Jan 30

IRA Financial Group Introduces New Bitcoin Self-Directed IRA with Checkbook Control

Bitcoin self-directed IRA LLC will allow for tax-free treatment on bitcoin transactions using retirement funds

IRA Financial Group, the leading provider of self-directed IRA LLC and Solo 401(k) Plans is proud to announce the introduction of the self-directed IRA bitcoin with checkbook control. The bitcoin self-directed IRA LLC structure will allow retirement account investors to purchase bitcoins and generate tax-deferred or tax-free gains. “We are excited to offer our clients with a tax efficient and cost effective way to use retirement funds to buy bitcoins,” stated Adam Bergman, a partner with the IRA Financial Group.

IRA Financial Group Introduces New Bitcoin Self-Directed IRA with Checkbook ControlOn March 25, 2014, the IRS issued Notice 2014-21, which for the first time set forth the IRS position on the taxation of bitcoins. According to the IRS, “Virtual currency is treated as property for U.S. federal tax purposes,” the notice said. “General tax principles that apply to property transactions apply to transactions using virtual currency.” By treating bitcoins as property and not currency, the IRS is providing a potential boost to investors but it also imposing extensive record-keeping rules—and significant taxes—on its use. With IRA Financial Group’s self directed IRA LLC bitcoin solution, traditional IRA or Roth IRA funds can be used to buy bitcoins without tax.

The primary advantage of using a Self Directed IRA LLC to make investments is that all income and gains associated with the IRA investment grow tax-deferred.

IRA Financial Group’s Self-Directed IRA LLC for bitcoin investors, is an IRS approved structure that allows one to use their retirement funds to make bitcoin 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 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 to make bitcoin investments offers a number of very interesting investment opportunities, including the ability to diversify ones retirement portfolio with real estate, precious metals, and other alternative investment options.

IRA Financial Group is the market’s leading provider of self-directed retirement plans. 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.

The IRA Financial Trust Company, a self-directed IRA custodian, was founded by Adam Bergman, a partner with the IRA Financial Group.

Adam Bergman, IRA Financial Group partner, has written six books the topic of self-directed retirement plans, including, The Checkbook IRA, Going Solo, Turning Retirement Funds into Start-Up Dreams, Solo 401(k) Plan in a Nutshell, Self-Directed IRA in a Nutshell, and In God We Trust in Roth We Prosper.

To learn more about the IRA Financial Group please call 800-472-0646.

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Jan 26

Some Helpful Tips For Investing In Real Estate Using Retirement Funds

This article originally appeared on Forbes.com and was written by our own Adam Bergman –

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Most people mistakenly believe that their retirement accounts must be invested in traditional financial related investments such as stocks, mutual funds, exchange traded funds, etc. Few Investors realize that the Internal Revenue Service (“IRS”) permits retirement accounts, such as an IRA or 401(k) plan, to invest in real estate and other alternative types of investments.  In fact, IRS rules permit one to invest retirement funds in almost any type of investment, aside generally from any investment involving a disqualified person, collectibles and life insurance.

One of the primary advantages of purchasing real estate with retirement funds is that all gains are tax-deferred until a distribution is made or tax-free in the case of a Roth account (after-tax). For example, if one purchased a piece of property with retirement funds for $100,000 and later sold the property for $300,000, the $200,000 of gain appreciation would generally be tax-deferred. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax and in most cases state income tax.

The two most common vehicles for purchasing real estate with retirement funds is the self-directed IRA or an employer sponsored 401(k) plan.  However, most employer 401(k) plans do not offer real estate as a plan investment option and, thus, the self-directed IRA has become the most popular way to buy real estate with retirement funds.  Establishing a self-directed IRA is quick and relatively inexpensive and can be done in just a few days.  The most challenging aspect of investing in real estate using retirement funds is navigating the IRS prohibited transaction rules.  In general, pursuant to Internal Revenue Code (“IRC”) Section 4975, the retirement account holder cannot make a retirement account investment that will directly or indirectly benefit ones self or any disqualified person (lineal descendant of the retirement account holder and related entities), perform any service in connection with the retirement account investment, guarantee any retirement account loan, extend any credit to or from the retirement account, or enter into any transaction with the retirement account that would present a conflict of interest.  The purpose of these rules is to encourage the use of retirement account for accumulation of retirement savings and to prohibit those in control of the retirement account from taking advantage of the tax benefits for their personal account.

