physically be held in a safe deposit box of the bank. Although, an argument can be made that the safe deposit box is constructively in the control of the IRA holder, since he or she has the keys for the box. However, the Internal Revenue Code under Section 408 clearly states “physical possession” and not “constructive control”. From a legal standpoint, possession is not defined to represent control, meaning one can be in possession of an item but not in control or ownership of. Hence, many tax practitioners take the position that holding precious metals in a safe deposit box in the name of the Self-Directed IRA LLC would satisfy the “physical possession” requirement under Internal Revenue Code Section 408(m).

The IRS has not offered any clear guidance on this issue, but what is clear, unlike IRS approved coins, is that precious metals should not be stored in the home or possession of the IRA holder or any person that does not satisfy the definition of a trustee pursuant to the Internal Revenue Code.

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 IRA Financial Group clients that wish 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 held 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.

Gold & Silver Purchases

Financial professionals across the globe all agree that asset diversification is the key to success. To reduce the risks of investing, they suggest the purchase of precious metals to diversify investments among different securities or asset classes.

Now you can hold precious metals in your individual retirement account.  With a self-directed IRA LLC from IRA Financial Group, you can invest in all types of precious metals, including gold, silver, platinum and palladium.

Advantages

1. Timing & Pricing. In today’s volatile and complex market place, timing and pricing is everything. With a Self-Directed IRA LLC, buy and sell orders can be done instantly, leaving no down time for big price swings in between trades.

2. Your Money Grows Tax-Free. By buying Gold in an IRA Financial Group Self-Directed IRA LLC, you can avoid all taxes until the money invested is withdrawn. Equally important, having access in time of crisis or national emergency is in the forefront of many people’s minds these days; we will help you ease that concern with a sound strategy that’s consistent with IRS requirements.

3. The Flexibility to Buy Time Sensitive Investments. IRA Financial Group’s Self-Directed IRA LLC’s allow you to carry a checkbook that is tied to the account. This gives you, the investor, an incredible freedom to buy precious metals at a moment’s notice.

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

Feb 27

IRA Financial Group Introduces Self-Directed IRA Solution for Flipping Real Estate Without Paying Tax

Buy and flip real estate or rental properties tax-free and without custodian consent with IRA Financial Group’s Self-Directed IRA LLC solution

IRA Financial Group, the leading provider of self-directed IRA LLC solutions, introduces a special self-directed retirement solution for buying and selling real estate without paying tax.

The “checkbook control” self directed IRA LLC real estate flipping solution offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person, including real estate. The IRS only describes the type of investments that are prohibited, which are very few. With IRA Financial Group’s self-directed IRA LLC real estate flipping solution, an individual can buy and sell real estate without paying tax, which can offer a real estate investor a huge tax savings. “Using a self-directed IRA LLC to flip homes can save a real estate investor up to 35% in tax, which is a huge advantage, “ stated Susan Glass, a tax specialist with the IRA Financial Group. “Because flipping real estate generally triggers short-term capital gains , which is taxed at ordinary income tax rates, using a self-directed IRA to buy real estate can offer enormous tax savings, “ stated Ms. Glass.

IRA Financial Group Introduces Self-Directed IRA Solution for Flipping Real Estate Without Paying TaxThe IRS has always permitted an IRA to purchase real estate, raw land, or flip homes. “With IRA Financial Group’s self-directed IRA LLC real estate flipping solution, buying and flipping rental properties is as simple as writing a check and is tax-free, “ stated Ms. Glass. “As the manager of the checkbook control IRA LLC, the IRA holder will have control over his or her IRA funds so that flipping a home can be made by simply writing a check,” stated Jean Scharfman, a retirement tax specialist with the IRA Financial Group. One major advantage of buying rental properties with retirement funds is that all rental income generated by the property is 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.

