Happy Thanksgiving! Our offices will be closed on 
Thursday November 23rd and Friday November 24th, 2017.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS and Department of Labor only describe the types of investments that are prohibited, which are very few.

The basis of the prohibited transaction rules are based on the premise that investments involving IRA and related parties are handled in a way that benefits the retirement account and not the IRA owner. The rules prohibit transactions between the IRA and certain individuals known as “disqualified persons”. These rules can be found in Internal Revenue Code Section 4975. In general, the definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios, but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder, and entities in which the IRA holder holds a controlling equity or management interest.

Most people mistakenly believe that their Roth IRA must be invested in bank CDs, the stock market, or mutual funds. Few Investors realize that the IRS has always permitted real estate to be held inside IRA retirement accounts. Investments in real estate with a Self-Directed Roth IRA LLC are fully permissible under the Employee Retirement Income Security Act of 1974 (ERISA). IRS rules permit you to engage in almost any type of real estate investment, aside generally from any investment involving a disqualified person.

In addition, the IRS states the following on their website: “…..IRA law does not prohibit investing in real estate but trustees are not required to offer real estate as an option.”

How Long Does it Take to Set Up a Self-Directed IRA LLC?The entire Self Directed IRA LLC structure can be set up in a matter of days. Our in-house tax and ERISA professionals will work with you directly to customize a structure that satisfies your tax and investment goals.

The whole process can be handled by phone, email, fax, or mail. Our expert tax and ERISA professionals are on site greatly reducing the set-up time and cost. Our in-houseretirement tax professionals will complete all the necessary IRA rollover or transfer paperwork and assist you in transferring your funds to the new passive custodian so that your funds will be available for investment in a matter of days. Typically it takes anywhere between 7 and 21 days for your funds to be transferred to your new “Checkbook Control” Self Directed IRA LLC. In most cases, we are able to complete the IRA LLC facilitation aspects of the transaction within a few days; however, the transfer of funds from one custodian to another can take some time depending on the financial institution and the type of assets being transferred. Most importantly, you will find that our fee for this service is significantly less than other companies that perform the same or similar services.

To get started or to learn more about the Self-Directed IRA LLC Structure, please contact one of our IRA Experts at 800-472-1043.

New Crypto IRA Platform will allow one to use IRA or 401(k) funds to buy and sell bitcoins & other cryptocurrencies through special purpose LLC

IRA Financial Group, the leading provider of self-directed IRA LLC and Solo 401(k) Plan & IRA Financial Trust Company, a leading self-directed IRA custodian, announces that it has partnered to offer a platform for using IRA or 401(k) plan funds to purchase cryptocurrencies, such as bitcoins. The Bitcoin IRA platform will allow one to invest IRA or 401(k) plan funds via a special purpose limited liability company (“LLC”) that will be controlled by the IRA owner, as manager of the LLC. “The great thing about using a special purpose self-directed IRA LLC to purchase bitcoins with retirement funds is that you have total control over the bitcoin investment,” stated Adam Bergman, a partner with the IRA Financial Group.

The Self Directed IRA LLC structure was affirmed in the Tax Court case Swanson v. Commissioner, 106 T.C. 76 (1996), and further confirmed by the IRS in Field Service Advisory (FSA) 200128011 (April 6, 2001).

In Swanson v. Commissioner, 106 T.C. 76 (1996), the Tax Court, in ruling against the IRS that the funding of a new entity by an IRA for self directing assets was not a prohibited transaction, stated the following:

“We find that it was unreasonable for [the IRS] to maintain that a prohibited transaction occurred when Worldwide's stock was acquired by IRA #1. The stock acquired in that transaction was newly issued -- prior to that point in time, Worldwide had no shares or shareholders. A corporation without shares or shareholders does not fit within the definition of a disqualified person under section 4975(e)(2)(G). It was only after Worldwide issued its stock to IRA #1 that petitioner held a beneficial interest in Worldwide's stock, thereby causing Worldwide to become a disqualified person under section 4975(e)(2)(G).”

