Apr 29

How to Fund a Business with Your IRA

Leaving your job or thinking of leaving your job and have an IRA or 401(k) qualified retirement plan? Why not use your IRA or 401(k) Plan to invest in yourself instead of a falling stock market? Why put your hard earned retirement funds in the hands of Wall Street when you can use your 401(k) funds on a business you can run, manage, and even earn a salary from?

With IRA Financial Group’s Business Acquisition structure, a new C Corporation is formed which will adopt a 401(k) Qualified Plan. Your existing retirement funds can then be rolled into the newly adopted 401(k) Plan tax-free. The 401(k) Plan will then purchase the stock of the new corporation. The new corporation will then use those funds to purchase a new business or franchise tax-free!

Use you IRA to purchase your own businessWith the IRS compliant Business Acquisition Structure, you can earn a reasonable salary from your new business or franchise. You can also use your new 401(k) Plan to make high tax-deductible contributions – $52,000 ($57,500 if you are over the age of 50) or even borrow up to $50,000 for any purpose.

What does the IRS Say about this?

The Internal revenue Code explicitly permits the purchase of corporate stock by a 401(k) Qualified Plan. The IRS has repeatedly confirmed that the structure is legal but has expressed some concern about the potential for abuse by individuals not being properly advised by tax professionals. For example, the IRS has documented the following instances of abuse when it comes to using retirement funds to invest in a business: (i) employees of the business are not properly informed that a 401(k) qualified plan has been adopted by the business and that they are eligible to participate, (ii) the structure is established with no intention to use for business purpose and the sole purpose for establishment was to get access to the retirement funds without penalty, or (iii) the structure is being used to purchase assets for personal use with the retirement funds.

Therefore, the IRS has stressed that it is imperative that when using IRA or 401(k) funds to establish a new business or finance an existing one, it is important to work with qualified tax professionals who have experience in this area and could make sure the structure is established in full compliance with IRS and ERISA rules and procedures. Work with IRA Financial Group’s in-house tax professionals to help establish your IRS compliant Business Acquisition Solution.

IRA Financial Group’s Business Acquisition structure is IRS compliant and is the only legal structure that one can use to invest retirement funds into a business they will operate and be employed by. With a self-directed IRA LLC, an individual can invest retirement funds in a private business, but not a business that he or she would be involved in – that would be considered a prohibited transaction pursuant to Internal Revenue Code 4975. While, with a Solo 401K, an individual could only borrow up to $50,000 or 50% of his or her account value whichever is less and use that loan for any purpose, including starting or financing a business. However, if an individual requires more than $50,000 for a business, then the Business Acquisition structure is the only solution that will allow one to use their retirement funds to start or finance a business tax-free and without penalty!

To learn more about the advantages of using a Business Acquisition Structure to start or finance a business using retirement funds, please contact a retirement expert at 800-472-0646.

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Apr 28

Check Out Our Roth IRA Calculator

The primary advantage of using a Self-Directed Roth IRA LLC to make investments is that all income and gains associated with the Roth IRA investment grow tax-free and will not be subject to tax upon withdrawal or distribution. This is because unlike traditional IRAs, you are generally not subject to any tax upon taking Roth IRA distributions once you reach the age of 59 1/2. In general, the longer the time period, the more advantageous the Roth IRA is because of the powerful advantages of compounding.

IRA Financial Group Introduces Newly Designed Self-Directed Roth IRA Tax Calculator ApplicationOne of the most important determinants impacting how large your retirement can get is the length of time you let your savings grow. The reason for this is that the effects of compounding can become a very powerful tool. Unlike a Traditional IRA, income and gains generated from a Self-Directed Roth IRA grow tax-free. In contrast, income and gains generated by a traditional Self-Directed IRA are only deferred, as taxes must be paid upon distribution, which are vulnerable to future increases in tax rates. The power of tax-free compounding can best be viewed by way of example: Assume Joe, who is thirty years old, decided to start a Self-Directed Roth IRA. Joe had a current Roth IRA balance of zero at that time. Assume Joe decided to make annual Roth IRA contributions of just $3500 each year until he reached the retirement age of 70. Further assume that Joe was able to generate an average annualized rate of return of 9% and the prevailing tax rate was 25%. At age $70 with a Roth IRA, Joe would have $1,289.022 tax-free in his Self-Directed Roth IRA. In contrast, if invested outside of a retirement account, assuming a 25% tax rate, the individual would have just $699,475. Hence, the Self-Directed Roth IRA allowed the individual to accumulate an additional $589,547 of wealth.

