Mar 31

Ways to Convert to a Self-Directed Roth IRA

IRA Financial Trust Company will assist you with making a Roth IRA conversion in connection with your Self-Directed Roth IRA. A conversion to a Roth IRA results in taxation of any untaxed amounts in the traditional IRA. However, the 10% early distribution penalty will not apply.

You can convert your traditional IRA to a Roth IRA by:

  • Rollover – You receive a distribution from a traditional IRA and contribute it to a Roth IRA with IRA Financial Trust within 60 days after the distribution (the distribution check is payable to you);
  • Trustee-to-Trustee transfer – You tell the financial institution holding your traditional IRA assets to transfer an amount directly to IRA Financial Trust, the new Trustee (IRA custodian) of your Roth IRA. The distributing Trustee may achieve this by issuing you a check payable to the new Trustee – IRA Financial Trust Company;
  • Same Trustee transfer – If your traditional and Roth IRAs are maintained at the same financial institution, you can tell the Trustee to transfer an amount from your traditional IRA to your Roth IRA.

Below are some important points to consider when deciding whether to convert your Traditional IRA to a Self-Directed Roth IRA.

  • Do you have the ability to pay income taxes on the money you convert from your Traditional IRA?
  • Based on your income tax bracket, does it make sense to pay the entire tax due in the current year? If you expect your rate to go up, converting may be for you. If you think it will go down, then the opposite holds true.
  • Do you anticipate withdrawing Roth IRA funds for personal use within five years of conversion? If so, you may face taxes and penalties if you withdraw within five years of a conversion.
  • How confident are you in the projected investment returns relating to your IRA? The more confident you are that the investment will go up significantly in the future, the more attractive a Roth IRA conversion will be.

Converting a Traditional IRA to a Roth Self-Directed Roth IRA has a number of tax advantages and can offer you multiple tax and investments benefits.

To learn more about converting your Traditional IRA to a Self-Directed Roth IRA, please contact one of our Self-Directed retirement experts at 1-800-472-1043.

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Mar 29

New Podcast – The Cold Hard Truth About Holding IRS Approved Coins and Metals With a Self-Directed IRA

IRA Financial Group’s Adam Bergman discusses the topic of how to hold IRS approved coins and metals in a Self-Directed IRA.

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Click Here to Listen

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Mar 28

The “Checkbook Control” Self-Directed Roth IRA LLC

A Self-Directed Roth IRA LLC with “Checkbook Control” plan is an IRS and tax court approved structure that will allow you to use your Roth 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 Roth 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 Roth IRA LLC “Checkbook Control” structure, a limited liability company (“LLC”) is established that is owned by the Roth IRA and managed by the IRA account owner (you). The IRA owner’s funds are then transferred by the passive custodian to the new Roth IRA LLC bank account. As the manager of the Roth IRA LLC, the IRA owner will have the authority to make investment decisions on behalf of the Roth IRA providing the Roth IRA owner with “checkbook control” over his or her Roth IRA funds.

With a “checkbook control” Self-Directed Roth 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 Roth IRA funds you will gain the following advantages:

Investment Opportunities: A Self-Directed Roth 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; your 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 non-Self-Directed IRA. The income from these Roth IRA investments will flow back into your IRA tax-free.

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

Self Directed IRA LLC With Checkbook ControlExample 1: Joe has a Self-Directed Roth IRA LLC set-up by the IRA Financial Group. Joe has established his Self-Directed Roth IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his Roth 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 Roth IRA LLC, Joe can simply write a check using the funds from his Roth 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 Self-Directed Roth IRA LLC set-up by the IRA Financial Group. Joe has established his Self-Directed Roth IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his Roth 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 Roth 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 Roth 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.

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.