If you take money out of an IRA before you reach the age of 59 and 1/2, your withdrawal is called an early distribution, and you will have to pay a 10% early distribution tax on the money unless you can meet one of the following exceptions:

  • you are age 59 and 1/2
  • you die
  • you become disabled
  • if you choose to take substantially equal periodic payments
  • if you are at least 55 years when you leave the job (this rule does not apply to IRAs)
  • if you withdraw the money to pay medical expenses (the tax exemption only applies to the portion of your medical expenses that would be deductible if you itemized deductions on your tax return)
  • if you withdraw the money to pay child support or alimony
  • if you use the money to pay a federal tax levy
  • health insurance premiums (this exemption is unique to IRAs and certain conditions must be met)
  • you received unemployment compensation for at least 12 consecutive weeks, you received the funds from the IRA during a year in which you received unemployment compensation or during the following years, the IRA distribution is received no more than 60 days after you return to work
  • higher education expenses (certain conditions have to be met such as the distributions are used to pay for tuition, fees, books, supplies, and equipment, the expenses are paid on behalf of the IRA owner spouse, child, or grandchild, and the distributions do not exceed the amount of the higher education expenses)
  • first home purchase (lifetime distribution limit of $10,000, the IRA distribution must be used for the acquisition, construction, or reconstruction of a home, the funds must be used within 120 days of receipt, the funds must be used to purchase a principal residence for a first-time home buyer, the first time home buyer must be the IRA owner, or the owner's spouse, or an ancestor)

Please contact one of our IRA Experts at 800-472-1043 for more information.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS and Department of Labor only describe the types of investments that are prohibited, which are very few.

The foundation of the prohibited transaction rules are based on the premise that investments involving IRA and related parties are handled in a way that benefits the retirement account and not the IRA owner. The rules prohibit transactions between the IRA and certain individuals known as “disqualified persons”. The outline for these rules can be found in Internal Revenue Code Section 4975. In general, the definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios, but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder, and entities in which the IRA holder holds a controlling equity or management interest.

Last week, the IRS announced the new limits for retirement plans for 2018.  Here's what you need to know about your IRA Contributions -

2018 IRA (including Self-Directed IRAs) Contribution Limit - Limits remain the same as 2017.  For individuals under age 50, the limit is $5,500.  For those 50 and older, you can make an additional $1,000 catch-up contribution, bringing the total limit to $6,500.

2018 Deductible IRA Phase-outs - If you participate in en employer-sponsored plan (such as a 401(k) plan), there are income restrictions for a deduction.  If you are single or head-of-household, you can get a full deduction if your adjusted gross income (AGI) is $63,000 or less.  It phases out until an AGI of $73,000.  An AGI above that means you cannot deduct your IRA contribution for the year.  If you are married filing jointly, you receive a full deduction if your AGI is $101,000 or less.  This phases out until an AGI of $121,000.  If you are married filing jointly and your spouse participates in an employer's plan, the phase-out starts at $189,000 and you are not eligible for a deduction if your AGI is above $199,000.

2018 Roth IRA (including Self-Directed Roth IRAs) Contribution Limit - Again, these are the same as last year (and the same amount as traditional plans).  $5,500 if you are under age 50 and $6,500 if you are age 50+.

2018 Roth IRA Income Limits - You may only contribute directly to a Roth IRA if you are below the income limits.  If you are single or head-of-household, you may make a full contribution if your AGI is less than $120,000.  Your contribution limit phases out until $135,000, in which you may not contribute to a Roth directly.  If you are married filing jointly, an AGI of less than $189,000 allows for a full contribution.  This amount phases out until it reaches $199,000.

Note: You must have earned income in the year(s) in which you wish to contribute to an IRA.  The amount you may contribute is the lesser of the annual limit or your earned income for the year.

Individuals may generally rollover their retirement savings between eligible defined contribution plans, defined benefit plans and pre-tax IRAs, including SEP IRAs and SIMPLE IRAs to a Self-Directed IRA. Eligible defined contribution plans include qualified 401(k) retirement plans under Internal Revenue Code Section 401(a), 403(a), 403(b), and governmental 457(b) plans. Individuals may also roll over after-tax retirement funds to a Roth Self-Directed IRA.

What is the most Common Way to Fund a Self-Directed IRA?

Transfers and rollovers are types of transactions that allow movements of assets between like IRAs – Traditional IRA to Traditional IRA and Roth IRA to Roth IRA. An IRA transfer is the most common method of funding a Self-Directed IRA LLC or Self-Directed Roth IRA.

There have been no income level restrictions for making Roth IRA conversions since 2010, hence a high income earner can do a conversion of after-tax (non-deductible) IRA funds to a Roth IRA, which is known as a ‘backdoor’ Roth IRA. In other words, the ‘backdoor’ IRA allows a high- income earner, who has exceeded the Roth IRA annual income contribution limits, to circumvent those rules and make a Roth IRA contribution. However, as detailed below, a tax could be due on the conversion under the pro rata (aggregation) rules if the IRA holder has other traditional pre-tax IRAs that have not been taxed. In general, the taxes owed on the conversion will depend on the ratio of IRA assets that have been taxed to those that have not, making the 'backdoor' IRA unattractive for some.

Click here to read the full article at Forbes.com.