Aside from navigating the IRS prohibited transaction rules, the following are a handful of helpful tips for making real estate investment using retirement funds:

  • The deposit and purchase price for the real estate property should be paid using retirement account funds and not from any disqualified person(s)
  • All expenses, repairs and taxes incurred in connection with the retirement account real estate investment should be paid using retirement funds – no personal funds from any disqualified person should be used
  • If additional funds are required for improvements or other matters involving the retirement account-owned real estate investment, all funds should come from the retirement account or from a non-“disqualified person”
  • Partnering with yourself or another disqualified person in connection with a retirement account investment could trigger the IRS prohibited transaction rules.
  • If financing is needed for a real estate transaction, only nonrecourse financing should be used. A nonrecourse loan is a loan that is not personally guaranteed by the retirement account holder or any disqualified person and whereby the lender’s only recourse is against the property and not against the borrower.
  • If using a nonrecourse loan to purchase real estate with a self-directed IRA, the unrelated business taxable income (“UBTI”) rules could be triggered and a tax rate reaching as high as 40 percent could apply.  Note – an exemption from this tax is available for 401(k) plans pursuant to IRC 514(c)(9). If the UBTI tax is triggered and tax is due, IRS Form 990-T must be timely filed.
  • No services should be performed by the retirement account holder or any “disqualified person” in connection with the real estate investment.  Please see: Finally Some Clarity On What You Can And Cannot Do In Your Self-Directed IRA for additional information
  • Title of the real estate purchased should be in the name of the retirement account. For example, if Joe Smith established a Self-Directed IRA LLC and named the LLC “XYZ, LLC”, title to the real estate purchased by Joe’s Self-Directed IRA LLC would be as follows: XYZ LLC.  Whereas, if Joe Smith established a self-directed IRA with ABC IRA Trust Company (custodian), and the custodian purchased the real estate directly on behalf of Joe without the use of an LLC, then title would read:  ABC IRA Trust Company FBO John Doe IRA.
  • Keep good records of income and expenses generated by the retirement account owned real estate investment
  • All income, gains or losses from the retirement account real estate investment should be allocated to the retirement account owner of the investment
  • Make sure you perform adequate diligence on the property you will be purchasing especially if it is in a state you do not live in.
  • Beware of fraud if purchasing real estate from a promoter.
  • If using a self-directed IRA LLC to buy real estate, it is good practice to form the LLC in the state where the real estate will be located to avoid any additional filing fees.  Also, be mindful of any annual state LLC filing or franchise fees.

Using retirement funds to buy real estate can offer retirement account holders a number of positive financial and tax benefits, such as a way to invest in what one knows and understands, investment diversification, inflation protection, and the ability to generate tax-deferred or tax-free (in the case of a Roth) income or gains. The list of helpful tips outlined above should provide retirement account investors looking to buy real estate with a guideline of how to keep their retirement account from running afoul of any of the IRS rules.  However, retirement account holders using retirement funds to invest in real estate must be mindful of the broad application of the IRS prohibited transaction and UBTI rules and should consult with a tax professional for further guidance.

For more information about using a Self-Directed IRA to invest in real estate, please contact us @ 800.472.0646.

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Jan 24

Do You Need a Special Custodian to Make Self-Directed IRA Investments?

Pursuant to Section 408 of the Internal Revenue Code, an IRA must be established by a bank, financial institution, or authorized trust company.  Thus, a bank such as Wells Fargo, financial institution such as Vanguard, or a trust company such as the IRA Financial Trust Company are authorized to establish and administer IRAs.  The main difference is that not all IRA custodians allow the IRA to invest in alternative assets, such as real estate.

Individual Retirement Account is a term that most Americans have some understanding of.  They are commonly aware that it is a type of retirement account that was designed by Congress to encourage people to save for retirement. They generally understand that one can contribute a certain amount of income each year to the IRA account for investment. However, most do not have a solid understanding of the concept of tax deferral and the fact that retirement funds can be invested in assets other than stocks or mutual funds through what has become known as a Self-Directed IRA.