Lower Custodian Fees: With a Self-Directed Roth IRA LLC with “checkbook control” you can save a lot of money on IRA custodian fees. 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. The custodian in the “checkbook control” Self-Directed Roth 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 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 since you as manager of the IRA LLC have “checkbook control” over your Roth 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 $150,000 IRA Value and 2 Transactions per year
Equity Trust
No
Approximately $975 per year – Fees may increase based on increase in value of investment(s)
Pensco Trust
No
Approximately $975 per year – Fees may increase based on increase in value of investment(s)
Entrust

Yes

Approximately $485 per year – Fees may increase based on increase in value of investment(s) or number of transactions
IRA Services

Yes

$200 flat fee for Year 1
$136 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 Roth IRA LLC and a Self-Directed IRA without “checkbook control”.

If Jim selected Equity Trust as the custodian, Jim would be paying approximately $975 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 $3900 to Equity Trust for custodian services.

Alternatively, if Jim elected to use the IRA Financial Group’s Self-Directed Roth IRA LLC “checkbook control” structure, Jim would pay approximately $1500 in year 1. However, for every year thereafter Jim would only be required to pay approximately $136 per year for maintenance of the “checkbook control” structure. Thus, over a 4 year period, Jim would be required to pay approximately $2044, a saving of $1856 or a savings of approximately 47.5%.

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 Roth IRA LLC and a Self-Directed Roth IRA without “checkbook control”.

If Beth selected Equity Trust as the custodian, Beth would be paying approximately $975 each year for a custodian plus will require custodian approval to purchase or sell precious metals. Over a 6-year period, Beth would pay approximately $5850 to Equity Trust for custodian services.

Alternatively, if Beth elected to use the IRA Financial Group’s Self-Directed Roth IRA LLC “checkbook control” structure, Beth would pay approximately $1500 in year 1. However, for every year thereafter would only be required to pay approximately $136 per year for maintenance of the “checkbook control” structure. Thus, over a 6 year period, Beth would be required to pay approximately $2044, a saving of $3806 or a savings of approximately 65%.

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 Roth IRA LLC with the IRA Financial Group and a Self-Directed Roth IRA without “checkbook control”.

If Dan selected Pensco Trust as the custodian, Dan would be paying approximately $975 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 $4875 to Pensco Trust for custodian services.

Alternatively, if Dan elected to use the IRA Financial Group’s Self-Directed Roth IRA LLC “checkbook control” structure, Dan would pay approximately $1500 in year 1. However, for every year thereafter Dan would only be required to pay approximately $136 per year for maintenance of the “checkbook control” structure. Thus, over a 5 year period, Jim would be required to pay approximately $2180, a saving of $2695 or a savings of approximately 55%.

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 Roth IRA LLC and a Self-Directed Roth IRA without “checkbook control”.

If Lisa selected Equity Trust as the custodian, Lisa would be paying approximately $975 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 $6825 to Equity Trust for custodian services.

Alternatively, if Lisa elected to use the IRA Financial Group’s Self-Directed Roth IRA LLC “checkbook control” structure, Lisa would pay approximately $1500 in year 1. However, for every year thereafter would only be required to pay approximately $136 per year for maintenance of the “checkbook control” structure. Thus, over a 7-year period, Lisa would be required to pay approximately $2452, a saving of $4373 or a savings of approximately 64%.

Speed: With a Self-Directed Roth IRA LLC with “Checkbook Control”, you, as manager of the Roth IRA LLC, can act quickly on a great investment opportunity. With a Self-Directed Roth IRA LLC, when you find an investment that you want to make with your Roth IRA funds, simply write a check or wire the funds straight from your Self-Directed Roth IRA LLC bank account to make the investment. The Self-Directed Roth 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 Roth 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 Roth IRA LLC with “checkbook control”, you, as manager of the Roth IRA LLC, will have direct access to your Roth IRA funds allowing you to make an investment quickly and efficiently. There is no need to obtain approvals from your custodian, deal with time delays awaiting approval from your custodian or paying any review fees. Instead making a Roth IRA investment is as simple as writing a check or wiring funds directly from your Roth IRA LLC checking account.