Unlike a conventional Self Directed IRA which requires custodian consent and requires high custodian fees, a real estate IRA LLC with “Checkbook Control” will allow one to buy real estate, including rental properties by simply writing a check. “With a traditional custodian controlled self directed IRA, completing real estate flipping transaction would be nearly impossible since the IRA custodian would need to be involved in every facet of the real estate transaction, “ stated Ms. Scharfman. Whereas, with IRA Financial Group’s checkbook control self-directed IRA real estate LLC solution, the IRA funds will be held at a local bank in the name of the IRA LLC which would make entering into a real estate investment as simple as writing a check. With IRA Financial Group’s real estate IRA LLC solution, no longer would one need to ask the IRA custodian for permission or have the IRA custodian sign the real estate transaction documents. Instead, with a Checkbook Control IRA, as manager of the IRA LLC, the IRA holder, will be able to buy rental properties simply by writing a check.

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.

Feb 26

What is a Self-Directed IRA LLC?

A Self-Directed IRA LLC is a type of IRA that allows the IRA holder (you) to gain control over your retirement funds so you have the ability to self-direct the type investments that you want to make using your retirement funds. With a traditional Self-Directed IRA, you as the IRA holder must direct the IRA custodian to make the investment you wish to make using your retirement funds, which often triggers high custodian fees and transaction delays. Whereas, with a Self-Directed IRA LLC with Checkbook Control you as the IRA LLC manager will have the ability to make traditional investments (stocks, mutual funds) as well as non-traditional investments (real estate, precious metals, etc) tax-free and without custodian consent.

The Self-Directed IRA LLC “Checkbook Control” Structure is IRS and tax court approved. The idea of using an entity owned by an IRA to make investments 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.

Use a Self-Directed IRA to invest in anything from real estate to precious metalsUnlike a conventional Self-Directed IRA which requires custodian consent and requires high custodian fees, a Self-Directed IRA LLC with Checkbook Control will allow you to buy real estate or make other investments by simply writing a check.  With a Self-Directed IRA LLC, a special purpose limited liability company (“LLC”) is established 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, the IRA holder (you) will have total control over the IRA assets to make the investments you want and understand – not just investments forced upon you by Wall Street.

With IRA Financial Group’s Self-Directed IRA LLC, you will have total control to make any approved investment, including a real estate purchase, pay for improvements, and then sell the property without ever talking to the IRA custodian.  Since all your IRA funds will be held at a local bank in the name of the Self-Directed IRA LLC, all you would need to do to engage in a real estate transaction or other investment is write a check straight from the IRA LLC account or simply wire the funds from the IRA LLC bank account.  No longer would you need to ask the IRA custodian for permission or have the IRA custodian sign the real estate transaction documents.  Instead, with a Checkbook Control IRA, as manager of the IRA LLC, you will be able to execute the IRA investment by simply writing a check.

With a Self-Directed IRA LLC you will never have to seek the consent of a custodian to make an investment or be subject to excessive custodian account fees based on account value and per transaction.

By having a Self-Directed IRA LLC, you will gain checkbook control over your IRA funds so you can make real estate and other investments tax-free and without custodian consent.

The following are a number of the benefits of using a Self-Directed IRA LLC:

“Checkbook Control ”: With a Self-Directed IRA LLC with Checkbook Control, as the IRA LLC manager (the IRA care of the custodian will be the owner/member of the LLC), you will no longer have to get each investment approved by the custodian of your account. Instead, as manager of the 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 IRA LLC bank account.

Invest in Real Estate & much more Tax-Free: With a Self-Directed IRA LLC with checkbook control, you will be able to invest in almost any type of investment opportunity that you discover, including real estate; your only limit is your imagination. The income and gains from these investments will flow back into your IRA tax-free.

Reduce Custodian Fees: With a Self-Directed IRA LLC structure, you will be in a position to 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, with a Self-Directed IRA LLC, 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 Self-Directed 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 LLC allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

Tax Deferral: With the Self-Directed IRA LLC structure, all income and gains from IRA investments will generally flow back to your Self-Directed IRA LLC tax-free. Because an LLC is treated as a pass-through entity for federal income tax purposes and the 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 generally flow-through to the IRA tax-free!