Do You Need a Special Custodian to Make Self-Directed IRA Investments?So why don’t they know this? It’s not because the majority of Americans are uneducated, indifferent, or incurious – they simply have not been told. It’s not in the financial interests of the traditional institutional investment companies, such as Bank of America, Charles Schwab, or E-Trade, to encourage you to make alternative investments using retirement funds. They make money when you invest in their financial products and keep your money there for a long time, whether through highly profitable trading commissions or by leveraging the power of your savings. They make no money when you use your money to invest in alternative or nontraditional investments, such as a plot of land or a private business. They get no commissions as a result. They lose access to your money too. Why would they inform you that such a strategy was permissible and possibly even preferable depending on the circumstances?

Yet, such nontraditional or alternative retirement asset investments are perfectly legal. The IRS has permitted them since 1974. It says so right on the IRS website.

And the best way to make those investments is through the Self-Directed IRA.

What are the Responsibilities of a Self-Directed IRA Custodian?

The majority of all Self-Directed IRA custodians are non-bank trust companies for the reasons outlined above.  The Self-Directed IRA custodian or trust company will typically have a banking relationship with a bank who will hold the IRA funds in a special account called an omnibus account, offering each Self-Directed IRA client FDIC protection of IRA funds up to $250,000 held in the account.  For example, 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 a safe and secure way to make Self-Directed IRA investments.

The following are the primary roles and responsibilities of a Self-Directed IRA custodian:

  • IRS approved
  • Permitted to hold and custody IRA and 401(k) plan assets
  • Subject to state regulation by the state division of banking
  • Performance of administrative recordkeeping regarding the Self-Directed IRA
  • Perform administrative review of the Self-Directed IRA assets
  • 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

What are the Differences Between a Self-Directed IRA Custodian and Third-Party Administrator?

All IRA custodians, banks, financial institutions, and approved trust companies are regulated entities that are authorized by the IRS to act as IRA custodians. Since custodians are directly approved by the IRS, they are the only entity in this group that’s allowed to physically hold retirement assets. IRA custodians are needed in order to make investments with IRA funds and, as a result, are regulated by federal and state banking authorities.

Whereas, an IRA administrator is not able to hold or custody IRA assets and is not approved or overseen by the IRS or any state banking regulators. IRA administrators essentially act as intermediaries between the IRA owner and a partner custodian.

Why Is It Important to Work Directly with an IRA Custodian?

IRA administrators are not subject to any IRS or state audit or reviews.  Accordingly, they are not subject to ongoing oversight, especially in the area of prohibited transactions, which is important in order to keep your Self-Directed IRA in full IRS compliance. Whereas, an IRA custodian is subject to quarterly state banking division audits and reviews, as well as IRS audits, helping keep your IRA safe from prohibited transactions and fraud.

To learn more about establishing a Self-Directed IRA account with the IRA Financial Trust Company, please contact a Self-Directed IRA specialist at 800-472-0646.

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Jan 20

Understanding Your Options When Inheriting An IRA From A Non-Spouse

This article, written by our own Adam Bergman, appeared on Forbes.com

Unfortunately, the Internal Revenue Service (“IRS”) does not allow you to keep retirement funds in your account indefinitely. The required minimum distribution rules (“RMD”) were created in order to guarantee the flow of IRA funds into the federal income tax system as well as to encourage IRA owners to use their retirement funds during their retirement.

One generally has to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when reaching the age 70½ or as the beneficiary recipient of an inherited IRA. Of interest, Roth IRAs do not require withdrawals until after the death of the owner.

There are a number of distribution options available to a designated IRA beneficiary, generally dependent on whether the deceased IRA owner’s sole primary beneficiary is a spouse, and whether the deceased IRA owner has reach 70 1/2, the age for RMDs. Remember, a living IRA owner is not required to take an RMD until the IRA owner reaches the age of 70 1/2.

If an IRA holders dies and designates a non-spouse, such as a parent, child, sibling, friend, etc. as the primary beneficiary of his or her IRA, the non-spouse beneficiary will typically only have two options for taking RMDs with respect to the inherited IRA: (i) the life expectancy rule and (ii) the five-year rule.

