Feb 29

Using Your IRA Funds to Buy a Business

Leaving your job or thinking of leaving your job and have an IRA? Why not use your IRA 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 IRA 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!

With 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 – $53,000 ($59,000 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.

Using Your IRA Funds to Buy a BusinessTherefore, 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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Feb 26

401(k) Plan Rollovers Spurring Strong Growth in Self-Directed IRA Retirement Market in 2016

With strong job market, more Americans finding employment and gaining access to 401(K) plan rollover funds in greater numbers.

IRA Financial Group, the leading provider of self-directed IRA LLC solutions, has partnered with the IRA Financial Trust Company to offer flat fee no account value self-directed IRA checkbook control accounts. Beginning in 2016, a trend has emerged where a growing number of clients have been changing jobs and hence gaining access to their rollover 401(k) plan funds. “We have seen a growing number of our clients gaining new employment and looking to rollover their 401(k) plan funds to a self-directed IRA for real estate and other alternative asset investments,” stated Adam Bergman, a partner with the IRA Financial Group.

The primary advantage of using a Self Directed IRA LLC 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 and return to the IRA LLC.

401(k) Plan Rollovers Spurring Strong Growth in Self-Directed IRA Retirement Market in 2016With IRA Financial Group’s self directed IRA LLC solution, 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 and without the need of custodian consent or steep custodian fees. “With the equity markets slide in 2016, we have seen a growing number of clients looking to use their rollover 401(k) plan funds to diversify their retirement portfolio by making alternative asset investments, such as real estate,” stated Mr. Bergman.

IRA Financial Group’s Self-Directed IRA LLC for real estate investors allows one to use their retirement funds held at IRA Financial Trust Company to make real estate and other investments tax-free. 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 a result, the Self-Directed IRA LLC 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.

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.

IRA Financial Trust Company – a self-directed IRA custodian was founded by Adam Bergman, a partner with the IRA Financial Group. The IRA Financial Group, the leading provider of self-directed IRA retirement solutions. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646. To learn more about establishing a checkbook IRA custodian account with the IRA Financial Trust Company please visit http://www.irafinancialtrust.com or call 800-472-1043.

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Feb 24

Penalties for Engaging in a Prohibited Transaction

In general, the penalty under Internal Revenue Code Section 4975 generally starts out at 15% for most type of retirement plans; however, the penalty is harsher for self-directed IRAs.

IRA Holder or IRA Beneficiary Engages in a Prohibited Transaction Under IRC 4975

When a self-directed IRA or Roth IRA holder (owner) or beneficiary is involved in a transaction that is deemed prohibited pursuant to Internal Revenue Code Section 4975, pursuant to Internal Revenue Code Section 408(e), the IRA loses its tax-exempt status and the IRA holder (or beneficiary) is treated for tax purposes to have received a distribution on the first day of the tax year in which the prohibited transaction occurred. The distribution amount that the IRA holder is deemed to have received is equal to the fair market value of the IRA as of the first day of such tax year, and is required to be included in the IRA holder’s income for the year. In addition, unless the IRA holder qualified for an exception to the early distribution penalty (i.e. over the age of 591/2, disabled, etc.), the 10% early distribution penalty would also apply.

Penalties for Engaging in a Prohibited TransactionTherefore, if the IRA holder or IRA beneficiary engages in a transaction that violates the prohibited transaction rules set forth under Internal Revenue Code Section 4975, the individual’s IRA would lose its tax exempt status and the entire fair market value of the IRA would be treated as taxable distribution, subject to ordinary income tax. In addition, the IRA holder or beneficiary would be subject to a 15% penalty as well as a 10% early distribution penalty if the IRA holder or beneficiary is under the age of 591.2.

Non-IRA Holder or Non-IRA Beneficiary Engages in a Prohibited Transaction Under IRC 4975

In the case where someone other than the IRA holder or IRA beneficiary (for example, another disqualified person) engages in a prohibited transaction, that disqualified person may be liable for certain penalties. In general, a 15% penalty is imposed on the amount of the prohibited transaction and a 100) additional penalty could be imposed if the transaction is not corrected. Note – fiduciaries to an IRA or plan are not subject to the 15% or 100% additional penalty.

Penalties for Engaging in a Prohibited Transaction Under Internal Revenue Code Section 408

The penalty for engaging in an Internal Revenue Code Section 408 prohibited transaction differs from the Internal Revenue Code Section 4975 penalty.  If an IRA assets are invested in collectibles or life insurance, only the assets used to purchase the investment are considered distributed, not the entire IRA.