A Self-Directed IRA with Checkbook Control offers one many advantages, including diversification, speed and lower fees.

Tax Advantages: With the Self-Directed IRA LLC, you have all the tax advantages of traditional IRAs, as well as tax deferral and tax-free gains. All income and gains generated by your IRA investment will flow back to your IRA tax-free. By using a Self-Directed IRA to make investments, the IRA owner is able to defer taxes on any investment returns, thus, allowing the IRA owner to benefit from tax-free growth. Instead of paying tax on the Self-Directed IRA returns of an investment, tax is paid only at a later date when a distribution is taken, leaving the investment to grow tax-free without interruption.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS only describes the type of investments that are prohibited, which are very few.   The main advantages of using a self-directed IRA to make investments is that one can generate tax-deferred or tax-free gains on investments one knows and understands.

For 2017, the following are some examples of types of investments that can be made with your Self-Directed IRA LLC:

  • Residential or commercial real estate
  • Domestic or Foreign real estate
  • Raw land
  • Foreclosure property
  • Mortgages
  • Mortgage pools
  • Deeds/Notes
  • Hard money lending
  • Private loans
  • Tax liens
  • Private businesses
  • Limited Liability Companies
  • Limited Liability Partnerships
  • Private placements
  • Precious metals and certain coins
  • Stocks, bonds, mutual funds
  • Foreign currencies
  • Bitcoins
  • Hedge Funds
  • Private Equity Funds

Using a Self-Directed IRA LLC to make investments offers the investor the ability to make traditional as well as non-traditional investments, such as real estate, in a tax-efficient manner.

On September 27, 2017, President Trump and the Republicans leaders presented a tax plan that included sharp cuts in tax rates to both corporations and individuals. Under the Trump tax plan, the corporate tax rate would fall to 20% from 35% as well as reduce taxes on business pass-through income to 25%. The tax plan would also allow immediate write-offs of business investment, preserve tax breaks for research and low-income housing, while also limiting deductions for interest.  The tax plan also provides corporations with a one-time tax on stored foreign profits and would allow the tax-free repatriation of foreign income. The proposed tax plan would also repeal the estate tax and the alternative minimum tax. With respect to individuals, the Republication tax plan proposed would collapse seven individual income tax brackets into three and the top rate on individuals could drop to 35% from 39.6%.

Click here to read the full article on Forbes.com!

Individuals may generally rollover their retirement savings between eligible defined contribution plans, defined benefit plans and pre-tax IRAs, including SEP IRAs and SIMPLE IRAs to a Self-Directed IRA. Eligible defined contribution plans include qualified 401(k) retirement plans under Internal Revenue Code Section 401(a), 403(a), 403(b), and governmental 457(b) plans. Individuals may also roll over after-tax retirement funds to a Roth Self-Directed IRA.

Beginning in 2010, the modified Adjusted Gross Income (“AGI”) and filing status requirements for converting a Traditional IRA to a Roth IRA are eliminated.

Top 3 Most Popular Investments for September 2017

IRA Financial Trust’s Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS only describes the type of investments that are prohibited, which are very few.   The main advantages of using a Self-Directed IRA to make investments is that you can generate tax-deferred or tax-free gains on investments you know and understand.

The following investments have been the most popular investments for our Self-Directed IRA clients for September 2017:

For a growing number of investors, cryptocurrency is not only the future of money, but also an attractive and potentially profitable investment asset, though highly risky and volatile.  Bitcoin has become the public’s most visible and popular cryptocurrency and it is also among the oldest, having first emerged in 2009.  Over one year, the market capitalization for Bitcoin has increased enormously, from around $7.16 billion in May 2016 to $27.9 billion today.  As the price of Bitcoin has risen over the last year, so has the confidence among investors, including retirement account investors.

The process of buying cryptocurrency is still somewhat unclear for a lot of people. It's not a stock or a traditional investment.  For most people in the U.S., Coinbase would be the easiest option to buy cryptocurrency, such as Bitcoins, Ethereum, or Litecoin.  After verifying the account, the investor can add a number of payment methods, including credit or debit cards, U.S. bank accounts, or even wire transfers of funds.  Cryptocurrency transactions are not anonymous and the identity of the currency owner can be traced back to a real-world identity. 

As a cryptocurrency, Bitcoin is generated through the process of "mining" - essentially using your computer's processing power to solve complex algorithms called "blocks."  One can buy and sell Bitcoin on an exchange, much like a physical currency exchange, converting wealth from Bitcoin to U.S. dollars and other national currencies, back to dollars or Bitcoin. And that's how money is made.