Understanding Your Options When Inheriting An IRA From A Non-SpouseThe IRS allows a non-spouse beneficiary to use the life expectancy rules to calculate the IRA required distributions after the deceased IRA holder’s death. The IRA distributions must begin to be taken no later than December 31 of the year after the death of the deceased IRA holder’s death. There are no additional opportunities for delaying IRA distributions for non-spouse beneficiaries. If distributions are made under the life expectancy rule to a designated beneficiary non-spouse, the applicable distribution period for the calendar year immediately after the year of the IRA owner’s death is the beneficiary’s remaining life expectancy as of his or her birthday during that year and the applicable period is reduced by one for each subsequent distribution calendar year. Unlike in the case of a spouse beneficiary, which is required to use the life expectancy of the deceased IRA owner for purposes of calculating the annual RMD amount, a non-spouse beneficiary is required to use his or her life expectancy when calculating the annual required distribution amounts. For example, if Jane is designated as sole beneficiary of an IRA of her mother, who died during 2015, her first distribution calendar year is 2016. If Jane turned 60 years old during that year, the applicable distribution period would be based on the life expectancy of a 60-year-old. Conversely, the non-spouse beneficiary has the option to select a five-year distribution rule, which would required the non-spouse beneficiary to take the entire amount of the inherited IRA as a distribution over a five year period. Of note, a non-spouse IRA beneficiary does not have the option to convert the traditional inherited IRA to a Roth IRA.

The IRA custodian (the financial institution) is required to submit reports to the IRS and to the IRA owner regarding RMDs. If an RMD is required to be taken from an IRA for a calendar year and the IRA owner is alive at the beginning of the year, the IRA custodian that held the IRA as of December 31 of the prior year must provide a statement to the IRA owner to report the due date of the RMD and, in most cases, the amount that is due. The IRA custodian is required to send this report to the IRA owner by January 31 of the year for which the RMD is required.

The RMD rules and options for a non-spouse beneficiary can bring to bear some financial and tax implications.  Therefore, it is important that one consults a tax professional or financial advisor for further guidance.

For more information about options when inheriting an IRA, please contact an IRA Expert @ 800.472.0646.

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Jan 17

Will Unconventional Assets Doom Your Retirement Or Save It?

Here’s an article written by Forbes.com contributor Ashlea Ebeling about alternate investing in a Self-Directed IRA:

At least half a million retirement accounts – worth $50 billion – hold unconventional assets including real estate, private equity and hedge funds, according to a new GAO report aiming to quantify the prevalence of these accounts and determine what risks account owners face. Other investments include energy investments, equipment leasing, foreign exchange currency, farming interests, precious metals, promissory notes, church bonds, tax liens, private placements — even Bitcoin. So much for index funds.

Retirement savers choosing these unconventional assets in self-directed individual retirement accounts and solo 401(k)s face big risks and need hand holding, according to a new GAO report, Improved Guidance Could Help Account Owners Understand the Risks of Investing in Unconventional Assets.

“Some view the self-directed IRA world as the wild west,” says Ryan Carey, a staffer for Sen. Ron Wyden (D-OR) who called for the report as a sequel to a 2014 GAO report that dropped the bombshell that 314 taxpayers have IRAs averaging $258 million each. Investing in unconventional assets can supercharge your retirement kitty—especially if it’s a Roth account where all growth is tax-free–but at the same time, the strategy can doom it.

The danger for individual investors is that investing in unconventional assets may jeopardize the accounts’ tax-favored status, placing their retirement security at risk. Tricky tax rules regarding prohibited transactions, unrelated business income tax and valuation issues all trip up investors. The punishment for “prohibited transactions” is brutal: Your entire IRA is disqualified, and its assets are considered distributed and taxable as of Jan. 1 of the year of the forbidden transaction.

In its latest report, the GAO got data from 17 custodians of self-directed IRAs and solo 401(k)s, interviewed experts like Warren Baker, a tax lawyer who has built a practice around advising owners of these accounts (see IRAs Gone Wild), and reviewed hundreds of investor complaints filed with federal agencies and watchdog organizations.