The Self-Directed IRA LLC, allows the IRA holder to:

  • Better protect their hard-earned retirement assets from a falling stock market or against the risk of U.S. inflation
  • Use the same Self-Directed IRA LLC to purchase domestic and foreign real estate, private mortgages, gold and stocks, bonds and mutual funds inside the same plan and generate profits tax-free
  • Purchase real estate foreclosures and tax liens on the spot, or make personal loans by simply writing a check and generate profits tax-free
  • Buy your retirement home or vacation property now at today’s prices, rent it out, and then move in at the age of 59 and 1/2!
  • Diversify your retirement portfolio and invest in almost any type of investment tax-free
  • Take control of your retirement funds and hold them at a local bank or credit union
  • Make a real estate or other investment by simply writing a check – it is that easy
  • Generate tax-free income and shield your retirement assets from creditors or bankruptcy!

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

To learn more about the Self-Directed IRA LLC structure, contact one of our IRA Professionals at 800-IRA-0646 today!  Don’t forget to like us on Facebook and follow us on Twitter for all your IRA needs.

Feb 25

Important Birthdays to Remember for Retirement

Hopefully, you’ve been saving for retirement for years and you’ve built up a substantial nest egg.  If you haven’t, you better get started on that.  If you have, there are some important age-related rules that you should take note of.  You don’t want to risk getting penalized for taking out your funds too soon, especially if you don’t need them.  Also, for certain accounts, you are required to start taking out funds, whether you need them or not.  Here are some reminders of certain rules you need to follow.

Important birthdays for retirement planningThe first important milestone is when you reach age 50.  This is an important year if you are lagging in your retirement savings or just want to sock away more money.  In the year you turn 50, the IRS allows you to contribute more money to your retirement plan.  This is known as the “catch-up” contribution.  For IRA’s this amount is $1,000 for 2014 (as well as 2013).  This allows fifty-somethings (and older) to put away $6,500 this year.  If you have a 401(k) plan, the catch-up amount is $5,500 making the total contribution limit $23,000.  Also, if you are a retiring firefighter, police or medic with 20 years of service, you can start taking penalty-free withdrawals.

The next age is 55, which is important for 401(k) plan users.  Once you turn 55 and leave your job for whatever reason, you are not subject to the 10% early withdrawal penalty.  This advantage is only for your most recent employer-sponsored plan.  If you have previous 401(k) plans, you need to hold off on distributions.  Also, this is only for 401(k)’s, not for IRAs.

Next comes your first important half birthday: 59 1/2.  Once you reach that age, IRA distributions are now penalty-free (in addition to all other 401(k) plans).  Any IRA funds withdrawn before this age will be subject to the 10% penalty.

Then, of course, is age 62, the year you may start collecting Social Security benefits.  If you can afford to, you should wait in taking these payments.  If you start them now, your payments may be lowered by up to 30%.  If you were born between ’43 & ’54, you’re eligible for full Social Security at age 66.  Between ’55 & ’59, that age ranges from 66 and 2 months to 66 and 10 months.  If you were born in 1960 or later, you will get full benefits at age 67.  However, if you delay benefits until age 70, you will see an 8% increase each year.

Finally, the last  important day (as far as retirement planning goes at least), is age 70 1/2.  This is the year you must start taking distributions from your traditional IRAs and 401(k) plans.  These are known as required minimum distributions (RMDs).  This amount is based on your plan worth and life expectancy.  Failure to withdraw this amount each year is subject to a 50% penalty for the amount not distributed.  Note: Roth IRA owners do not have to take RMDs.

If you have any questions about the rules of retirement, please contact a tax expert at the IRA Financial Group @ 800.472.0646.  Plus, don’t forget to follow us on Twitter!

Feb 24

Contribution and Distribution Rules for Your Roth IRA

Contribution Rules

A taxpayer’s contributions to Roth IRAs during any year may not exceed a dollar ceiling (or, if less, the taxpayer’s compensation income), reduced by deductible contributions for the year to traditional IRAs. For 2013 & 2014, the dollar ceiling is $5,500. Further, if you are at least 50 years of age before the end of the year, you may contribute another $1,000 as a “catch-up” contribution.