A Real Estate IRA LLC is generally also referred to as a Self Directed IRA LLC with “Checkbook Control”. A Real Estate IRA LLC or 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 purchase real estate or make almost any other type of investment tax- free!

With a Real Estate IRA LLC you will never have to seek the consent of a custodian to make a real estate investment or be subject to excessive custodian account fees based on account value and per transaction.

To establish a Real Estate IRA LLC with “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 passive custodian then transfers the IRA owner’s funds to the new IRA LLC bank account. As the manager of the IRA LLC, the IRA owner will have the authority to make real estate investment decisions on behalf of the IRA providing the IRA owner with “checkbook control” over his or her IRA funds.

When you find a real estate 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 real estate investment opportunity presents itself. “Checkbook Control” is especially important when it comes to making real estate or tax liens investments, since custodian delays could cause you to lose an investment opportunity.

If you take money out of an IRA before you reach the age of 59 1/2, your withdrawal is called an early distribution, and you will have to pay a 10% early distribution tax on the money unless you can meet one of the following exceptions:

There is generally no limit or restrictions on when an IRA owner may take a distribution from his or her IRA, although there may be adverse tax consequences, such as income tax and/or an additional tax on early distributions. However, pursuant to Internal revenue Code Section 72(t), there are certain instances where the Internal Revenue Service (“IRS”) allows certain IRA distributions that qualify as “hardship” distributions to be exempt from the additional tax on early distributions.

Click here to read the full article on Forbes.com!

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.

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 type of transactions. The purpose of these rules is to encourage the use of IRAs for accumulation of retirement savings and to prohibit those in control of IRAs from taking advantage of the tax benefits for their personal account.

When it comes to using retirement funds to invest in a hedge fund, it is important to be mindful of the IRS prohibited transaction rules under Internal Revenue Code Section 4975. In general, the IRS has restricted certain transactions between the IRA and a “disqualified person”. The definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios, but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder (i.e. parents, children, spouse, daughter-in-law, or son-in-law), and entities in which the IRA holder or a disqualified person holds a controlling or management interest. Furthermore, Internal Revenue Code Section 4975(c)(1)(D) and (E) outlines rules that relate to self-dealing or conflict of interest transactions that involves an investment that could directly or indirectly personally benefit a disqualified person. The self-dealing or conflict of interest prohibited transaction rules have the broadest application especially when it comes to hedge fund type investments.

A Simplified Employee Pension (SEP) is a special type of IRA that can be established by your employer or by you, if you are self-employed. Designed for small businesses, SEPs have many of the characteristics of qualified plans but are much simpler to establish and administer.

Increased regulation on IRA financial advisors has lead to increased demand for self-directed IRA real estate plans

IRA Financial Trust, the leading provider of self-directed IRA retirement solutions, has experienced strong demand for its self-directed IRA real estate plan solutions in light of the Department of Labor (“DOL”) new fiduciary rule. The U.S. DOL is expected to finalize new rules that would change the way financial advisors are allowed to give advice to their clients. The new rules are meant to reduce the conflict of interest among broker-dealers and financial advisors who advise consumers on how to invest their savings. Under the new rules, broker-dealers would be required to act in their clients’ best interest rather than encouraging money moves that directly benefit the broker’s bottom line. “The DOL fiduciary rule has good intentions and should help IRA investors receive better investment advice, however, we have experienced some clients incur additional fees under the new fiduciary regime,” stated Adam Bergman.

For 2017, the IRA contribution limits will remain the same as 2016.  For individuals under the age of 50, the maximum Self-Directed IRA contribution for 2017 will be $5500, the same of 2016.  For individuals over the age of 50, the maximum Self-Directed IRA contribution for 2017 will be $6500, the same of 2016.

For many retirement account investors, understanding how the Unrelated Business Taxable Income Rules work, also known as UBTI, UBIT, or debt-financed income rules, and how they may potentially apply to one’s retirement account investment has been a challenge.  The main reason is that the majority of IRA or 401(k) plan investors invest in traditional types of investments, such as equities, mutual funds, and ETFs, which do not trigger the application of the UBTI tax rules since most passive investments that a retirement account might invest in are exempt from the UBTI rules, such as interest, dividends, and capital gains.

Click here to read the full article on Forbes.com!

Bitcoin is usually described as virtual currency. That’s useful shorthand, but is it really money? And should it be taxed as if it is? Or is it a capital asset? How about a commodity? Or what about a collectible? Most commentators have viewed bitcoins either as a virtual type of currency or capital asset. However, the potential still exists that the IRS could argue that bitcoins do not satisfy the main functions of money and acts more like a stamp or other collectible than a currency.