Account owners (that is the individual taxpayers) who invest in unconventional assets are responsible for account management and compliance—and they bear the consequences of any mistakes. It’s the account owner who has to determine the appropriateness of an asset, review for potential prohibited transactions, and arrange for the purchase. Ongoing duties include monitoring the account for possible unrelated business income tax liability, preparing Form 990-T to report taxes, directing the custodian to disburse funds to pay tax liability, providing the custodian with an annual fair market value update for all hard to value assets in the account, and determining the amount of any required minimum distributions.

A lot can go wrong. The difficulty in verifying fair market value can expose account owners to fraud and allow losses to remain undetected for some time, the report says. (The SEC issued an investor alert on self-directed IRAs and the risk of fraud back in 2011.) Some account owners mistakenly expect the custodian to provide due diligence, monitor investments, or compensate them for investment losses, the report says. In one case, an account owner lost contact with the company in which he had invested $46,000 in private stock. Unable to retrieve his investment from the company, he expected the custodian return the full amount of the investment. In another case, an account owner expressed concern when the company from which he purchased private stock stopped providing updated valuations, and he thought the custodian could transfer his original investment amount back to his previous custodian.

Investors also face distribution problems. In several cases cited, a custodian initiates the in-kind distribution of the asset to the account owner for failure to pay account fees or failure to provide the custodian with the fair market value of the asset. The custodian uses the last known fair market value, triggering tax liability for a worthless asset. One case involved a $140,000 private stock investment; another case a $25,000 real estate investment.

There are also challenges with liquidating assets when you need retirement income—or have to take mandated required distributions once you reach 70 1/2. In one complaint a widow tried unsuccessfully to obtain income from her late husband’s account, but the investment sponsor said it was illiquid. Another potential trap: you may have to accept in-kind distributions of unconventional assets rather than cash as your RMDs but you’ll still owe income taxes on the distributions.

The IRS says it agrees with the GAO’s recommendations to improve guidance for retirement account owners with unconventional assets. It says it will add updates to Publication 590-A on IRAs, cautioning IRA owners about the possibility of unrelated business taxable income. In addition, the IRS will recommend that the Treasury include guidance to IRA owners and custodians on valuation issues as part of IRA guidance currently on the 2016-2017 priority guidance plan. And the IRS will modify its model custodial agreement for self-directed IRAs to make it clear that only certain articles have been pre-approved by the IRS.

Separately, the IRS is also ramping up its current information collecting efforts on unconventional assets in IRAs. Starting this past season (for tax year 2015), the IRS makes IRA custodians report whether IRAs own non-publicly traded assets on new boxes on Form 5498, an annual form filed with the IRS. That’s in addition to reporting the value of the IRA. So there’s an easy way for the IRS to target high value IRAs with non-publicly traded assets and look for overvaluation or self-dealing issues. There are also new boxes on Form 1099-R, so the IRS can track IRA distributions and theoretically check whether IRA owners are underreporting taxes by undervaluing the distribution amount.

In 2015, the IRS added an explicit caution to IRA owners in Publications 590-A and 590-B about the heightened risk of engaging in a prohibited transaction—but it hasn’t compiled data yet to help provide targeted outreach to those holding nonconventional assets. The IRS did say it could refine its outreach to using the new asset type data once compiled electronically, the GAO report says.

There are likely many more than the 500,000 accounts identified in the report as trust companies and other financial services providers accommodate high-net-worth clients who wish to invest in unconventional assets. Also, some individuals with solo 401(k)s act as trustee and don’t use a custodian, so these accounts aren’t reflected in the data. Also not included are employer-sponsored plans that use IRAs such as Saving Incentive Match Plans for Employees or a Simplified Employee Pension, which may also allow account owners to invest in unconventional assets.

The GAO report notes that solo 401(k)s are generally not required to report their investment holdings; they’re required to report only total plan assets, and aren’t required to identify or report separately on investment in unconventional assets. And if the solo 401(k) assets are less than $250,000, there is no reporting requirement.

This article shows that while alternate investing is valuable strategy, it’s best to have a trusted person handling your money.  Please contact one of the IRA Experts at the IRA Financial Group for more info!