Americans love to spend and hate to save. Americans have one of the lowest savings rates for developed countries. Americans are the ultimate consumers and that definitely plays a role. Most people don’t understand the basic concepts of retirement planning and how crucial it is, largely because they’re not widely taught in our high schools or even our colleges and universities. For example, if young workers were shown that if they began funding a self-directed Roth IRA with $3,000 per year at age 20 and continue on through age 65, they will wind up with $2.5 million at retirement (assuming they earn the long-run annual compound growth rate in stocks, which was 9.88 percent from 1926 to 2011). Not a bad result for investing only $3,000 a year.

Calculate Your Self-Directed Roth IRA LLC Plan Contributions Please click here to see for yourself how little it requires to become a millionaire upon retirement by using a Self-Directed Roth IRA:

Saving just $10 a day can make you a millionaire when you retire.

Start saving with a Self-Directed Roth IRA and you will be rolling in money when you retire.  For more information, please contact one of our IRA Experts @ 800.472.0646!

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Apr 24

Investing in a Gold IRA

Saving for retirement is not as clear cut as funding an IRA or 401(k) plan.  Most plans don’t offer the diversity you should have when saving.  Your money is usually tied up in stocks, bonds, mutual funds, etc. offered by your employer-sponsored plan or your custodian.  After a strong 2013, that might not be such a big deal, but the early part of this year has proven that your investments are more at risk in a volatile market.  One way to diversify your portfolio is to invest in precious metals, especially gold.

Investing in precious metals, including gold, silver and platinum with an IRA works just like a traditional plan.  Your investments grow tax-deferred until you start distributions during retirement.  The only caveat is that you cannot personally hold the gold (or other metal) in your possession.  They are held safely in an IRS-sanctioned depository and will be sent to you as soon as you reach retirement age.

Use a Self-Directed IRA to invest in precious metals, including gold, silver and platinumAs said, proper diversification is key to a successful retirement.  Investing in gold is a great way to protect from the market’s roller coaster of a ride.  Inflation is one a major concern of all Americans.  What the dollar is worth today won’t be the same as five or ten years from now.  The US government can make more money however they cannot make gold on the spot.  Therefore gold usually tends to keep its value above inflation.  Furthermore, since gold can be exchanged for goods or services, it is a liquid asset.  These assets are crucial to have a good cash flow during retirement.

Lastly, what if you already invest in an employer-sponsored plan?  You can continue to fund that plan and open up a separate self-directed IRA which you can then invest in gold with.  A tax expert with the IRA Financial Group can easily set up your account and fees are much less than your 401(k).  Moreover, when you leave your job, you can easily rollover your old 401(k) funds into your new self-directed IRA.  Check out this article for more details about rollovers.

For more information about investing in gold for your retirement years, please contact one of our experts @ 800.472.0646 or visit our website today!

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Apr 23

The Facts About the Checkbook IRA

A Self-Directed IRA LLC with “Checkbook Control” plan is an IRS and tax court approved structure that will allow you to use your IRA funds to make almost any type of investment, including real estate, tax liens, precious metals, foreign currency and much more tax free!

With a “checkbook control” 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.

To establish the Self-Directed IRA LLC “Checkbook Control” structure, a limited liability company (“LLC”) is established that is owned by the Self Directed IRA LLC With Checkbook ControlIRA and managed by the IRA account owner (you). 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.

With a “checkbook control” 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 “checkbook control” over your IRA funds you will gain the following advantages:

Investment Opportunities: A Self-Directed IRA LLC with “Checkbook Control” will allow you 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, foreign currency, stock options, hard money & peer to peer lending; you’re only limit is your imagination.  Of course, you can still make traditional investments, such as stock and mutual fund investments, as you did with a regular IRA. The income from these IRA investments will flow back into your IRA tax-free.

“Control”: With a Self-Directed IRA 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 IRA investment decisions are truly yours. To make an investment, simply write a check or wire funds straight from your Self Directed IRA LLC bank account.