The Self Directed IRA LLC structure was affirmed in the Tax Court case Swanson v. Commissioner, 106 T.C. 76 (1996), and further confirmed by the IRS in Field Service Advisory (FSA) 200128011 (April 6, 2001).

In Swanson v. Commissioner, 106 T.C. 76 (1996), the Tax Court, in ruling against the IRS that the funding of a new entity by an IRA for self directing assets was not a prohibited transaction, stated the following:

“We find that it was unreasonable for [the IRS] to maintain that a prohibited transaction occurred when Worldwide's stock was acquired by IRA #1. The stock acquired in that transaction was newly issued -- prior to that point in time, Worldwide had no shares or shareholders. A corporation without shares or shareholders does not fit within the definition of a disqualified person under section 4975(e)(2)(G). It was only after Worldwide issued its stock to IRA #1 that petitioner held a beneficial interest in Worldwide's stock, thereby causing Worldwide to become a disqualified person under section 4975(e)(2)(G).”

Zacky v. Commissioner, TC Memo 2004-130

The Zacky case involved three separate loans all of which were prohibited transactions under Section 4975(c)(1)(B), (D) and (E). 

The taxpayer, Mr. Zacky, was the president and sole owner of Aspects Inc. (“Aspects”), a corporation that maintained a qualified profit sharing plan.  Mr. Zacky was one of many participants under the plan and also served the plan’s sole trustee.  Mr. Zacky borrowed funds (Loan #1) from the plan to pay Aspects payroll liability that was about to become due. 

At some point thereafter the plan lent funds (Loan #2) to a related corporation, Inland Empire Properties, Inc. (“Inland”).  Mr. Zacky was also the president and sole owner of Inland, which had no other employees.  Inland owned and leased to Aspects and other tenants a commercial building.  The purpose of Loan #2 was to enable Mr. Zacky to pay off an outstanding car loan, and to that end Mr. Zacky transferred title to the vehicle to Inland shortly after Loan #2 was made.

Subsequent to Loan #2, the plan made another loan to Inland (Loan #3) to enable Inland to pay mortgage and real estate taxes due on the building it owned.

No principal or interest had been paid on any of the loans.  Moreover, Mr. Zacky, in his capacity as the plan’s trustee, did not seek nor attempt to compel repayment (but did require two loans to other participants to be repaid).

On June 9, 2017, the Department of Labor's (DOL) final rule meaningfully expanded when a person is deemed to be treated as a fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code) as a result of providing investment advice.  The final rule was initially set to become applicable on April 10, 2017, but the DOL delayed the final rule's applicability date for sixty days, until June 9, 2017 and also issued a new temporary enforcement policy for the transition period commencing on June 9th and ending on December 31, 2017...

Click here to read the full article on Forbes.com!

Making an investment through a Self-Directed Roth IRA LLC can be done in a few easy steps:

1. Set up a Self-Directed Roth IRA LLC.

With IRA Financial Trust, you no longer have to spend $2000 to $5,000 or more to set up your Self-Directed Roth IRA LLC.

We provide the following all for one low price

  • Free tax consultation with our in-house retirement tax professionals
  • 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, as required by the Custodian
  • Obtain the EIN from the IRS
  • Co-ordinate setup with the Custodian of your Choice
  • Free tax and IRA support regarding the Self-Directed Roth IRA LLC Structure
  • Expedited Service Guarantee!
  • Satisfaction Guaranteed!

The IRA Financial Trust Company 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 experts and tax and ERISA professionals are onsite greatly reducing the setup time and cost. Most importantly, each client of the IRA Financial Trust Company is assigned a retirement tax professionals 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.

No – not with a Self Directed IRA LLC. All investment decisions are made by you, as manager of the Self Directed IRA LLC. It’s simple - when you want to make an investment, you write a check, use your debit card, wire funds, etc. All documents can be signed by you, as manager of the LLC.

IRA Financial Trust, the leading provider of self-directed IRA LLC solutions, announces the findings of an internal report that shows that hard money lending for real estate has become a popular investment option for self-directed IRA investors. The IRS has always permitted an IRA to lend money to non-disqualified persons. The definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios, but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder, and entities in which the IRA holder holds a controlling equity or management interest.

Internal Revenue Code Section 514 requires debt-financed income to be included in unrelated business taxable income. It was enacted in 1969 for reasons best understood in their historical context.

Since the creation of IRAs back in the early 1970s, the IRS has always permitted an IRA to purchase, hold, or flip real estate. In fact, it states it right on the IRS website. By using a Self-Directed IRA to buy real estate, you will be able to purchase raw land, domestic or foreign real estate, residential or commercial property, flip homes, and much more tax-free and without requiring custodian consent!

