Self Directed 401k & IRA Solutions by Attorneys
PUNDEFF ADAMS
This Fox article discusses the high transactional costs of self directed IRAs for active investors, and mentions self directed IRA-LLCs as an alternative. However, in states like California, LLCs come with a $800 annual minimum tax, which cannot be avoided simply by filing in another state. A better alternative for some is a self directed [...]
Stylistically glib but substantively sincere, Mr. Nabers has some good ideas: His early & consistent stand against ROBS is commendable. http://www.jeffnabers.com/2011/09/15/the-jury-decides-on-robs-can-you-legally-fund-a-business-purchase-or-startup-with-a-self-directed-401k/ Boy do I get a lot of blowback every time I share my findings about why the government has declared ROBS illegal! Why is there not a specific government
A lot of unlikely fear mongering. The most I can foresee are some prospective limits on high income or net worth individual deductions / contributions. http://www.examiner.com/article/401k-plans-and-ira-eyed-to-alleviate-fiscal-cliff The ever expanding debate on averting financial consequences in early 2013 has refocused attention on concerns that the coveted 401 k plan and IRAs, long consid
This can work but must be structured correctly to avoid a prohibited transaction http://www.bloomberg.com/news/2012-11-05/foreclosures-drawing-cash-as-401k-returns-sag-mortgages.html David and Michelle Haisley from Fort Wayne, Indiana, weren’t happy with the performance of their retirement funds, so they made another investment — a foreclosed home for ,000.
Despite some of the overly broad language in this article, the real lesson is that retirement funds should not be invested in highly speculative investments or to fund your own business. However, by all means consider “non-traditional” or “alternative” investments that are risk and return competitive with “traditional” investments. Such investments, e.g., real estate, are [...]
Americans borrowing from 401Ks for current needs cause for concern? http://www.alaskadispatch.com/article/401k-tapping-trend-more-americans-dipping-retirement-funds-what-does-it-mean-country More than 20 percent of Americans have borrowed against their 401(k), the highest share since 1996. Nearly half of young people with 401(k)s at previous employers cash them out rather than roll them over. Tapping retirement funds is rarely a good idea.
Romney’s investment structures may not be something you should emulate . . . http://www.financial-planning.com/fp_issues/42_10/romneys-huge-ira-raises-questions-for-advisors-for-client-transactions-2681055-1.html Mitt Romney s Huge IRA Gives a Wake Up Call to Advisors to ensure their clients don t venture into the muddy waters of the prohibited-transaction rules.
How much is enough to retire on? This WSJ article talks about the recent Fidelity multiple of thumb: 8 x annual salary http://online.wsj.com/article/SB10000872396390443493304578034334095447050.html According to Fidelity, you need one times your salary by age 35, five times by age 55 and eight times by retirement. But is that really enough?
With every cutting edge investment strategy, there are charlatans. This article serves as a reminder to look at the quality, references, and background of any investment professional you may be considering. http://www.justice.gov/usao/mow/news2012/gwin.ple.html SPRINGFIELD, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a former Ozark, Mo., man [...]
Interesting and fundamental ideas, not so much about investments. http://www.forbes.com/sites/financialfinesse/2012/08/02/retiring-at-age-50-is-realistic-using-unorthodox-strategies/ The prevailing school of thought is that it’s completely unrealistic to retire at age 50 in today’s economy — maybe it was an option twenty years ago after a strong bull market, with lifetime income from a company pension and an early [...]
Despite the negative title, this article is more a caution about the investment targets than the self directed IRA as an investment vehicle http://www.usatoday.com/money/perfi/columnist/waggon/story/2012-07-12/self-directed-iras/56181024/1 You can invest in a wide array of things via your individual retirement account, aside from the usual stocks, bonds and mutual funds.
Apple has made the momentous decision to move its entire retirement plan to exchange traded funds (ETFs), according to Employee Benefit News. ETFs are investment funds which track (in value) a particular index (e.g., S&P 500, Wikipedia) They are characterized by low fees and high liquidity. They have established a favorable track record compared to mutual [...]
