by on May 8, 2012 Leave a Comment

A Self-Directed Case Study – An IRA or 401K for Jim and Susie?

Note from John:  This post will only identify certain benefits of a self-directed 401K vs. a self-directed IRA.  Another blog post will identify additional benefits of the 401K over the IRA.

In blog post titled:  “Can an IRA be Co-Jointly Owned (Remember the “I”)? (May 3, 2012), we spoke of Jim and Susie’s question about whether they could co-jointly own each other’s IRA accounts.  We spoke of both of their IRAs having values of $60,000 (Jim) and $40,000, respectively.  Jim and Susie inquired about establishing self-directed IRAs so they would have checkbook control of their retirement assets.  They learned about how both of their IRAs could fund (or purchase the assets of) one LLC that could hold their IRA assets.  Ownership of each IRA into the LLC would be directly proportional to the amount of funding into the LLC from each IRA.

Okay, that was THAT conversation….Jim and Susie were all set…or were they?! (the mystery deepens!!) [Read more...]

Filed Under: 401(k)'s & IRA's
by on May 7, 2012 1 Comment

Can IRAs be Co-Jointly Owned? — Remember, the “I”

The simple answer is…..NO!

Why? Remember, the “I” in IRA stands for Individual, and not anyone else. While you can certainly make other individuals the beneficiary of your IRA, it is still YOUR IRA.

So, with regard to a self-directed IRA, a typical question will be, “Is there any way my IRA and my wife’s IRA can be brought together for greater purchasing power for an investment in real estate (for example)?”

Yes, of course.

Both individual self-directed IRA accounts could purchase in proportional shares the assets of a jointly-owned and managed LLC. Ownership would be in direct proportion to the value of each person’s IRA. As an example, if Jim’s IRA was $60,000 and Susie’s (his wife) was 40,000, Jim’s IRA would have a 60% proportional share ownership of the joinly-owned and managed LLC, and Susie’s IRA would have a 40% proportional share of the LLC.

In the second half of this series, we will review how, if Jim or Susie were self-employed, they may want to rollover their IRAs into a self-administered 401K of which they are both co-trustees.

Filed Under: 401(k)'s & IRA's, Real Estate Investing
by on April 25, 2012 Leave a Comment

Real Estate Investing For Retirement and The Wizard of Oz

Had a great conversation with a 20-something Millennial this afternoon. The guy is way smarter than the average bear, and blessed with common sense to boot. He’d sent me an email with several questions, most of which I found more than merely interesting. Among them was,

Why don’t people talk about real estate as a viable means for retirement?

It’s been part of my basic understanding of what I do. What with all the empirical evidence showing real estate is far safer, more reliable, and generates more wealth than the many alternatives, the vast majority choose everything other than real estate. Why is that?

[Read more...]

Filed Under: 401(k)'s & IRA's, Real Estate Investing, Retirement Income
by on April 23, 2012 Leave a Comment

Yippee!! They NOW Offer Checkbook-Controlled IRA Accounts!!

Just this past week I spoke with a soon-to-be client who had done extensive research in the differences between custodians, administrators and facilitators of self-directed retirement plans (primarily IRAs).  While it ended up that he is going to establish a self-directed 401K, he initially called to inquire about an IRA.  He did not realize that he was even eligible to establish a 401K as a self-employed individual.

Regardless of what type of plan he is establishing and the reasons for his initial call, he stated that a very well-known IRA administrator was “heavily emphasizing” to their clients the “new” opportunity to have “checkbook control” of their IRA retirement assets.  What was interesting was that they heavily emphasized that this was “new” and that the company was on “top of the competitive curve” in establishing such plans for their clients.

Well, it is good to see that this company is doing what is possibly right by its clients, but what they failed to mention is that there has not been any prohibition on individuals controlling their IRAs and 401Ks since both plans were created by Congress.  In fact, this company has been in existence for some time extolling self-directed IRAs where they served as the custodian and did not allow their clients to have checkbook control of their IRA assets. [Read more...]

Filed Under: 401(k)'s & IRA's
by on April 19, 2012 Leave a Comment

Do You Want the Path of Least Resistance?

You know in the ‘ole days, it was not uncommon that many CPAs, Brokers, and Accountants would tell their clients that self-directed IRAs and 401Ks were “illegal.”  Many of these professionals may not have been trying to steer their clients out of selfish interests…they just may not have known that such accounts, as long as established and executed correctly, are quite legal.

Then 2008 came and not only did it seem that many of these professionals became aware of such plans, it almost seemed that “self-directed” anything became the new buzz words.  Heck, it even seemed as if everyone wanted to set up such plans (evidenced by the fact that I have had more than a handful of people ask PGI if we could train them to enter the field).

So, I never thought I would be doing a post on this topic…hey, it’s been so long, I almost feel like I am going retro :) .  But, I was speaking to a new client this week and he actually told me that he reviewed a self-directed 401K with his broker first and was told that such a plan was “absolutely illegal.”  Feeling discouraged, he felt as if his broker may have selfish interests, so he reviewed it with his CPA.  Guess what?  Well, his CPA never said it was illegal, but said he had “never heard of it before.” [Read more...]

Filed Under: 401(k)'s & IRA's, Asset Protection, IRS, Real Estate Investing
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