Example 1: Joe has a Self-Directed IRA LLC set-up by the IRA Financial Group. Joe has established his Self Directed IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his IRA funds to purchase a home from Steve, an unrelated third-party (non-disqualified person). Steve is anxious to close the transaction as soon as possible. With a “checkbook control” Self-Directed IRA LLC, Joe can simply write a check using the funds from his IRA LLC account or can wire the funds directly from the account to Steve. Joe, as manager of the LLC, no longer is required to seek the consent of the IRA custodian before making the real estate purchase. In contrast, with a regular Self- Directed IRA without “checkbook control” Joe may not be able to make the real estate purchase since seeking custodian approval would likely take too much time.

Example 2: Joe has a Self0Directed IRA LLC set-up by the IRA Financial Group. Joe has established his Self Directed IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his IRA funds to invest in tax lien certificates via auction. Purchasing tax lien certificates requires Joe to make the tax lien payment at the auction. With a “checkbook control” Self-Directed IRA LLC, Joe can simply bring his LLC checkbook to the auction or secure a certified check from the bank in order to make payments at the auction. In contrast, with a regular Self-Directed IRA without “checkbook control” Joe would not be able to make tax lien certificate investments because he would need IRA custodian approval before each tax lien certificate purchase and would not have sufficient time to seek the consent of the custodian.

Lower Custodian Fees: With a Self-Directed IRA LLC with “checkbook control” you can save a lot of money on IRA custodian fees. 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 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 since you as manager of the IRA LLC have “checkbook control” over your IRA funds (“checkbook control”).

See how much you can save in custodian fees with a Self Directed IRA LLC Structure:

Self Directed IRA Custodian
Checkbook Control
Annual Fees – Assuming $100,000 IRA Value and 2 Transactions per year
Equity Trust
No
Approximately $640 per year – Fees may increase based on increase in value of investment(s)
Entrust

No

Approximately $765 per year – Fees may increase based on increase in value of investment(s)
Pensco Trust
No
Approximately $675 per year – Fees may increase based on increase in value of investment(s)
IRA Services

Yes

$180 flat fee for Year 1
$115 flat fee for Year 2+
Sunwest Trust
Yes
$275 flat fee for Year 1
$225 flat fee for Year 2+

Below are a number of examples that demonstrate the financial savings one can enjoy using a “checkbook control” Self Directed IRA LLC versus a Self Directed IRA without “checkbook control.

Example 1: Jim, who resides in Missouri, wants to use his retirement funds to invest in real estate and is debating between using a “checkbook control” Self Directed IRA LLC and a Self Directed IRA without “checkbook control”.

If Jim selected Equity Trust as the custodian, Jim would be paying approximately $640 each year for a custodian plus will require custodian approval to purchase or sell a real estate investment. Over a 4 year period, Jim would pay approximately $2560 to Equity Trust for custodian services.

Alternatively, if Jim elected to use the IRA Financial Group’s Self Directed IRA LLC “checkbook control” structure, Jim would pay approximately $1400 in year 1. However, for every year thereafter Jim would only be required to pay approximately $105 per year for maintenance of the “checkbook control” structure. Thus, over a 4 year period, Jim would be required to pay approximately $1715, a saving of $845 or a savings of approximately 33%.

Example 2: Beth, who resides in Michigan, wants to use her retirement funds to invest in precious metals and is debating between using a “checkbook control” Self Directed IRA LLC and a Self Directed IRA without “checkbook control”.

If Beth selected Entrust as the custodian, Beth would be paying approximately $765 each year for a custodian plus will require custodian approval to purchase or sell precious metals. In addition, Beth would have to pay approximately $250 a year for depository services to store the metals. Over a 3-year period, Beth would pay approximately $3045 to Entrust for custodian services.

Alternatively, if Beth elected to use the IRA Financial Group’s Self Directed IRA LLC “checkbook control” structure, Beth would pay approximately $1400 in year 1. However, for every year thereafter would only be required to pay approximately $105 per year for maintenance of the “checkbook control” structure. Thus, over a 3 year period, Beth would be required to pay approximately $1700, a saving of $1345 or a savings of approximately 44%.

Example 3: Dan, who resides in Kentucky, wants to use his retirement funds to invest in real estate and is debating between using a “checkbook control” Self Directed IRA LLC with the IRA Financial Group and a Self Directed IRA without “checkbook control”.