In addition, pledging an IRA as a security for a loan is a prohibited transaction under Internal Revenue Code Section 408(e)(4). Under this section, if an IRA holder pledges a portion of his or her as security for a loan, only the amount pledged is deemed distributed – not the entire IRA.

The prohibited transaction rules are extremely broad and the penalties extremely harsh (immediate disqualification of entire IRA plus penalty). Thus, the IRA owner self directing his or her investments must be especially cautious in engaging in transactions that could compromise his or her best judgment or result in a direct or indirect personal benefit. Accordingly, it is crucial that any retirement investor looking to make an investment involving retirement funds work directly with a retirement tax professional or qualified tax advisor to make sure that the proposed transaction would not violate any of the IRS prohibited transaction rules.

To learn more about the IRS prohibited transaction rules for self-directed IRA LLC investments, please contact a tax advisor at 800-472-0646.

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Feb 23

Check Out Our Roth IRA Calculator to Understand the Power of Tax Free Investing

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.

Check Out Our Roth IRA Calculator to Understand the Power of Tax Free InvestingOne 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 us at 800.472.0646.

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Feb 22

Cashing Out a SIMPLE IRA

Here’s a short article from fool.com talking about the rules for cashing out a SIMPLE IRA:

A SIMPLE IRA is a type of retirement plan that is popular among small businesses and the self-employed. Like most other retirement accounts, there are special rules governing when you can withdraw the money. Here’s what you need to know.

What is a SIMPLE IRA?
A SIMPLE IRA plan is available to any small business with 100 or fewer employees, and as the name implies, is relatively easy to establish and maintain. Employees may choose to contribute to their accounts, and the employer has two options. They can either:

  • Match employee contributions up to 3% of compensation, or
  • Contribute 2% of compensation for every eligible employee.

Employees are always 100% vested in their accounts, and their contributions are limited to $12,500 in 2016, with an additional $3,000 “catch up” contribution allowed for account holders over 50. Just like most other tax-deferred retirement accounts, employees are required to begin taking required minimum distributions at age 70 1/2.

If you’d like more information about SIMPLE IRAs, check out this in-depth look at this type of account.

Cashing Out a SIMPLE IRAWhen are you allowed to withdraw from a SIMPLE IRA?
Technically, you can withdraw the funds in your SIMPLE IRA whenever you want to. However, if you make an unqualified withdrawal, you’ll face a 10% early withdrawal penalty from the IRS. If withdrawals are made within the first two years of participation in the SIMPLE IRA, the penalty increases to 25%.

Qualified reasons for withdrawing from a SIMPLE IRA include the following:

  • You’re over 59 1/2 years old. This is considered “retirement age” for the purpose of most types of retirement accounts.
  • You die or become totally and permanently disabled.
  • The withdrawal is used to pay qualifying higher-education expenses.
  • You agree to take withdrawals in a series of “substantially equal payments” over your remaining life expectancy.
  • The withdrawal is $10,000 or less and is used toward a first-time home purchase for you or a relative.
  • The withdrawal is used to pay an IRS levy.
  • The withdrawal is used to pay large unreimbursed medical expenses, or to pay health insurance premiums while you’re unemployed.
  • You’re a qualified military reservist called to active duty.

It’s also important to mention that any money you withdraw from your SIMPLE IRA, regardless of whether it’s a qualified withdrawal or not, will be included in your taxable income for the year. So before you cash out your entire account, consider that doing so may put you into a higher tax bracket.

If you have any questions, you can contact an IRA Expert at the IRA Financial Group @ 800.472.0646.

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Feb 19

IRA Financial Group Client Survey Shows Demand for Self-Directed IRA on the Rise In 2016 as Clients Looking to Use Cash to Purchase Real Estate

With lack of financing available, self-directed IRA LLC investors using cash taking advantage of attractive real estate opportunities across the country

IRA Financial Group, the leading provider of checkbook control self-directed IRA LLC solutions, announces the finding of its internal client survey on self-directed IRA investments, which found that the ability to use retirement funds in cash real estate transactions has helped IRA Financial Group’s self-directed IRA LLC clients take advantage of appealing real estate investment opportunities. “Having cash available on a self-directed IRA and not requiring a mortgage or other financing has helped many of clients find and closing on attractive real estate deals,” stated Jacky Ospina, a tax professional with the IRA Financial Group. “Having the ability to offer cash for a real estate property helped our self-directed IRA clients move quick on a potential real estate investment opportunities,” stated Ms. Ospina.

The primary advantage of using a Self Directed IRA LLC 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 and return to the IRA LLC.

With IRA Financial Group’s self directed real estate IRA LLC solution, 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 and without the need of custodian consent or steep custodian fees.