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Jan 12

Why Choose IRA Financial Trust as Your Self-Directed IRA Custodian

The IRA Financial Trust Difference

The IRA Financial Trust Company was founded by tax attorneys who worked at some of the largest law firms 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 financial institution that is made up of retirement tax specialists committed to helping you make Self-Directed retirement investments quickly while minimizing annual fees.

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

The IRA Financial Trust DifferenceEstablish a Self-Directed IRA or a Self-Directed IRA LLC with Checkbook Control with retirement experts who can help you navigate all the IRS rules and regulations while leveraging the reassurance of Northern Trust, a global banking leader for over 125 years.

The retirement experts at IRA Financial Trust will help you establish your Self-Directed IRA or Checkbook Control IRA in minutes.  We are the nation’s first IRA custodian that has established an application process specifically for the Checkbook Control IRA LLC.  Once your new Self-Directed IRA account has been established with IRA Financial Trust, we will assist you in rolling over your current retirement funds or make IRA contributions to your account.  All rollover and IRA contributions will be held with the Northern Trust, where they will receive FDIC protection of up to $250,000, before they are invested in traditional or alternative assets at the client’s direction.

Getting started is quick and easy.

Work with IRA Financial Trust and Northern Trust to establish your Self-Directed IRA or Checkbook IRA account today!

To learn more about opening a Self-Directed IRA account with the IRA Financial Trust Company, please contact an IRA retirement expert at 1-800-472-1043.

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Jan 10

Why You Need a Self-Directed Roth IRA in 2017!

Use your retirement funds to invest in real estate, precious metals, private businesses and much more tax-free!

The Self-Directed Roth IRA Structure has been in use for some 35 years. The Tax Court and the IRS have firmly established that the funding of a new entity by an IRA for self-directing assets was a permitted transaction and not prohibited pursuant to Code Section 4975. In fact, the IRS, in an advisory memorandum to audit agents, confirmed that a newly established entity owned by an IRA and managed by the IRA owner may make investments using IRA funds without violating the prohibited transaction rules under Internal Revenue Code Section 4975.

The Roth IRA

In 1997, Congress, under the Taxpayer Relief Act, introduced the Roth IRA to be like a traditional IRA, but with a few attractive modifications. The big advantage of a Roth IRA is that if you qualify to make contributions, all distributions from the Roth IRA are tax-free – even the investment returns – as long as the distributions meet certain requirements. In addition, unlike traditional IRAs, you may contribute to a Roth IRA for as long as you continue to have earned income (in the case of a traditional IRA, you can’t make contributions after you reach age 70 and 1/2). The rules for the Roth IRA are found in the Internal Revenue Code under Section 408A.

What is a Roth IRA?

A Roth IRA is an IRA that the owner designates as a Roth IRA. ASelf Directed IRA LLC Roth IRA is generally subject to the rules for Traditional IRAs. For example, traditional and Roth IRAs and their owners are identically affected by the rules treating an IRA as distributing its assets if the IRA engages in a prohibited transaction or the owner borrows against it. The reporting requirements for IRAs also apply to Roth IRAs. However, several rules, described below, apply uniquely to Roth IRAs.

The most attractive feature of the Roth IRA is that even though contributions are not deductible, all distributions, including the earnings and appreciation on all Roth contributions, are tax-free if certain conditions are met.

Roth IRA Characteristics

The following is an overview of the tax characteristics of the Roth IRA

  • Contributions are not Tax-Deductible: Unlike a Traditional IRA, an individual is not permitted to take an income tax deduction for their Roth IRA contributions. All Roth IRA contributions are made with after-tax dollars. What this means is that the amount of the contribution is treated as basis in the IRA.
  • Earnings are Tax-Deferred: Earnings and gains from a Roth IRA are tax-deferred and may be tax-exempt if certain conditions are met. What this means is that all income and gains generated by a Roth IRA investment are not subject to income tax.
  • Tax-Free Earnings: The attraction to the Roth IRA is based on the fact that qualified distributions of Roth earnings are tax-free. As long as certain conditions are met and the distribution is a qualified distribution (the Roth IRA has been established for greater than five years and the Roth IRA owner is over the age of 59 and 1/2), the Roth IRA owner will never pay tax on any Roth distributions received.