If Dan selected Pensco Trust as the custodian, Dan would be paying approximately $675 each year for a custodian plus will require custodian approval to purchase or sell a real estate investment. Over a 5 year period, Dan would pay approximately $3375 to Pensco Trust for custodian services.

Alternatively, if Dan elected to use the IRA Financial Group’s Self Directed IRA LLC “checkbook control” structure, Dan would pay approximately $1400 in year 1. However, for every year thereafter Dan would only be required to pay approximately $105 per year for maintenance of the “checkbook control” structure. Thus, over a 5 year period, Jim would be required to pay approximately $1820, a saving of $1555 or a savings of approximately 46%.

Example 4: Lisa, who resides in Iowa, wants to use her retirement funds to invest in tax liens and is debating between using a “checkbook control” Self Directed IRA LLC and a Self Directed IRA without “checkbook control”.

If Lisa selected Entrust as the custodian, Lisa would be paying approximately $765 each year for a custodian plus will require custodian approval to make each tax lien purchase. Over a 7-year period, Lisa would pay approximately $5300 to Entrust for custodian services.

Alternatively, if Lisa elected to use the IRA Financial Group’s Self Directed IRA LLC “checkbook control” structure, Lisa would pay approximately $1400 in year 1. However, for every year thereafter would only be required to pay approximately $105 per year for maintenance of the “checkbook control” structure. Thus, over a 7-year period, Lisa would be required to pay approximately $2030, a saving of $3270 or a savings of approximately 62%.

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

Diversification: With a Self-Directed IRA LLC, you can invest in almost any type of investment, including real estate, allowing you to diversify and better protect your retirement portfolio.

Access: With a Self-Directed IRA LLC with “checkbook control”, you, as manager of the IRA LLC, will have direct access to your 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. Instead making an IRA investment is as simple as writing a check or wiring funds directly from your IRA LLC checking account.

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

To learn more about the Self-Directed IRA LLC with “checkbook control”, please contact one of our IRA expert @ 800.472.0646 or check out this website.

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Apr 22

Higher Real Estate Prices Creating Strong Returns for Self-Directed IRA Real Estate Investors

Lack of new homes on the market and rising real estate prices triggering strong return for real estate IRA investors

IRA Financial Group, the leading provider of “checkbook control” self-directed IRA LLC solutions, announces that its clients have found that higher real estate prices across the United States has led to strong tax-deferred return for self-directed real estate IRA investors. According to Adam Bergman, a tax partner with the IRA Financial Group, as inventories stay low and the number of buyers stay high, IRA Financial Group’s self-directed IRA real estate clients that used IRA or Roth IRA funds to purchase real estate have been able to generate tax-deferred and tax-free gains in their real estate investments. “Our clients have seen real estate prices steadily increase throughout the country driven by lack of inventory in the housing market and have been able to generate strong returns without paying tax, “ stated Mr. Bergman

The primary advantage of using a “checkbook control” Self Directed IRA LLC to make real estate investments is that investments can be made by simply writing a check or executing wire without involving a custodian. In addition, all income and gains associated with the IRA investment grow tax-deferred or a tax-free in the case of a Roth IRA.

Higher Real Estate Prices Creating Strong Returns for Self-Directed IRA Real Estate InvestorsWith IRA Financial Group’s real estate IRA self-directed solution, traditional IRA or Roth IRA funds can be used to buy real estate throughout the United States in a tax-deferred account by simply writing a check. “With real estate prices climbing nationwide, our clients have been experiencing strong tax-deferred and tax-free returns with their self-directed IRA structures,” stated Ms. Glass. “Using a Self Directed IRA LLC to buy real estate presents a number of exciting tax planning opportunities, “ stated Susan Glass, a retirement tax specialist with the IRA Financial Group.

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

Using IRA Financial Group’s self directed IRA LLC with “checkbook control” solution real estate investors will gain the ability to make real estate investments in a tax efficient manner by using a “checkbook control” self-directed IRA LLC our clients have been able to compete and win bidding wars for real estate investments,” 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 real estate IRA Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

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

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Apr 21

How to Back Door to a Roth IRA

A Roth IRA is one of the best ways to save for retirement.  Unlike a traditional IRA, which is funded with pre-tax money, a Roth is funded with after-tax money but all qualified withdrawals are tax-free.  This includes both principle and earnings.  However, if you (and your spouse) make too much money, you cannot directly contribute to a Roth IRA.  You can use the “back door” to get the tax advantage of a Roth.