The IRA Financial Group will take care of setting up your entire 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 Roth 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 professional 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.

Checkbook IRA LLC Structure

To view a diagram of the Checkbook IRA LLC structure, please select the image below.

Self Directed IRA LLC

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

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Mar 25

What Does Checkbook Control Mean?

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 IRA 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.

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 with “checkbook control” allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

A Self-Directed IRA LLC with “Checkbook Control” Offers Investment Alternatives

With a Self-Directed IRA LLC with “checkbook control,” you will have the ability to invest in almost any type of investment, including real Self Directed IRA LLC With Checkbook Controlestate, private business entities, tax liens, foreign currency, and commercial paper tax-free! Unlike a traditional IRA custodian, such as Vanguard or Fidelity, which only allows IRA investments into stock or mutual funds, a Self-Directed IRA LLC with “checkbook control” will allow you to make non-traditional types of investments with your IRA funds, such as real estate and precious metals. The almost unlimited investment opportunities presented by a Self-Directed IRA LLC will allow you to diversify and better protect your retirement portfolio.

Below is a partial list of allowable investments:

  • Residential or commercial real estate
  • Raw land
  • Foreclosure property
  • Mortgages
  • Mortgage pools
  • Deeds
  • Private loans
  • Tax liens
  • Private businesses
  • Limited Liability Companies
  • Limited Liability Partnerships
  • Private placements
  • Gold
  • stocks, bonds, mutual funds
  • Most currencies

A Self-Directed IRA LLC Eliminates or Reduces Custodian Costs

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.

Gaining “Checkbook Control” is Quick & Easy

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 in-house 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 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.

The Self-Directed IRA LLC “Checkbook Control” Process

STEP 1: A Self-Directed IRA account is established with an IRS approved and FDIC backed passive custodian.

STEP 2: Retirement funds are transferred to the new Self-Directed IRA account tax-free!

STEP 3: A Limited Liability Company (LLC) is formed with the IRA account owner designated as Manager and the IRA as owner (member) of the LLC.

STEP 4: At the direction of the IRA owner, the passive custodian invests the IRA funds into the newly formed IRA LLC. One or more IRAs can be used to fund the IRA, including Traditional, Roth, and SEP IRAs.

STEP 5: The Manager of the new IRA LLC (the IRA owner) directs all, or a portion, of the IRA funds held in the new LLC bank account for investment.

STEP 6: The LLC makes an investment using IRA funds and all income and gains generally flow back to the LLC tax-free!

Get Started with your “Checkbook Control” Self-Directed IRA LLC today!  Contact us @ 80.472.0646.

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Mar 23

Protecting Your Self Directed IRA from Fraud

IRA Financial Trust Company is committed to helping our clients make safe and financially rewarding investments with their Self-Directed retirement accounts. While Self-Directed IRAs can be a safe way to invest retirement funds, investors should be mindful of potential fraudulent schemes when using a Self-Directed retirement structure.

Recently, the Securities and Exchange Commission (“SEC”) issued an Investor Alert to warn investors of the potential risks of fraud associated with investing through Self-Directed Individual Retirement Accounts. The SEC notes that there has been a recent increase in reports or complaints of fraudulent investment schemes that utilized a Self-Directed IRA as a key feature.

The IRA Financial Trust Company or any party cannot guarantee the success of any investment and investors should undertake their own evaluation of the merits of a proposal, and should check with regulators about the background and history of an investment and its promoters before making a decision of potential fraudulent schemes when considering a Self-Directed retirement structure. Investors should understand that the custodians of Self-Directed retirement account may have limited duties to investors, and that the custodians and Trustees for these accounts will generally not evaluate the quality or legitimacy of an investment and its promoters. As with every investment, investors should undertake their own evaluation of the merits of a proposal, and should check with regulators about the background and history of an investment and its promoters before making a decision.