The maximum contribution is the same for traditional and Roth IRAs, but this ceiling applies differently to them because contributions to Roth IRAs are after-tax funds, whereas contributions to traditional IRAs are pretax funds. Assume A contributes $3,000 to a Roth IRA for 2013, and B contributes the same amount for the year to a traditional IRA; both are taxed at 30 percent at all times. Although only $3,000 of salary income was required to fund B’s contribution, A’s contribution effectively takes pretax income of $4,286 ($4,286, less 30 percent thereof, is $3,000). If each of the IRAs earns eight percent, and each of the contributors withdraws the accumulated funds on retirement ten years after the contributions are made, A will have $6,477 ($3,000 plus earnings at eight percent for ten years), and B will have $4,534 ($6,477 less 30 percent thereof).

Contribution and Distribution Rules for your Roth IRATaxpayer’s ability to make a Roth IRA contribution begins to phase out when your adjusted gross income (AGI) exceeds $178,000 (for joint filers) and $112,000 for single filers. In addition, you are not permitted to make a contribution at all when your AGI exceeds $188,000 (for joint filers) or $127,000 (for single filers). Note: with a traditional IRA you may make a contribution even if your income is high and you are covered by an employer’s plan. However, you may not be able to deduct the contribution on your return.

Contributions in excess of the maximum are subject to a six percent excise tax unless the excess and income thereon are distributed to the owner not later than the due date of his or her return for the year (taking extensions into account). Income included in a distribution made within this time is included in the owner’s gross income for the year of the contribution, not the year of the distribution.

As with traditional IRAs, contributions to a Roth IRA are deemed made on the last day of the year if made before the following April 15. Contributions to a Roth IRA, unlike a traditional IRA, can be made by taxpayers older than 70 1/2.

Distribution Rules

Distributions from Roth IRAs are not required to begin at any particular time, and there are no limitations on death benefits. Distributions from a traditional IRA, in contrast, must begin by April 1 following the year in which the owner reaches age 70 1/2 or (if later) retires and must generally be made in ways that will exhaust the account during the lifetimes or over life expectancies of the owner and his or her spouse. In other words, while congressional policy is that traditional IRAs be for retirement savings only, Congress acquiesces in the use of Roth IRAs for accumulating wealth to be transmitted at death.

Roth and traditional IRAs are subject to the same rules for distributions after the owner’s death. If the beneficiary is not the surviving spouse, distributions must either be completed by the end of the fifth calendar year following the year of the owner’s death or consist of a series of payments beginning before the end of the calendar year following the year of death and continuing not longer than the beneficiary’s life expectancy. If the beneficiary is a surviving spouse, distributions may be delayed until the spouse reaches age 70 1/2 or retires, or the spouse may elect to treat the IRA as his or her own.

A “qualified distribution” from a Roth IRA is excluded from gross income. To be qualified, a distribution must satisfy both of the following requirements:

  • It must not occur before the fifth taxable year following the year for which a Roth IRA contribution was first made by the taxpayer or the taxpayer’s spouse.
  • It must be made after the account owner reaches age 59 1/2 or becomes disabled, be made to the owner’s beneficiary or estate after the owner’s death, or be a “qualified special purpose distribution.”

Qualified special purpose distributions are distributions, up to a $10,000 lifetime maximum, that are “used” by the distributee within 120 days to pay “qualified acquisition costs” for property to serve as the “principal residence” of a “first-time home-buyer,” who must be the IRA owner, his or her spouse, or a child, grandchild, or more remote ancestor of the owner or spouse. Qualified acquisition costs are costs of acquiring, constructing, or reconstructing a residence, including “reasonable settlement, financing, or other closing costs.” A first-time home-buyer is a person who has not had a “present ownership interest in a principal residence” during the two years preceding the acquisition of the residence financed with the distribution. A distribution can qualify only to the extent of $10,000, less all prior qualified first-time home-buyer distributions received by the recipient.

A non-qualified distribution is excluded from gross income only to the extent of the excess of the taxpayer’s contributions to Roth IRAs, less all prior distributions, qualified and unqualified. A distribution of an excess contribution is not qualified and is therefore included in gross income to the extent of the income of the account required to be included in the distribution. An amount included in gross income on a non-qualified distribution may be subject to an additional 10 percent penalty tax under Internal Revenue Code Section 72(t) (e.g., if made to the owner before age 59 1/2 ). Very generally, the effect of these rules is that investment returns of a Roth IRA are tax-free to the distributee if received in a qualified distribution but are otherwise taxed.