First off, who can and cannot contribute to a Roth IRA?  This all depends on your modified adjusted gross income or MAGI for both you and your spouse (if you are married).  As a single filer, if you earned less than $114,000 you can fully contribute to a Roth IRA.  The amount you can contribute phases out between that and $129,000.  Once you reach $129,000, you cannot fund a Roth IRA directly.  For married, joint filers, those numbers range from $181,000 to $191,000.  Again, if you’re combined MAGI is above that amount, neither of you may contribute to a Roth.

If you cannot contribute directly to a Roth, you need to figure out the total amounts of your pre-tax contributions, after-tax contributions and investment earnings of all your IRAs (which include traditional plans, rollover IRAs, SEP and SIMPLE IRAs.  If you want to continue the tax-deferred status of your pre-tax contributions and earnings, you need to move those funds to your 401(k) plan.  Otherwise, any of The "back door" Roth IRA Solutionthose funds that are withdrawn will be subject to tax at your current tax rate.  Any after-tax contributions in a traditional plan do not need to be moved since you already paid the taxes on them.  Note that this is not a mandatory move and if you are not allowed to roll the money over or do not want to, you do not have to, but you will pay taxes.

You can than contribute to your IRA up to the maximum amount allowed which is $5,500 for 2014 or $6,500 if you are age 50 or over.  You can instruct your custodian to convert any amount you want into a Roth IRA.  As stated before, if you have pre-tax contributions in the account, you will be taxed on that amount.  Likewise, if you were to fund an IRA with pre-tax money, taxes will be due on the amount converted.

There is no set timetable as to when you have to perform the conversion after a contribution, but if your after-tax contributions see earnings, you will be taxed on that amount so it’s best to perform the conversion as soon as possible if you are hoping to avoid any taxes.

The ‘”back door” Roth IRA conversion can get tricky with respect to taxation.  It’s best to consult with a retirement expert rather trying to perform the conversion yourself.  The IRA pros at the IRA Financial Group can help you through this tricky process and help put you in a better financial state during retirement.  Contact them today @ 800.472.0646 or visit their website today!

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Apr 18

IRA Financial Group Introduces Tax-Free Solution For Investing in Real Estate – The Self-Directed Roth IRA

Self-Directed Roth IRA LLC real estate solution allows for tax-free real estate investing

IRA Financial Group, the leading provider of self-directed Roth IRA LLC solutions introduces an IRS approved solution for investing in real estate tax-free with retirement funds. IRA Financial Group’s “checkbook control” self directed Roth IRA LLC offers one the ability to use his or her retirement funds to make almost any type of real estate investment on their own without requiring the consent of any custodian or person, including real estate without tax or penalty. The IRS only describes the type of investments that are prohibited, which are very few. “ Our self-directed Roth IRA real estate solution is the ultimate tax shelter for real estate investors, “ stated Adam Bergman, a tax partner with the IRA Financial Group.

IRA Financial Group’s Self-Directed Roth IRA LLC for real estate investors, also called a real estate IRA with checkbook control, is an IRS approved structure that allows one to use their retirement funds to make real estate and other investments tax-free and without custodian consent. The Self-Directed Roth IRA LLC involves the establishment of a limited liability company (“LLC”) that is owned by the Roth IRA (care of the Roth IRA custodian) and managed by the Roth IRA holder or any third-party. As manager of the Roth IRA LLC, the Roth IRA owner will have control over the Roth IRA assets to make the investments he or she wants and understand – not just investments forced upon you by Wall Street.

The IRS has always permitted a Roth IRA to purchase real estate, raw land, or flip homes. “With IRA Financial Group’s self-directed Roth IRA LLC solution, investors can make real estate purchases and IRA Financial Group Introduces Tax-Free Solution For Investing in Real Estate – The Self-Directed Roth IRAgenerate income and gains without ever paying tax stated Mr. Bergman. “A growing number of clients are realizing that using self directed Roth IRA to make investments will become far more tax efficient than in prior years due to the increasing income tax rates, stated Jacky Ospina, a retirement tax specialist with the IRA Financial Group. One major advantage of buying rental properties with a Self-Directed Roth IRA is that all rental income generated by the property is tax-free until a distribution is taken.