For a growing number of investors, crytocurrency is not only the future of money, but also an attractive and potentially profitable investment asset, though highly risky and volatile. Bitcoin has become the public’s most visible and popular cryptocurrency and it is also among the oldest, having first emerged in 2009. Over one year, the market capitalization for bitcoin has increased enormously, from around $7.16 billion in May 2016 to $27.9 billion today. As the price of bitcoin has risen over the last year or so, so has the confidence among investors, including retirement account investors.

If you take money out of a qualified plan, IRA, or Self-Directed IRA before you reach the age of 59 and 1/2, your withdrawal is called an early distribution, and you will have to pay a 10% early distribution tax on the money unless you can meet one of the following exceptions:

Your investment may be disallowed under Internal Revenue Code Section 408 or result in a “Prohibited Transaction” under Internal Revenue Code Section 4975 and could result in the immediate disqualification of your Self-Directed IRA.

Although IRAs are generally not ERISA plans, the Department of Labor has jurisdiction over these plans for purposes of the prohibited transaction rules, including individual requests for exemptions from those rules. There are two different consequences for incurring a prohibited transaction under the Code:

A Limited Liability Company (LLC) is a company that has option to be taxed as a partnership, this is beneficial because the LLC won’t pay any taxes on gains, and instead it will be the owner of the LLC who is liable for any taxes just as if they earned the money themselves. Because the owner of the LLC is your Self-Directed IRA (the IRA owner is the manager), there are no taxes unless you are running a business that is unrelated to the purpose of an IRA (making investments), using debt financing or taking a distribution from your IRA. In addition, the LLC offers limited liability and asset protection with respect to the assets of the IRA.

Please contact one of our Self Directed IRA Experts at 800-472-1043 for more information.

Fake news that gold can be held at home with a self-directed IRA runs counter to IRS law

IRA Financial Trust Company, a custodian for self-directed IRA LLC and solo 401(k) plans announces the release of a free guide on using a self-directed IRA to purchase gold and other IRS approved precious metals. The free precious metals guide will help self-directed IRA investors navigate the IRS rules surrounding the purchase and possession of IRS approved precious metals, such as gold or American Eagle coins.

The IRS does not list the type of assets or investments that may be purchased with retirement funds, but does indicate which categories of assets or investments are not permitted. Internal Revenue Code Section 408(m) sets forth a list of approved precious metals and coins that are not considered “collectibles” and may be purchased with retirement funds. “Because the rules for the purchase and possession of IRS approved metals and coins are complex, IRA Financial Trust felt it was important to provide a detailed guide for self-directed IRA investors,” stated Adam Bergman, President of the IRA Financial Trust Company, a self-directed IRA custodian.

A Self-Directed Roth IRA LLC offers you several advantages than a traditional IRA -

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.

Investment Options: With the Self-Directed Roth IRA LLC, you can invest in almost any type of investment, including real estate, private business entities, tax liens, precious metals and commercial paper tax-free!

The Self-Directed IRA is a retirement solution that will unlock a world of investment opportunities. The Self-Directed IRA is a retirement investment vehicle that allows one to use their retirement funds to make traditional as well as non-traditional investments, such as real estate tax-free and without custodian consent. In most instances, investors using retirement funds to make an investment will use cash to make the investment. Whether the investment is in the form of stocks, precious metals, or real estate most investors using retirement funds to make the investment will not borrow any funds to make the investment. In other words, most investors using retirement funds will use cash to make the investment.

Self-Directed IRAs are generally permitted to engage in most types of investments, however, if a Self Directed IRA engages in certain types of "prohibited transactions" or invests in life insurance or collectibles you may jeopardize the tax-deferred status of your IRA account. This could lead to the disqualification of the IRA and severe tax consequences. Therefore, it is important that you familiarize yourself with the IRA rules.

Using a Self-Directed Roth IRA LLC presents a number of exciting tax planning opportunities. Whether you currently have a Traditional IRA or a Roth IRA, the IRA Financial Trust Company’s in-house tax and ERISA professionals have significant experience helping clients use a Self-Directed Roth IRA LLC to maximize their tax benefits and investment returns.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS and Department of Labor only describe the types of investments that are prohibited, which are very few.

The basis of the prohibited transaction rules are based on the premise that investments involving IRA and related parties are handled in a way that benefits the retirement account and not the IRA owner. The rules prohibit transactions between the IRA and certain individuals known as “disqualified persons”. These rules can be found in Internal Revenue Code Section 4975. In general, the definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios, but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder, and entities in which the IRA holder holds a controlling equity or management interest.