What is fraud?

Fraud occurs when a person or business intentionally deceives another with promises of goods, services, or financial benefits that do not exist, were never intended to be provided, or were misrepresented. Typically, victims give money but never receive what they paid for.

Who are the victims of fraud?

Virtually anyone can fall prey to fraudulent crimes. Con artists do not pass over anyone due to such factors as a person’s age, finances, educational level, gender, race, culture, ability, or geographic location. In fact, fraud perpetrators often target certain groups based on these factors.

Who commits fraud crimes?

According to the U.S. Government, like their victims, fraud criminals vary educationally, socially, geographically, and financially. Most con-artists make a career of their criminal activities. Some even join professional organizations to legitimize their schemes and project a respectable front.

What are some common types of fraud?

The weapon of choice for fraud criminals is not a gun or a knife. Rather, it is most often a telephone, letter, glossy publication, or brochure offering free vacations, merchandise, investment opportunities, or services. Not all frauds involve the direct selling of goods to consumers. Some frauds target institutions or businesses. Examples include:

  • Telemarketing fraud (telephone solicitation for phony goods or services)
  • Mail fraud
  • Health care and insurance fraud
  • Pension and Trust fund fraud
  • Credit card and check fraud (including fraud by impersonation resulting from theft of mail or credit cards)
  • Identity theft
  • Fraud related to securities, commodities, and other investments
  • Bank fraud
  • Embezzlement
  • Pyramid or Ponzi schemes
  • Advance fee schemes
  • Internet fraud

Here is a list of resources for retirement investors seeking information on investments and investment advisors:

  • 12 Warning Signs An Investment Is A Scam, by Sy Harding.
  • SEC: The SEC provides information on different products, asset allocations and risk.
  • FINRA: FINRA provides an online service for investors to check the backgrounds of brokers called Broker Check.
  • FINRA’s website also has tools and resources to protect senior investors and help them make informed investment decisions, including “Investor Alerts” that provide timely information on steering clear of investment scams and problems.
  • NASAA: The North American Securities Administrators Association (NASAA) also has helpful information available for specific states. This organization is very proactive in providing resources for senior investors.
  • FTC: The Federal Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. They also enter Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. Visit the FTC website or call 877-FTC-HELP.
  • BBB: The Better Business Bureau (BBB) www.BBB.org is also an excellent resource for researching businesses that have been reported for fraudulent or deceptive practices.
  • AARP: The Association of Retired Persons (AARP) has provided resources and funding for many research projects in various states in order to uncover scams targeted at senior citizens. They also have numerous free publications to help seniors become more astute investors.
  • Fox Business – Don’t Lose Your IRA to Fraud, by Gail Buckner,

Tips to Avoid and Prevent Being Financially Cheated

  • Shred financial documents and paperwork with personal information before you discard them.
  • Protect your Social Security number. Give it out only if absolutely necessary or ask to use another identifier.
  • Don’t give out personal information over the phone, mail or the Internet unless you know who you are dealing with.
  • Don’t give out passwords for any of your accounts to anyone.
  • Don’t give out your credit card numbers to any strangers.
  • If you believe the contact is legitimate, go to the company’s Web site by typing in the site address directly or using a page you have previously bookmarked, instead of a link provided in the e-mail.
  • Review all offers in writing.
  • Be aware of being kept on the phone for a long time.
  • Be wary of promises of quick profits, offers to share “inside” information, and pressure to invest before you have an opportunity to investigate.
  • Be careful of promoters who use “aliases.” Pseudonyms are common online, and some salespeople will try to hide their true identity.
  • Words like “guarantee,” “high return,” “limited offer,” or “as safe as a CD” are red flags.
  • Watch out for offshore scams and investment opportunities in other countries.
  • Watch out if a company is not registered with the SEC or the Secretary of State where it is located.
  • If a financial adviser cannot be found through FINRA.
  • Don’t assume that people online are who they claim they are.
  • Ask the online promoter whether-and how much-they are being paid to sell the product.
  • Do business with people you know.
  • Make sure you understand the investment before you invest your money.
  • Take your time to make decisions.
  • Be sure to talk over all financial decisions with a Trusted family member, friend or financial adviser.
  • Report any frauds and any potential investment frauds affecting Americans to local, state or federal regulators.
  • Never make a check out to a financial adviser.
  • Never allow statements or confirmations to be sent directly to your financial adviser without receiving copies.
  • Recommendations from a sales representative based on “confidential information”, an “upcoming favorable research report” a “prospective merger or acquisition,” or the announcement of a “dynamic new product.”
  • Never act on a recommendation from your sales representative that you make a dramatic change in your investment.
  • Pressure to trade the account in a manner that is inconsistent with your investment goals and the risk you want or can afford to take.
  • Do not heed any assurances from your sales representative that an error in your account is due solely to a computer or clerical error. Insist that the branch manager or compliance officer promptly send a written explanation and follow up to make sure the error is fixed.