Instead of buying real estate with personal funds and being subject to tax on the income or upon the disposition of the asset, a Self Directed Roth IRA real estate LLC with Checkbook Control will allow one to buy real estate, including rental properties without paying tax immediately. With a self-directed real estate Roth IRA, all income and gains generated by the IRA LLC investment will flow back to the IRA tax-free

Adam Bergman, a tax partner with the IRA Financial Group, expands on the benefits of using a self-directed Roth IRA LLC with checkbook control to make investments, ”By using retirement funds to make investments, retirement investors will have the ability to generate income or gains without ever paying tax.” “Using a Self-Directed Roth IRA allows one to take advantage of the best remaining legal tax shelter.” 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.

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Apr 17

Investing in Real Estate with a Self-Directed IRA

Most people mistakenly believe that their IRA must be invested in bank CDs, the stock market, or mutual funds. Few Investors realize that the IRS has always permitted real estate to be held inside IRA retirement accounts. Investments in real estate with a Self-Directed IRA LLC 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.

In addition, the IRS states the following on their website: “…..IRA law does not prohibit investing in real estate but trustees are not required to offer real estate as an option.”

Advantages of Using a Self-Directed IRA LLC to Purchase Real Estate

Income or gains generated by an IRA generate tax-deferred/tax-free profits. Using a Self-Directed IRA LLC to purchase real estate Using a Self Directed IRA LLC To Purchase Real Estateallows the IRA to earn tax-free income/gains and pay taxes at a future date (in the case of a Roth IRA the income/gains are always tax-free), rather than in the year the investment produces income.

With a Self-Directed IRA LLC, you can invest tax-free and not have to pay taxes right away – or in the case of a Roth IRA – ever! All the income or gains from your real estate deals flow through to your IRA tax-free!

Why Buy Real Estate Using a Self-Directed IRA LLC

  • Gains are tax free
  • Positive cash flow is tax free
  • No time limit for holding property
  • IRA can borrow money – Leverage your investment with non-recourse financing
  • Potential to earn a larger rate of return on invested capital

Tax Advantages of Buying Real estate with a Self-Directed IRA LLC

When purchasing real estate with a Self-Directed IRA LLC, in general, all income and gains generated by your pre-tax retirement account investment would generally flow back into the retirement account tax-free. Instead of paying tax on the returns of a real estate investment, tax is paid only at a later date, leaving the real estate investment to grow unhindered. Generally, self-directed IRA real estate investments are usually made when a person is earning higher income and is taxed at a higher tax rate. Withdrawals are made from an investment account when a person is earning little or no income and is taxed at a lower rate.

For example, if Joe established a Self-Directed IRA LLC with $100,000 to purchase real estate and make other investments. Assume Joe kept his Self-Directed IRA LLC open for 20 years. Further assume that Joe was able to generate an average annual pre-tax rate of return of 8% and the average tax rate was 25%. By using a tax-deferred Self-Directed IRA LLC strategy, after 20 years Joe’s $100,000 investment would be worth $466,098 – a whopping $349,572 after taxes on the earnings. Whereas, if Joe made the investments with taxable funds (non-retirement funds) Joe would have only accumulated $320,714 after 20 years.

Types of Real Estate Investments

Below is a partial list of domestic or foreign real estate-related investments that you can make with a Self-Directed IRA LLC:

  • Raw land
  • Residential homes
  • Commercial property
  • Apartments
  • Duplexes
  • Condos/town-homes
  • Mobile homes
  • Real estate notes
  • Real estate purchase options
  • Tax liens certificates
  • Tax deeds

Investing in Real Estate with a Self-Directed IRA LLC is Quick & Easy!

Purchasing real estate with a Self-Directed IRA LLC is essentially the same as purchasing real estate personally.