As mentioned previously, there is a procedure for applying for a prohibited transaction exemption. The application process can be time consuming, and there are certain types of transactions that have a better chance of approval than others. One of the types transactions involving an IRA which is sometimes granted involves a “disqualified party,” e.g. the [...]
The article link below is accurate on many points about 401(k) variants and there benefits, but as attorneys who also advises businesses on employment matters, we say: beware the limitation on employees. An employer must resist the temptation to improperly convert or hire someone as an independent contractor to avoid the limitations. The fines or [...]
In our practice, we occasionally see transactions structured by other financial planners attempting to circumnavigate the Prohibited Transaction Rules found in Internal Review Code sec. 4975, by using the thresholds found in the “Plan Asset Rule.” Dept. of Labor Regs. Sec. 2510.3-101. As is typical with most prohibited transactions, these arrangements often involve the IRA [...]
Loans from self directed retirement accounts basically come in two forms: 1) IRAs and 2) 401(k)s. In the first, they are not really loans at all. Rather, investors have 60 days to transfer or “rollover” their retirement account savings from one custodian to another. During that time, they may hold the funds in their [...]
Pundeff Adams represents investors in applying for prohibited transaction exemptions. The following are verbatim excerpts from a tentative authorization by the Employee Benefits Security Administration of a prohibited transaction (published on the EBSA website), in which an IRA was allowed to sell property to the IRA owner:
A Self Directed IRA or 401(k) is intended for passive investments. If you are using, or considering using, your IRA or 401(k) for an investment that is not exactly passive, you may want to pause and read further. Examples of such “investments” include: purchasing, repairing, and flipping homes; and soliciting, making, and servicing loans (occasionally [...]
Solo-Ks and other Self Directed 401(k)s, like self directed IRAs can be structured for investing in non-traditional assets like real estate, and allow Roth accounts. However, these plans enjoy several advantages for the self-directed retirement plan investor. First though, these plans are limited by one big disadvantage: These plans are available only to persons involved [...]
The custodian plays a key role in one’s self-directed IRA. Choosing the right one is an important decision that should take into consideration not only the fees charged, but the reputation of custodian, the type of investment that will be held in the account and the accessibility and responsiveness that can be expected of the [...]
Many advisers concerning self directed retirement IRA and 401(k) investing fail to understand the breadth and complexity of the prohibited transaction limitations in Internal Revenue Code §4975(c). In particular, they focus on the objective numerical limitations while ignoring the subjective “catch-all” limitations of that section. In particular, IRC §4975(c)(1)(D) & (E), which prohibit a disqualified [...]
(Law firm PundeffAdams fills void in tax and legal expertise regarding the increasingly popular use of “self directed” IRA and 401(k) accounts to buy real estate and other tangible investments.) The use of IRAs and 401ks to purchase real estate and other “non-traditional” investments is becoming increasingly popular. Still a relatively unknown option, real estate [...]
Solo-Ks are the best way to go for the purchase of real estate or other alternative investments. However, if you’re not suitable for a Solo-K because you have full time employees (other than family), you may be able to use another 401k plan as long as you forgo annual contributions to it (roll-overs are ok). [...]
http://www.foxbusiness.com/personal-finance/2013/04/10/dont-let-self-directed-ira-fee-to-death/
Boy do I get a lot of blowback every time I share my findings about why the government has declared ROBS illegal! Why is there not a specific government
http://www.examiner.com/article/401k-plans-and-ira-eyed-to-alleviate-fiscal-cliff
The ever expanding debate on averting financial consequences in early 2013 has refocused attention on concerns that the coveted 401 k plan and IRAs, long consid
David and Michelle Haisley from Fort Wayne, Indiana, weren’t happy with the performance of their retirement funds, so they made another investment -- a foreclosed home for ,000.
Individual retirement accounts and 401(k)'s are being used increasingly to invest in start-ups or commodities, but such maneuvers can leave users penniless in retirement.