The IRS permits using a Self-Directed IRA LLC to purchase real estate or raw land. Since you are the manager of the Self-Directed IRA LLC, making a real estate investment is as simple as writing a check from your Self-Directed IRA bank account. The advantage of purchasing real estate with your Self-Directed IRA LLC is that all gains are tax-deferred until a distribution is taken. In the case of a Roth Self-Directed IRA, all gains are tax-free.

For example, if you purchased a piece of property with your Self-Directed IRA LLC for $100,000 and you 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.

April 21st, 2017

Now that the tax filing deadline has passed for the 2016 tax year, this is a perfect time to start thinking about some simple ways to boost retirement savings and at the same time lower overall tax liability for 2017...

Click here to read the article on Forbes.com.

A Limited Liability Company (LLC) is a company that has option to be taxed as a partnership; this is beneficial because the LLC won’t pay any taxes on gains, and instead it will be the owner of the LLC who is liable for any taxes just as if they earned the money themselves. Because the owner of the LLC is your Self-Directed IRA (the IRA owner is the manager), there are no taxes unless you are running a business that is unrelated to the purpose of an IRA (making investments), using debt financing or taking a distribution from your IRA. In addition, the LLC offers limited liability and asset protection with respect to the assets of the IRA.

Please contact one of our Self Directed IRA Experts at 800-472-1043 for more information.

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.

In addition to the significant tax benefits in using a Self-Directed Roth IRA LLC to make investments, the Roth IRA also offers a number of very exciting estate planning opportunities.

In general, a self-directed Roth IRA is an after-tax account that allows the Roth IRA holder to benefit from tax-free investment growth, so long as a Roth IRA distribution is not taken prior to a five year holding period and the Roth IRA holder is not under the age of 59½ ( a “qualified distribution”). In addition, a Roth IRA holder would not be subject to the required minimum distribution rules (“RMD”).

With IRA Financial Group’s Self-Directed Roth IRA LLC Estate Planning Solution, your family could receive tax-free use of your Roth IRA funds. Converting a pre-tax IRA to a Roth IRA could be used as a very valuable estate-planning tool for estate owner’s that would be subject to the estate tax (For 2015 - estates over $5,430,000) as the Roth conversion funds would be paid out of funds subject to estate tax.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS and Department of Labor only describe the types of investments that are prohibited, which are very few.

The basis of the prohibited transaction rules are based on the premise that investments involving IRA and related parties are handled in a way that benefits the retirement account and not the IRA owner. The rules prohibit transactions between the IRA and certain individuals known as “disqualified persons”. These rules can be found in Internal Revenue Code Section 4975. In general, the definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios, but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder, and entities in which the IRA holder holds a controlling equity or management interest.

Tax Advantages: With the Self-Directed IRA LLC, you have all the tax advantages of traditional IRAs, as well as tax deferral and tax-free gains. All income and gains generated by your IRA investment will flow back to your IRA tax-free. By using a Self-Directed IRA to make investments, the IRA owner is able to defer taxes on any investment returns, thus, allowing the IRA owner to benefit from tax-free growth. Instead of paying tax on the Self-Directed IRA returns of an investment, tax is paid only at a later date when a distribution is taken, leaving the investment to grow tax-free without interruption.

Here's another one from Adam Bergman that was written for Forbes.com -

With the individual tax-filing deadline date of April 18, 2017 for the 2016 taxable year quickly approaching, reviewing some of the ways one can save taxes as well as boost his or her retirement savings is always helpful.  Below are a few ways one can use the IRA contribution regime to help save taxes as well as enhance one’s retirement nest egg.

For Tax Year 2015 and beyond on IRS Form 5498, the IRS now requires IRA custodians to separately specify transactions which involve certain Self-Directed IRA investments

The information on Form 5498 is submitted to the Internal Revenue Service by the trustee (IRA custodian) of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions  (RMDs), and the fair market value (FMV) of the account.

The IRS Form 5498 gives the market value of all assets and cash held within the client account for the previous year and is used for tax reporting.  The IRA custodian will forward IRS Form 5498 to the IRS electronically by May 31 of the current year for the previous year.

Individuals may generally rollover their retirement savings between eligible defined contribution plans, defined benefit plans and pre-tax IRAs, including SEP IRAs and SIMPLE IRAs to a Self-Directed IRA. Eligible defined contribution plans include qualified 401(k) retirement plans under Internal Revenue Code Section 401(a), 403(a), 403(b), and governmental 457(b) plans. Individuals may also roll over after-tax retirement funds to a Roth Self-Directed IRA.

President Trump’s decision to delay the implantation of President Obama’s fiduciary rule, which was in the works for almost six years, put’s a pause on a framework that would have regulated the investment advice given to 401(k) plans and IRAs equally.