The basis of property other than money received in a distribution from a Roth IRA is the property’s fair market value, whether or not the distribution is qualified. An owner’s lifetime gift of a Roth IRA to another person is treated as a distribution in full to the owner and a gift of an account or annuity that is not an IRA.

Please contact one of the Roth IRA Experts at the IRA Financial Group at 800-472-0646 for more information.  Don’t forget to give us a like on Facebook!

Feb 21

Self Directed IRA With CPA Service

IRA Financial Group is the only full service Self-Directed IRA facilitator that offers its clients the ability to consult with our in-house tax accountants and CPAs, in addition, to our tax professions. Our in-house CPAs are specially trained in the taxation of retirement accounts, which allows us to provide our clients with specialized tax advice and offer tax filing and reporting services relating to the use and taxation of retirement funds to make investments. Because the use of retirement funds to make investments, such as real estate via a Self-Directed IRA LLC are governed by a set of multifaceted and not widely known tax rules, having the ability to consult and work directly with specially trained tax professionals and CPAs is crucial.

The Taxation of a Self-Directed IRA LLC

Self-Directed IRA LLC owned by one IRA – Disregarded Entity

Self-Directed IRA In-House CPA ServiceUsing a Self-Directed IRA LLC to make investments, such as real estate presents many exciting investment and tax deferral opportunities. In general, when a wholly owned IRA LLC, also known as a single member Self-Directed IRA LLC is used to make a retirement account investment, there is generally no Federal Income tax return filing requirements, as the LLC will be treated as a disregarded entity for tax purposes. An LLC is treated as pass-through entity for tax purposes, which means it is not subject to tax. The owner (IRA member) of the LLC would be the party responsible for the payment of tax on the allocated net profits generated by the LLC.

When it comes to the payment of tax, in the case of a single member LLC treated as a disregarded entity for tax purposes, the member (owner) of the LLC, and not the LLC would be responsible for the payment of tax in connection with any net profits generated by the LLC. However, in the case of a single-member Self-Directed IRA LLC, an IRA, which is exempt from tax pursuant to IRC Section 408, is the sole owner of the LLC, not an individual or taxable entity. Hence, since a tax-exempt retirement account is the sole owner of the LLC, in general, no tax is due when making real estate and other passive investments with a Self-Directed IRA LLC.

In addition, most states do not require single member LLC to file a state tax return. However, certain some states do impose certain filing and tax requirements on single-member Self-Directed IRA LLCs. As a result, it is vital to work with specially trained tax professionals and CPAs who can properly advise on all the federal and state tax matters involving using a single-member Self-Directed IRA LLC.

Self-Directed IRA LLC owned by two or more IRAs – Partnership

In the case of an LLC owned by two or more IRA accounts, the LLC would be treated as a partnership for Federal Income tax purposes and as a result an IRS Form 1065, Partnership Return, must be filed with the IRS even though no tax is due at the partnership level. An LLC owned by two or more IRAs is treated as a partnership for tax purposes. Like a single member LLC, multiple-member LLCs are treated as pass-through entities for tax purposes and, thus, are not subject to tax. The owner(s) (IRA member(s)) of the LLC would be the parties responsible for the payment of tax on the allocated net profits generated by the LLC. However, in the case of a multiple-member Self-Directed IRA LLC, two or more IRAs, which are exempt from tax pursuant to IRC Section 408, would be the owners of the LLC, not an individual or taxable entity. Hence, since a tax-exempt retirement account are the sole owners of the LLC, in general, no tax is due when making real estate and other passive investments with a Self-Directed IRA LLC.

In addition, most states require LLCs treated as a partnership for federal income tax purposes to file a partnership return for state purposes. However, in the case of a single member Self-Directed IRA LLC, an IRA, which is exempt from tax pursuant to IRC Section 408 is the sole owner of the LLC, not an individual or taxable entity. Hence, since a tax-exempt retirement account is the sole owner of the LLC, in general, no tax is due when making real estate and other passive investments with a Self-Directed IRA LLC.

However, some states do impose certain filing and tax requirements on multi-member Self-Directed IRA LLCs. As a result, it is vital to work with specialized tax professionals and CPAs who can properly advise you on all the federal and state tax matters involving using a multiple-member Self-Directed IRA LLC.