The Self-Directed Roth IRA LLC structure has become a popular choice for gaining total investment control (“checkbook control”) over IRA funds and making investments tax-free. In each case, a limited liability company (“LLC”) is established that is owned by the IRA account and managed by the IRA account holder. The IRA Holder’s IRA funds are then transferred by the Custodian to the LLC’s bank account providing the IRA holder with “checkbook control” over his or her IRA funds.

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 United States, including White & Case LLP and Dewey & LeBoeuf LLP. We have helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investments.

With IRA Financial Group’s Self-Directed Roth IRA LLC Structure – you now can:

  • Use your retirement funds to invest in real estate and much more tax-free!
  • Take advantage of great investment opportunities in real estate, tax liens, precious metals, private businesses, and much more!
  • Gain control of your retirement funds!
  • Pay no tax on distributions
  • Purchase a home and move in tax-free at 59 and 1/2
  • Diversify your retirement portfolio!
  • Access your retirement funds to make the investments you want when you want!
  • Help grow your retirement funds tax-free!
  • Make investments quickly without delay!
  • Make investment decisions without requiring custodian consent!
  • Save on high annual custodian fees
  • Enjoy tax benefits generated by using a Self-Directed Roth IRA LLC
  • Work directly with our retirement tax professionals to establish an IRS compliant structure that works best for you and your investment goals

Our Self-Directed Roth IRA LLC Establishment Service Includes

  • Free tax consultation with our IRA Specialists
  • 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
  • Obtain the EIN from the IRS
  • Co-ordinate setup with the Custodian of your Choice
  • Free tax and IRA support
  • Direct access to our on-site retirement tax professionals
  • No annual fees
  • Satisfaction Guaranteed!

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 retirement tax experts 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.

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

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Jan 03

There’s Still Time to Cut Your 2016 Tax Bill

Although we’ve rung in a new year, there’s still time to cut your taxes for 2016.  If you already have an individual retirement account (IRA), you have until Tax Day to make contributions.  Contributions made to a traditional plan are usually tax-deductible, though there are income limits if your employer offers a retirement plan, such as a 401(k).  Although Roth plans are not tax-deductible, there’s still huge benefits to max out your 2016 plan, including tax-free withdrawals come retirement.

What are the maximum contribution limits?

The maximum contribution limit for an IRA for 2016 (and 2017) is $5,500 or $6,500 if you’re age 50 or older, or your taxable compensation for the year, if less. Contributions to a Roth IRA may be limited based on your filing status and income.

There's Still Time to Cut Your 2016 Tax BillIs my IRA contribution deductible on my tax return?

If neither you nor your spouse is covered by an employer retirement plan, such as a 401(k), your deduction is allowed in full.

For contributions to a traditional IRA, the amount you can deduct may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. In the case of a Roth IRA, contributions aren’t deductible.

Can I contribute to a traditional or Roth IRA if I’m covered by a retirement plan at work?

Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan). If you or your spouse is covered by an employer-sponsored retirement plan, such as a 401(k) plan and your income exceeds certain levels, you may not be able to deduct your entire contribution.

Can I establish an IRA if only one spouse has earned income for the year?

Yes. If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return and cannot exceed the maximum IRA contributions for the year (for 2017 $5500 or $6500 if over the age of 50). It doesn’t matter which spouse earned the compensation.

How can I make a Roth IRA contribution if I earned too much money in 2017?

For 2017, if your modified adjusted gross income is below $181,000 and you file a joint return, you can make a Roth IRA contribution. For those who earned greater than $181,000 during the year, the IRS provides a formula, which will set forth the reduced maximum amount of Roth IRA contributions permitted for the year, if any.

One way to circumvent the Roth IRA income threshold rules, if to simply make an after-tax traditional IRA contribution and then convert the Traditional IRA into a Roth IRA. Since the Traditional IRA contribution was made after-tax there would be no tax on the Roth IRA conversion. This tactic was made possible when the IRS removed the income level restrictions for making Roth conversions in 2010.

Can I Make IRA contributions after age 70½

You can’t make regular contributions to a traditional IRA in the year you reach 70½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

To learn more about the IRA contribution rules, please contact an IRA tax expert at 800-472-0646.

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