In general, the best prevention technique is to identify and research the persons, products and companies offering their services. The more education and understanding of the product features, especially investment products, the higher the level of scrutiny can be applied. In the event of any suspicious calls, emails or personal solicitations, report it to the proper authorities.

Always take the time you need to understand and evaluate a potential investment. Make sure you understand the investment you will be making and thoroughly understand how the promoter will be able to generate the returns being promised. Also, make sure the promoter of the investment has the necessary qualifications or licenses, if applicable, to offer the investment. Be cautious if a sponsor or advisor uses the affiliation as the reason to make the investment, rather than relying on the underlying merits of the investment or Trust in the sales person.

Please click here to see a list of questions that will allow you to better determine whether a potential investment involving your retirement funds may have a high likelihood of being fraudulent. It is not a comprehensive list of questions but simply a starting point. The answers to these questions are not a substitute for your own due diligence. We also strongly encourage investors to make use of legal, tax and financial advisors to support these efforts.

It is highly advisable to consult with a tax attorney or tax professional, about the details of your transaction before using a Self-Directed IRA to make an investment.

To learn more about the risks of using a Self-Directed IRA to make investments, please contact a Self-Directed retirement expert at 1-800-472-1043.

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Mar 21

Who is Defined as a Disqualified Person?

The term “Disqualified Person” includes virtually anyone having a direct or indirect relationship to the plan other than as a participant or beneficiary. Under Internal Revenue Code Section 4975, the principal categories of Disqualified Persons are:

  • The IRA participant (holder)
  • The IRA participant’s spouse
  • The IRA’s participant’s ancestors and lineal descendants (mother/father/daughter/son)
  • Spouses of the IRA participant’s lineal descendants (son/daughter’s spouse)
  • Fiduciaries of the plan (custodian or trustee)
  • Investment managers and advisors
  • Any corporation, partnership, trust, or estate in which the IRA holder has a 50% or greater interest

Note: According to Internal Revenue Code Section 4975, siblings, aunts, uncles, cousins, and friends are not included in the definition of Disqualified Persons.

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

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Mar 18

What Are the Roth IRA Distribution Rules for 2016?

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.”

What Are the Roth IRA Distribution Rules for 2016?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 homebuyer,” 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 homebuyer 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 homebuyer distributions received by the recipient.

A nonqualified 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 nonqualified 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 our Roth IRA Experts at 800-472-0646 for more information.

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Mar 17

The Advantages of Using the Business Acquisition & Compliance Solution Structure (BACSS)

There are many advantages of using IRA Financial Group’s BACSS (also known as the Rollover Business Start-up or ROBS) to fund your business!

Tax Advantages: With the Business Acquisition & Compliance Solution Structure (BACSS) you have the ability to use your retirement funds to acquire a new business or grow an existing business tax-free!