In-House CPA Services

The IRA Financial Group has designed a specialized Self-Directed IRA LLC CPA service, which will offer clients the ability to consult with specialized Self-Directed IRA LLC trained CPAs on a wide variety of tax matters concerning the Self-Directed IRA. Below is a list of some of the services offered by our in-house CPAs:

  • Advising clients regarding Federal Income tax matters concerning the use of a Self-Directed IRA LLC
  • Advising clients regarding state Income tax matters concerning the use of a Self-Directed IRA LLC
  • Assisting clients with the completion and filing of any Federal Income tax Partnership returns in connection with a Self-Directed IRA LLC
  • Assisting clients the completion and filing of any state Income tax returns in connection with a Self-Directed IRA LLC
  • Advising clients on the IRS prohibited transaction rules as they pertain to federal and state tax matters involving a Self-Directed IRA transaction
  • Assisting clients regarding any state franchise or income tax matters concerning a Self-Directed IRA LLC investment
  • Advising clients regarding the Unrelated Business Taxable Income (UBTI or UBIT) rules
  • Advising clients regarding the Unrelated Debt Finance Income (UDFI) tax rules
  • Assisting clients the completion and filing of the IRS Form 990-T in connection with a Self-Directed IRA LLC investment that generates UBTI and/or UDFI
  • Assisting clients with the day-to-day accounting and management of the Self-Directed IRA LLC & investments (QuickBooks)
  • Self-Directed IRA valuation services
  • Advising on the federal and state asset & creditor protection rules relating to the use of a Self-Directed IRA LLC

Specialized In-House CPA Service for Real Estate Investors

When it comes to engaging in a real estate transaction with a Self-Directed IRA LLC there are a number of important IRS and tax rules that must be followed. For example, IRC Section 4975 prohibits an IRA owner to engage in a transaction that directly or indirectly benefits him/or her or any other “disqualified person”. A “disqualified person” is defined in IRC Section 4975 as the IRA owner and any of his or her lineal descendants, which include parents, children, spouse, daughter-in-laws, and son-in-laws. In addition, a “disqualified person” is not permitted to provide any services or receive any personal benefit from the Self-Directed IRA LLC investment. Therefore, IRA Financial Group has specially designed a CPA tax service program for Self-Directed IRA investors. The specialized CPA service will offer special federal and state tax advice regarding real estate matters as well will cover federal and state tax reporting and filing obligations. Our specially designed Self-Directed IRA real estate CPA service will also offer clients that ability to work with our in-house CPAs to develop an internal accounting system that could keep track of all IRA LLC related expenses and income in order to be in a position to properly value the Self-Directed IRA LLC’s assets. The Self-Directed IRA real estate CPA service is designed to offer a retirement investor with a more detailed accounting of the activities of the Self-Directed IRA LLC.

The tax professionals and CPAs at the IRA Financial Group are committed to making sure your Self-Directed IRA LLC solution remains in full IRS and state compliance from establishment through investment.

For more information on IRA Financial Group’s in-house CPA services, please contact a Self-Directed IRA expert at 800-472-0646.

Feb 20

IRA Financial Group Clients Invested Over $420 Million in 2013 Helping to Spur U.S. Real Estate Market

IRA Financial Group Clients Invested Over $420 Million in 2013 Helping to Spur U.S. Real Estate Market, According to IRA Financial Group Report

IRA Financial Group, the leading facilitator of self-directed IRA LLC & Solo 401(k) plan solutions, announces that in 2013 its self-directed and solo 401(k) plan clients invested over $420 million in the U.S. and foreign real estate markets.

 

IRA Financial Group Clients Invested Over $420 Million in 2013 Helping to Spur U.S. Real Estate Market“By using cash in their retirement funds and not requiring a mortgage or other financing, our clients have has great success in finding and closing on real estate transactions across the United States in 2013,” stated Susan Glass, a tax professional with the IRA Financial Group. “Our Self-Directed IRA and Solo 401(k) Plans clients have helped contribute the growth in the U.S. real estate markets,” stated Ms. Glass.