  • Set-up a Self-Directed IRA LLC with the IRA Financial GroupSelf Directed IRA LLC
  • Identify the investment property
  • Purchase the investment property with the Self-Directed IRA LLC – no need to seek the consent of the custodian with a Self-Directed IRA LLC with “Checkbook Control
  • Title to the investment property and all transaction documents should be in the name of the Self-Directed IRA LLC. Documents pertaining to the property investment must be signed by the LLC manager
  • All expenses paid from the investment property go through the Self-Directed IRA LLC. Likewise, all rental income checks must be deposited directly in to the Self-Directed IRA LLC bank account. No IRA related investment checks should be deposited into your personal accounts.
  • All income or gains from the investment flow through to the IRA tax-free!

Structuring the Purchase of Real Estate with a Self-Directed IRA LLC

When using a Self-Directed IRA LLC to make a real estate investment there are a number of ways you can structure the transaction:

1. Use your Self-Directed IRA LLC funds to make 100% of the investment

If you have enough funds in your Self-Directed IRA LLC to cover the entire real estate purchase, including closing costs, taxes, fees, insurance, you may make the purchase outright using your Self-Directed IRA LLC. All ongoing expenses relating to the real estate investment must be paid out of your Self-Directed IRA LLC bank account. In addition, all income or gains relating to your real estate investment must be returned to your Self-Directed IRA LLC bank account.

2. Partner with Family, Friends, Colleagues

If you don’t have sufficient funds in your Self-Directed IRA LLC to make a real estate purchase outright, your Self-Directed IRA LLC can purchase an interest in the property along with a family, friend, or colleague. The investment would not be made into an entity owned by the IRA owner, but instead would be invested directly into the property.

For example, your Self-Directed IRA LLC could partner with a family member, friend, or colleague to purchase a piece of property for $150,000. Your Self-Directed IRA LLC could purchase an interest in the property (i.e. 50% for $75,000) and your family member, friend, or colleague could purchase the remaining interest (i.e. 50% for $75,000).

All income or gain from the property would be allocated to the parties in relation to their percentage of ownership in the property. Likewise, all property expenses must be paid in relation to the parties’ percentage of ownership in the property. Based on the above example, for a $2,000 property tax bill, the Self-Directed IRA LLC would be responsible for 50% of the bill ($1000) and the family member, friend, or colleague would be responsible for the remaining $1000 (50%).

Isn’t Partnering with a family member in a Real Estate Transaction a Prohibited Transaction?

Likely not if the transaction is structured correctly. Investing in an investment entity with a family member and investing in an investment property directly are two different transaction structures that impact whether the transaction will be prohibited under Code Section 4975. The different tax treatment is based on who currently owns the investment. Using a Self-Directed IRA LLC to invest in an entity that is owned by a family member who is a disqualified person will likely be treated as a prohibited transaction. However, partnering with a family member that is a non-disqualified person directly into an investment property would likely not be a prohibited transaction. Note: If you, a family member, or other disqualified person already owns a property, then investing in that property with your Self-Directed IRA LLC would be prohibited.

3. Borrow Money for your Self-Directed IRA LLC

You may obtain financing through a loan or mortgage to finance a real estate purchase using a Self-Directed IRA LLC. However, two important points must be considered when selecting this option:

  • Loan must be non-recourse – A “prohibited transaction” is a transaction that, directly or indirectly involves the loan of money or other extension of credit between a plan and a disqualified person. Normally, when an individual purchases real estate with a mortgage, the traditional loan provides for recourse against the borrower (i.e., personal liability for the mortgage). However, if the IRA purchases real estate and secures a mortgage for the purchase, the loan must be non-recourse; otherwise there will be a prohibited transaction. A non-recourse loan only uses the property for collateral. In the event of default, the lender can collect only the property and cannot go after the IRA itself.
  • Tax is due on profits from leveraged real estate – Pursuant to Code Section 514, if your Self-Directed IRA LLC uses non-recourse debt financing (i.e., a loan) on a real estate investment, some portion of each item of gross income from the property are subject to Unrelated Business Income Tax (UBTI). “Debt-financed property” refers to borrowing money to purchase the real estate (i.e., a leveraged asset that is held to produce income). In such cases, only the income attributable to the financed portion of the property is taxed; gain on the profit from the sale of the leveraged assets is also UDFI (unless the debt is paid off more than 12 months before the property is sold). There are some important exceptions from UBTI: those exclusions relate to the central importance of investment in real estate – dividends, interest, annuities, royalties, most rentals from real estate, and gains/losses from the sale of real estate. However, rental income generated from real estate that is “debt financed” loses the exclusion, and that portion of the income becomes subject to UBTI. Thus, if the IRA borrows money to finance the purchase of real estate, the portion of the rental income attributable to that debt will be taxable as UBTI.