Start or Grow a Business Tax-Free: With BACSS, you can access your retirement funds to start or grow a business tax free and without penalty!

Access Funds without Penalties: Accessing your retirement funds can prove expensive if not structured properly. Distributions before retirement age can cost you up to 45% in taxes and penalties. With BACSS, you can access your retirement funds to start or grow a business tax-free and without penalty!

Acquire or Build a Business with No Debt: With BACSS, you can start or grow a business without ever borrowing a penny or touching the home equity you worked so hard to build.

Control your Future: With BACSS, you will be in control of your retirement funds. BACSS is designed to make you the trustee of the plan giving you “Checkbook Control” over your retirement funds. As trustee of the plan you will have the ability to invest your funds to acquire or grow a business tax-free and without penalty!

Compliance with IRS and ERISA Rules: BACSS was designed as an IRS and ERISA compliant structure for using retirement funds to acquire or invest in a business tax-free! The IRA Financial Group’s in-house retirement tax professionals spent the last two years carefully studying IRS guidance in order to design an IRS and ERISA compliant structure for using retirement funds to acquire or invest in a business tax-free! Unlike our competitors who have been offering this type of structure for many years, prior to receiving guidance from the IRS and with a significant portion of their activity having been found to be non-compliant, the IRA Financial Group has patiently waited for clear IRS guidance before offering a structure that would be fully compliant with IRS and ERISA rules and procedures. Because the IRS has stressed the importance of compliance when using retirement funds to purchase a business, it is crucial to work with a company that is operated by a team of in-house tax and ERISA professionals who have worked at some of the largest law firms in the United States, including White & Case LLP and Dewey & LeBoeuf LLP to ensure a fully compliant structure.

Speed: 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 be ready for investment into your new or existing business within 14-21 days.

Value: With the IRA Financial Group, you will be working directly with our in-house tax and ERISA professionals to design an IRS and ERISA compliant structure that will allow you to use your retirement funds to acquire or grow a business tax-free at a fair and reasonable price.

Use your retirement funds to purchase a new business or franchise tax-free and without penalty!

It’s 100% IRS compliant.

Call us today at 800-472-0646 to learn more about how you can use your retirement funds to start a new business or grow an existing business tax-free, in full IRS compliance, and without penalties!

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Mar 16

Choosing the Right Self-Directed IRA Custodian

IRA Financial Trust Company is one of the few IRA custodians in the country that specializes in establishing Self-Directed IRA with Checkbook Control accounts.

IRA Financial Trust Company was founded by tax attorneys who worked at some of the largest law form in the world, including White & Case LLP and Dewey and LeBoeuf LLP, and have helped over 12,000 clients self-direct their retirement funds through their ownership in the IRA Financial Group LLC.

IRA Financial Trust Company is a regulated non-banking financial institution that is made up of retirement tax specialists committed to helping you make Self-Directed retirement investments quickly while minimizing annual fees. IRA Financial Trust is a non-banking IRA custodian. IRA Financial Trust has partnered with Northern Trust, one of the most respected private banks in the world, to offer our Self-Directed IRA clients with a safe and secure way to make Self-Directed IRA investments.

The IRA Financial Trust Advantage

  • One low annual fee
  • No transaction or annual account asset fees
  • Our Northern Trust Company relationship
  • IRA Financial Group has helped over 12,000 clients establish Self-Directed retirement accounts totaling nearly 4 billion dollars since 2010
  • Work with Self-Directed IRA experts
  • Experience our Continuing Retirement Education (CRE) Platform
  • Invest in what you know and understand from the comfort of a local bank
  • Specializing in Checkbook Control Self-Directed IRAs

WHAT ARE THE RESPONSIBILITIES OF THE IRA CUSTODIAN OF YOUR RETIREMENT ACCOUNT?