 

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

 

With IRA Financial Group’s self directed IRA real estate LLC & Solo 401(k) Plan solutions, 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. “Even with real estate prices increasing, in 2013 our clients invested over $420 million in cash in real estate and have been able to find attractive real estate opportunities for their retirement account, “ stated Adam Bergman, a tax partner with the IRA Financial Group. “Using a Self Directed IRA LLC or Solo 401(k) Plan to buy real estate presents a number of exciting tax planning opportunities, “ 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. 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, whereby, the Solo 401(k) plan involves the establishment of a trust and managed by the plan participant, as trustee.” As a result, the Self-Directed IRA and Solo 401(k) Plan provides the retirement account holder with greater control over his or her retirement assets allowing the individual to make traditional as well as non-traditional investments, such as real estate tax-deferred and with much lower annual fees. “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 in 2013 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.

Feb 19

The Self-Directed IRA Structure – How It Works

Working with our IRA Experts, establishing a Self-Directed IRA LLC is quick and easy. Our IRA Experts will take care of everything for you. 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.

1. Tax-Free Transfer of Funds.

Our IRA Experts will assist you in transferring your retirement funds tax-free from your current custodian to a new FDIC backed/IRS approved Passive Custodian that allows for truly Self Directed IRA investments. With a Self Directed 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 IRA LLC, an FDIC backed IRS approved passive custodian is used. The custodian in the “checkbook control” Self Directed IRA LLC structure is referred to as a “passive” custodian largely because the custodian is not required to approve any IRA related investment and simply serves the passive role of satisfying IRS regulations. By using a Self Directed 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.

What Type of retirement Funds May be Transferred Tax-Free?

  • Traditional IRA
  • Roth IRA
  • SEP
  • SIMPLE
  • 401(k)
  • 403(b)
  • Plans for Self-Employed (Keoghs)
  • ESOPs
  • Money Purchase Pensions Plans

Our IRA Experts will assist you in completing all the necessary custodian documents so your retirement funds are transferred to the new passive custodian quickly and without any tax.

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

2. Creation of the Self-Directed IRA LLC:

Our in-house tax professionals will form your customized Self-Directed IRA LLC in the state of your choosing. Typically the LLC is formed where the initial IRA investment will be made. Because your IRA and not you will be the member of the LLC, your state residence is not relevant in determining the state in which your LLC will be formed. In addition, a specially drafted Self-Directed IRA LLC Operating Agreement, which is required, will be drafted by our tax professionals as well a Tax ID# will be acquired as part of the LLC formation process.

Our IRA Experts will consult with you on the formation of the new Self-Directed IRA LLC to assure that the LLC is formed in the appropriate state.

3. Open a local bank account for the LLC

Our tax professionals will provide you with the appropriate LLC documents so you can open your IRA LLC checking account at any bank or credit union of your choice.

4. Transfer of IRA Funds to New LLC Bank Account

You, as IRA owner, will direct the Passive Custodian to transfer the IRA funds to your new Self-Directed IRA LLC bank account. The IRA would then become a member of the Self-Directed IRA LLC.

5. Appointment of Manager of LLC

As the Manager of the Self Directed IRA LLC with “Checkbook Control”, you will have the freedom to make all investment decisions for your Self Directed IRA LLC quickly and without custodian consent. As Manager of the Self Directed IRA LLC, you will be able to write a check or wire money from the LLC bank account to make an Investment.

6. Self-Directed IRA Investment is Made

As manager of the LLC, you will have the authority to make investment on behalf of your IRA LLC. The Investment must be made in the name of your Self Directed IRA LLC. All income and gains generated by your IRA LLC will generally flow back to the IRA tax-free!

Setting up a Self Directed IRA LLC is quick and easyFor additional information on the advantages of using a Self-Directed IRA LLC with “checkbook control” to make investments, please contact an IRA expert at the IRA Financial Group at 800-472-0646.