For example, if the average acquisition indebtedness is $50 and the average adjusted basis is $100, 50 percent of each item of gross income from the property is included in UBTI.

A Self-Directed IRA LLC subject to UBTI is taxed at the trust tax rate because an IRA is considered a trust. For 2011, a Self-Directed IRA LLC subject to UBTI is taxed at the following rates:

  • $0 – $2,300 = 15%
  • $2,300 – $5,350 = $345 + 25%
  • $5,350 – $8,200 = $1,107.50 + 28%
  • $8200 – $11,200 = $1,905.50 + 33%
  • Over $11,200 = $2,895.50 + 35%

Why Work With the IRA Financial Group?

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

To learn more about using a Self-Directed IRA LLC to invest in real estate, please contact one of our Self-Directed IRA Experts at 800-472-0646 for more information.

Apr 14

How the Self Directed Roth IRA Works

Making an investment through a Self-Directed IRA LLC can be done in a few easy steps:

1. Set up a Self-Directed Roth IRA LLC.

With IRA Financial Group, you no longer have to spend $2000 to $5,000 or more to set up your Self-Directed Roth IRA LLC.

We provide the following all for one low price

  • Free tax consultation with our in-house retirement tax professionals
  • Setup your LLC in the State of your choice
  • Prepare and file the Articles of Organization with the State
  • Generate a special purpose, attorney-reviewed Self-Directed Roth IRA LLC Operating Agreement
  • Generate a special purpose, attorney-reviewed Subscription Agreement, as required by the Custodian
  • Obtain the EIN from the IRS
  • Co-ordinate setup with the Custodian of your Choice
  • Free tax and IRA support regarding the Self-Directed Roth IRA LLC Structure
  • Expedited Service Guarantee!
  • Satisfaction Guaranteed!

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

2. Transfer of Retirement Funds Tax-Free.

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, such as real estate, tax liens, precious metals, and much, much more.

What is a Passive Custodian?

The IRS approved and FDIC backed 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. The passive custodian business model is built around the establishment and maintenance of IRAs, whereas a traditional IRA custodian generates income through the marketing and sale of investment products.

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 the funds.

With a Self-Directed Roth 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 Roth IRA LLC, an FDIC backed IRS approved passive custodian is used. By using a Self-Directed Roth 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.

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.

3. Open IRA LLC Bank Account.

Open a local bank account for the LLC at any bank of your choice. You can open a bank account for your Self-Directed IRA LLC at any bank or credit union.

4. Tax-Free Transfer of Funds to LLC Bank Account.

Direct the passive custodian to transfer the IRA funds to your new Self-Directed Roth IRA LLC bank account. The IRA LLC checking account can be opened at any bank or credit union.

5. “Checkbook Control”.

As the Manager of the Self-Directed Roth IRA LLC, you will have the freedom to make all investment decisions for your Self-Directed Roth IRA LLC. In other words, you will have “checkbook control” over your IRA funds allowing you to make an IRA investment by simply writing a check or wiring funds directly from the IRA LLC bank account.

6. Tax-Free Investing.

Since your IRA will become the owner(s) (member(s)) of the newly formed IRA LLC, all income and gains generated by an IRA LLC investment will generally flow back to your IRA tax-free. With a Self-Directed Roth IRA LLC, all income and gains associated with the Roth IRA investment grow tax-free and will not be subject to tax upon withdrawal or distribution. This is because unlike traditional IRAs, you are generally not subject to any tax upon taking Roth IRA distributions once you reach the age of 59 1/2.

Because an LLC is treated as a pass-through entity for federal income tax purposes, all income and gains are taxed at the owner level not at the entity level. However, since an IRA is a tax-exempt party pursuant to Internal Revenue Code Section 408 and, thus, does not pay federal income tax, all IRA investment income and gains will generally flow through to the IRA tax-free!

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

For more information about the Self-Directed Roth IRA LLC, please contact an IRA Expert @ 800.472.0646 today!

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