Performing and IRA rollover to a Self-Directed IRA LLC gives the custodian the ability to avoid transaction costs, distribution penalties and custodial delays when purchasing and investing in real estate and small businesses.
A self-directed Roth IRA provides you with broader investment opportunities and enables you to take advantage of investments without having to pay custodial fees or encounter other time-consuming processes.
A self-directed Roth IRA has a number of investment and tax benefits and incentives for the IRA holder. With a self-directed Roth IRA you’re free to invest private and public companies, real estate properties, tax liens, private loans, financial paper, and even franchises. Moreover, your investment returns will occur in a tax-free environment. Apart from enabling a tax-free investment strategy for your portfolio, another important benefit that the self-directed Roth IRA provides is that it can eliminate the fees that are traditionally required of account holders. These fees include transaction, asset-based and holding fees, which you can be exempt from with a self-directed Roth IRA. In short, your IRA LLC can be less expensive to manage than a traditional retirement account. In addition, you can take advantage of the purchasing power that comes with a self-directed Roth IRA by simply writing a check to invest in the opportunities you see fit, without ever having to pay a income or capital gains tax or have a taxable distribution.
A self-directed Roth IRA, which is nearly synonymous to the Self-Directed IRA, provides the IRA holder with a number of investment and tax benefits, including:
- The ability to purchase and invest in both domestic and international private mortgages, real estate, gold and stocks, mutual funds and bonds, using the one self-directed Roth IRA under the same plan.
- Personal loan and note writing ability, making purchases of real estate foreclosures as well as tax liens easy and stress-free.
- The chance to purchase and sell properties, including domestic, international, residential, rental and commercial properties, as self-directed Roth IRA investments. Freely take advantage of the profits from these investment properties tax free.
- Purchase a retirement property at today’s rates, lease it out privately, and then occupy your retirement home property at the time you take the IRA distribution.
While there are a number of limitations for investing your self directed Roth IRA, the opportunities for unparalleled growth with such accounts can be wildly enormous. To find out more about setting up your own self-directed Roth IRA LLC, please give us a call.
Become the custodian of your own future by grasping control over your retirement funds.
Tax liens, personal loans, private equity, privately-held businesses, and real estate are all areas in which your retirement funds can be put to effective use. With checkbook control over your individual retirement account funds, you can now tap the purchasing power locked within your IRA or 401k. Tapping the power locked in the assets you hold without early distribution and tax penalties is a huge benefit to you and your family. Doing so before you retire will give you more opportunity and control over your destiny.
Often referred to as a checkbook IRA or real estate IRA, this unique financial instrument allows its user to make hard asset purchases on the spot simply by writing a check. As the custodian of your IRA LLC you can now diversify account monies from traditional SEPs, Keoghs, IRAs, 401(k)s, and 403(b)s into more secure, yet highly lucrative investments–all while finding the benefit of tax-deferred profits to your retirement portfolio.
As the custodian and controller of your self-directed individual retirement account, you will glean the following benefits:
- Invest in both traditional and non-traditional investments including stocks, bonds, mortgage notes, foreign real estate, liens, etc.
- Make personal loans by simply writing a check from your IRA.
- Acquire foreclosed or distressed real estate by making a checkbook IRA purchase on the spot.
- Realize tax-deferred profits by investing in commercial and residential investment properties with your new real estate IRA.
- Be your own manager of your rental properties owned by your IRA and save time and valuable money and resources.
- Purchase a retirement home at today’s prices and rent it until you plan on occupation later.
While there are some few and limited areas where your checkbook IRA may find To learn how thousands have already made the self-directed IRA LLC the foundation of their financial success.
Backdoor Roth IRA
The almost unavoidable certainty of future increasing investment taxes–some of which is already occurring–has prompted a new wave of IRA rollover techniques for earning tax-free income. The backdoor IRA is one such method. A backdoor IRA allows for movement of monies from taxable, traditional retirement vehicles into a Roth IRA.
This scenario will allow joint filers who report a joint adjusted gross in excess of $250,000 to effectively avoid tax increases set to occur in the near future. It also allows higher net worth individuals to invest using a Roth account where they were previously locked out due to income restraints. Previously, income above a specified threshold precluded some single and joint filers from even obtaining a Roth IRA all together. Now taxpayers, regardless of their adjusted income can perform a rollover to a Roth IRA.
When performing such a rollover, proper steps must be taken to avoid any unnecessary taxes. For instance, specific steps must be taken to avoid prorated taxes based on the amount held in existing retirement accounts. This process requires some somewhat involved, but completely legal work-arounds.
The law is very clear on backdoor Roth IRAs. By filing the proper forms, investors are better qualified to avoid unnecessary taxes on investment income in their retirement accounts. For more information on setting up your own backdoor IRA, please contact us directly.
Self-Directed IRA Rules
Self directed IRA rules have become popular in the recent years as a tool for wealth accumulation in a retirement plan. However, it is important that one understands the limitations associated with his/her IRA. In accordance to the International Revenue Code (IRC), buying of collectibles and life insurance investments are not permissible. On the other hand, you can legally invest your retirement benefits into alternative assets such as real estate, gold mortgages, tax liens, franchise or other small businesses.
As defined by the IRC, prohibited transactions can result from wrong interaction between a ‘disqualified party’ and your retirement plan. A disqualified party as far as self directed IRA rules are concerned is:
- The owner of the IRA together with the spouse
- The ascendants and descendants of the owner of the IRA
- Any entity with more than 50% combined ownership with a disqualified person
- A 10% director, extra compensated employee, officer or owner of such entity
- Any IRA fiduciary or persons offering services to IRA
Therefore, after considering the above guidelines, a number of prohibited transactions according to the Self directed IRA rules can be derived. Some examples of such transactions include:
- Giving loans to your children or wife
- Receiving payments from your IRA investment cash flows
- Purchasing your life insurance
- Buying collectibles using retirement funds
- Selling of personal property to the IRA in which you are registered
- Buying a home to live at the moment using your retirement funds
- Offering your retirement assets as a guarantee for a loan
Note that prohibited transactions in accordance to the self directed IRA rules are not limited to the outlined ones. The governing criterion is based on the definition given above. In addition, in order to be successful in maximizing your retirement benefits without breaking the self directed IRA rules, you need to understand the above guidelines. You may also seek professional guidance concerning the same if need be.