  • Assisting in opening & funding your IRA account
  • Making the investment(s) on your behalf
  • Making distributions & paying expenses per your request
  • Providing you with quarterly statements
  • Answering questions about your account and our procedures
  • Reporting information required by the IRS and other governmental agencies
    • IRS Form 1099R – Distributions from your IRA
    • IRS Form 5498 – Contributions to, and Fair Market Value of, your IRA

REMINDER

As a Custodian of Self-Directed accounts, we are not permitted to give investment, legal or tax advice.

Choosing The Right Self-Directed IRA Custodian A World of Investment Opportunities

With a Self-Directed IRA you can invest in almost any type of investment, including real estate, private business entities, tax liens, and precious metals without tax.  A Self-Directed IRA allows you to better diversify your retirement portfolio and invest in what you know and understand.

WHAT ARE PROHIBITED TRANSACTIONS?

The Internal Revenue Code does not describe what a Self-Directed IRA can invest in, only what it cannot invest in. Internal Revenue Code Sections 408 & 4975 prohibits Disqualified Persons from engaging in certain types of transactions. A Prohibited Transaction, which is defined in Internal Revenue Code Section 4975, is any transaction between your retirement account (the Plan) and a “disqualified” person or entity. In general, a “disqualified” person is any lineal ascendant (i.e. parents, grandparents, etc.), descendants (children, grandchildren, etc.), spouse, spouse’s ascendants, descendants or any entity for which a disqualified person has 50% or more ownership.

The following are examples of prohibited transactions:

  • Lending money or engaging in some other extension of credit between the retirement account and a disqualified person. For example, you cannot personally guarantee a loan for the purchase of real estate by your retirement account.
  • Furnishing goods, services or facilities between the retirement account and a disqualified person. For example, you cannot personally make an improvement to a house or piece of property held by your retirement account.
  • Transferring or using by or for the benefit of a disqualified person, the income or assets of a retirement account. For example, you may not use any real estate owned by the retirement account for any personal purpose.
  • Dealing with income or assets of a plan by a disqualified person who is a fiduciary acting in his/her own interest or for his/her own account. For example, you should not loan money from your retirement account to a business you own.
  • Receiving any consideration for his/her personal account by a disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan. For example, you cannot take a salary for managing real estate owned by your retirement account.

For more information about the prohibited transaction rules, please refer to IRS publication 590.

WHAT ARE YOUR RESPONSIBILITIES AS AN IRA ACCOUNT HOLDER?

  • Choosing the investment(s)
  • Performing due diligence on the investment(s)
  • Understanding the risks related to your investment(s)
  • Reviewing the SEC Investor Alert on Self-Directed IRAs and the Risk of Fraud
  • Monitoring the investment(s)’ performance
  • Understanding Prohibited Transaction rules (see above) and avoiding them
  • Ensuring that valuations are provided to IRA Financial Trust for all assets on at least an annual basis
  • Understanding IRA Financial Trust Company fees and minimum balance requirement. Please see our FEE SCHEDULE & FINANCIAL DISCLOSURE FORM for more information.

To learn more about the advantages of using the IRA Financial Trust to establish your Self-Directed IRA, please contact a Self-Directed retirement expert at 1-800-472-1043.

Mar 14

How Do Substantial Equal Periodic Payments Work?

The Substantial Equal Period Payments provide an exception to the early distribution tax. Under the Substantial Equal Periodic Payments method, you do not have to pay the early distribution tax on money that you take out of your plan in regular payments over either your life expectancy or the joint life expectancy of you and your beneficiary even if you are younger than 59 and 1/2.

The following are some basic rules about the exception:

  • There are no age restrictions.
  • The payments must be substantially equal, which means you cannot alter the payments each year.
  • You must compute the payments as though you intend to distribute the retirement plan over your entire life or over the joint life of you and your spouse.
  • You may not discontinue payments or alter the computation method for at least 5 years and if you have not reached age 59 and 1/2 at the end of the 5 year period, you must wait until you reach that age before making a change.

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

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