IRA Financial Group Client Survey Shows Demand for Self-Directed IRA on the Rise In 2016 as Clients Looking to Use Cash to Purchase Real EstateIRA Financial Group’s Self-Directed IRA LLC for real estate investors, also called a real estate IRA with checkbook control or a Self-Directed real estate IRA, 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 a result, the Self-Directed IRA LLC 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.

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 proudly announces the latest book titled “The Checkbook IRA” written by tax partner Adam Bergman, which is now available on Amazon. This is the second book in a four-part series on self-directed retirement plans. The first book “Going Solo” is also available on Amazon.

IRA Financial Group is the market’s leading “checkbook control” Self Directed IRA Facilitator. IRA Financial Trust is the markets first focused checkbook self-directed IRA custodian. 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. To learn more about establishing a self-directed IRA account with the IRA Financial Trust Company please visit http://www.irafinancialtrust.com or call 800-472-1043.

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Feb 17

Services Offered When Using the Rollover Business Start-up

The IRA Financial Group was founded by a group of top law firm tax and ERISA professionals who have worked at some of the largest law firms in the country, including White & Case LLP and Dewey & LeBoeuf LLP.

Services Offered When Using the Rollover Business Start-upWe’ve looked closely at the Rollover Business Start-up Solution (ROBS) in developing our Business Acquisition & Compliance Solution Structure (“BACSS”), our in-house retirement tax professionals have carefully examined and researched IRS and Department of Labor guidance to design a structure that is fully compliant with IRS and ERISA rules. Each client of the IRA Financial Group is assigned an individual retirement tax professional who will help customize a structure that satisfies his or her financial and retirement needs while ensuring the structure is developed in full compliance with IRS and ERISA rules and requirements. Our services include:

  • Establishment of “C” Corporation including Filing Fees;
  • Filing LLC Articles of Incorporation with the state;
  • Application for Corporation EIN;
  • Drafting all required initial corporate resolutions and minutes;
  • Drafting of customized Stock Purchase Agreement;
  • Drafting of customized Employee Stock Purchase Agreement;
  • Free consultation with in-house retirement tax professional on the BACSS structure;
  • Adoption of 401(k) Plan;
  • Basic Plan Document;
  • EGTRRA Amendment;
  • Summary Plan Description;
  • Trust Agreement;
  • Appointment of Trustee;
  • Beneficiary Designation;
  • Application for Plan trust EIN;
  • Assistance in the establishment of business and 401(k) Plan bank accounts;
  • Assistance with the transfer of funds to your new 401(k) Plan bank account;
  • Assistance in coordinating the completion of all IRS required information returns
  • Assistance in coordinating the acquisition of an independent business appraisal;
  • Free consultation with in-house retirement tax professional on the BACSS structure;
  • Tax support on the BACSS and the 401(K) Plan; and
  • Annual compliance review

We have developed a process that ensures speed and compliance, by using standardized procedures that work via phone, e-mail, fax, and mail. Your funds will typically be ready for investment into your new or existing business within 14-21 days.

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

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Feb 16

SIMPLE IRAs and Early Distributions

All of the special IRA rules for early distributions apply to SIMPLE IRAs, but there is one additional rule. If you are a participant in a SIMPLE IRA and receive a distribution within 2 years of the date you began contributing to it, the early distribution tax increases from 10% to 25%. At the end of 2 years, it falls back to 10%.

SIMPLE IRAs and Early Distributions

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

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Feb 12

Do You Have to Take Roth IRA Distributions in a Certain Order?

In general, you cannot pick and choose the origin of each distribution you take. For example, if you take a distribution before the five-year holding period is up, you would want to take your contributions first, because they are not subject to tax or penalties. However, the ordering rules for determining Roth distributions are quite taxpayer favorable. Roth distributions are deemed to come out in the following order:

  • Regular Roth IRA contributions are distributed first
  • Next, converted amounts, starting with the amounts first converted
  • Earnings come out last

Do You Have to Take Roth IRA Distributions in a Certain Order?These ordering rules can significant impact the tax treatment of the distributions. For example, if you take a distribution before the five-year holding period is up of if you fail to satisfy the other requirements of a qualified distribution, the withdrawal still won’t be subject to the early distribution tax as long as you have taken less than the total amount of all contributions you have made to your Roth IRAs. Note that for purposes of these ordering rules, all Roth IRAs are considered a single Roth IRA.

 

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

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Feb 10

New Podcast – How to Complete IRS Form W-9 for a Self-Directed IRA

IRA Financial Group’s Adam Bergman discusses tips for properly filling out the IRS Form W-9 for your Self-Directed IRA.

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Click Here to Listen

 

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