Feb 17

IRA Financial Group Introduces Value “Checkbook Control” Self-Directed IRA Solution, Which Can Save IRA Investors Over 45% in IRA Custodian Fees Over Multiple Years

Establishing a “Checkbook control” IRA LLC will save thousands of dollars vs. a full-service IRA custodian over several years according to IRA Financial Group Study

IRA Financial Group, the leading provider of “checkbook control” self-directed IRA and Solo 401(k) Plans announces the result of its internal study which highlights the cost benefits involved in establishing a “checkbook control” self-directed IRA LLC solution vs. a full service custodian self-directed IRA. A Self-Directed IRA LLC with “Checkbook Control” plan is an IRS and tax court approved structure that will allow one to use their IRA and 401(k) plan funds to make almost any type of investment, including real estate, tax liens, precious metals, foreign currency and much more tax free!

IRA Financial Group Introduces Value “Checkbook Control” Self-Directed IRA Solution, Which Can Save IRA Investors Over 45% in IRA Custodian Fees Over Multiple Years With a checkbook control IRA the IRA holder will never have to seek the consent of a custodian to make an investment or be subject to excessive IRA custodian account fees based on account value and per transaction. IRA Financial Group’s internal study showed that over a five-year period, an investor that established a “checkbook control” self-directed IRA LLC would save, on average, 45% of the costs or a general savings $4500. The internal study surveyed the fees of a number of the top full service IRA custodians in the industry. “Many full-service IRA custodians argue that one reason to not adopt a “checkbook control” self-directed IRA LLC is the cost when in-fact over a five year period the self-directed IRA LLC structure is significantly more cost effective than a full-service IRA custodian,” stated Susan Glass, a retirement tax professional with the IRA Financial Group.

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

According to Jaclyn Baily, a tax professional with the IRA Financial Group, with a Self-Directed IRA LLC with “Checkbook Control”, the IRA holder, as manager of the IRA LLC, can act quickly on a great investment opportunity. With a Self-Directed IRA LLC, when the IRA holder finds an investment with IRA funds, he or she would 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 one to eliminate the delays associated with an IRA custodian, enabling one to act quickly when the right investment opportunity presents itself, as well as a save a significant amount of money on annual IRA custodian fees.

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

IRA Financial Group is the market’s leading “checkbook control Self Directed IRA 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.  Be sure to check out on Facebook and Twitter!

Feb 15

The Real Estate IRA LLC

What is a Real Estate IRA LLC?

A Real Estate IRA LLC is generally also referred to as a Self Directed IRA LLC or a Checkbook Control LLC. In the case of a Real Estate 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.

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.

A Real Estate IRA LLC Offers Checkbook Control

Having checkbook control over your IRA funds will permit you to make real estate investments with your IRA funds. You will no longer be relegated to investing in traditional securities and mutual funds, instead you will have the ability to diversify your investment portfolio and invest in real estate.

A Real Estate IRA Offers Growth Potential

Use a Self-Directed IRA to purchase real estateA Real Estate IRA can offer the opportunity to greatly accelerate the growth in your retirement portfolio. With a Real Estate IRA 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. A few investment possibilities include residential, commercial, industrial buildings, raw land, foreign real estate 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 subprime 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 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, 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, 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.

Use Leverage with your Real Estate IRA

The Real Estate IRA can then 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.

A Real Estate IRA Eliminates or Reduces Custodial Costs

With a Real Estate IRA, you can save a lot of money on custodian fees. When setting up a Real Estate IRA, IRA Financial Group utilizes a passive custodian that charges a very low annual fee and provides excellent customer service.

Setting-Up a Real Estate IRA is Easy

IRA Financial Group makes setting up your Real Estate IRA easy, effortless, and inexpensive.

How it Works

We take care of everything. The whole process can be handled by phone, email, fax, or mail. You can expect the process to set up a Real Estate IRA to take about 15 days. If your current custodian is expedient in releasing your funds, it will take even less time. Additionally, you will have access to our IRA experts for free consultation anytime.  Most importantly, 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 Process

STEP 1: A Real Estate IRA account is established with a passive custodian in preparation of funds being transferred from one or more existing IRA accounts.

STEP 2: A Limited Liability Company (LLC) is formed with the IRA account holder designated as Manager.

STEP 3: The Manager directs all, or a portion, of the retirement funds held by the Passive Custodian into the LLC bank account.

Get Started Now

Contact an IRA expert from the IRA Financial Group @ 800.472.0646 for more info about the Real Estate IRA LLC!