Here's an article from Forbes.com talking about the recent court case involving the Roth IRA DISC strategy -

On February 16, 2017, the United States Appeals Court for the Sixth Circuit in Summa Holdings, Inc. v. Commissioner of Internal Revenue held that using DISC and Roth IRA strategy for their Congressional-sanctioned purpose, tax avoidance, was permissible. The Appeals Court reversed a previous Tax Court ruling (Summa Holdings Inc. v. Commissioner, T.C. Memo 2015-119) that disallowed a domestic international sales corporation (DISC) Roth IRA strategy on the grounds that it had no nontax business purpose.

IRA Financial Trust, the leading provider of Self-Directed IRA LLC solutions, announces a specially designed Self-Directed IRA LLC solution for hard money lenders looking to generate tax-deferred or tax-free returns. Because most financial institutions continue to require solid credit scores and spend weeks reviewing financial statements, tax returns and business plans, there is a growing need for quick financing for many individuals, small business and investors, especially real estate developers and builders for their real estate projects. As a result, IRA Financial Group has partnered with the IRA Financial Trust Company to design a special Checkbook Control Self-Directed IRA LLC program designed specifically for hard money lenders.

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

Every IRA custodian is required to report annually to the Internal Revenue Service (“IRS”) the fair market value of each IRA it holds.  The IRA custodian will report the fair market value of the IRA to the IRS using IRS Form 5498.  Most IRA holders are unaware of this process since the majority of IRAs are invested in traditional investments, such as stocks and mutual funds, and the IRA custodian will be able to calculate the value of the IRA itself using publicly available information as of December 31 of the previous year.  For example, if Ken Smith has an IRA with Trust Company X and owns 100 shares of Apple, Trust Company X can quickly calculate the value of the IRA based off the share price as of December 31.  However, in the case of alternative assets, such as real estate, private equity, tax liens, etc., calculating the fair market value of the IRA investment could prove more difficult.

Unbeknownst to many retirement account holders, payment of individual retirement account (“IRA”) custodian/trustee fees is generally tax-deductible. Under Internal Revenue Service (“IRS”) rules, in place of the standard deduction, one can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). One can only claim the amount of expenses that is more than 2% of their adjusted gross income. For example, Amy, a single taxpayer, has an adjusted gross income of $50,000. She may deduct her miscellaneous itemized deductions only to the extent that they exceed 2% of $50,000, or $1,000. Some of the more popular itemized deductions are for: gifts to charity, home mortgage interest, tax preparation fees, and medical and dental expenses.

Self-Directed IRA Custodian fees may be tax deductible for taxpayers who itemize deductions

IRA Financial Trust, the leading provider of self-directed IRA plans, is proud to announce the introduction of its tax deductible self-directed IRA structure. Unbeknownst to many retirement account holders, payment of IRA custodian/trustee fees may be generally tax-deductible. Under Internal Revenue Service rules, in place of the standard deduction, one can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). One can only claim the amount of expenses that is more than 2% of their adjusted gross income. With IRA Financial Trust’s self-directed IRA account, these annual IRA management fees may be tax deductible, subject to the itemized deduction rules and so long as the fees are separately billed and paid for using IRA funds. “IRA management fees paid by personal cash or check that are not deducted from the IRA may be deducted as investment expenses, subject to the itemized deduction limits,” according to Adam Bergman, President of the IRA Financial Trust.

Self-Directed IRAs are generally permitted to engage in most types of investments, however, if a Self Directed IRA engages in certain types of "prohibited transactions" or invests in life insurance or collectibles you may jeopardize the tax-deferred status of your IRA account. This could lead to the disqualification of the IRA and severe tax consequences. Therefore, it is important that you familiarize yourself with the IRA rules.

The maximum contribution limit for a self-directed IRA for 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 self-directed Roth IRA may be limited based on your filing status and income.

Contributions made to a self-directed IRA LLC must be made to the IRA administrator/custodian and may not be contributed directly to the LLC. Once the IRA contribution is made to the IRA administrator/custodian, the funds can then be transferred to the IRA LLC.

Here's the second of two articles that originally appeared on Forbes.com talking about the fiduciary rules -

Now that President Trump has rescinded the fiduciary rule, what exactly does that mean for IRA investors?  The fiduciary rule, developed by the Obama administration, aimed to protect retirement savers from bad advice and keep more money in their pockets. It also sought to indirectly change the way the industry structures its products and advisor compensation policies.

Without the fiduciary rule, brokers who work under the suitability standard are required to make recommendations that are suitable for their clients, not those that are in their best interest. The belief is that some brokers make recommendations that pay them commissions rather than those that are best for their clients, supporters of the rule say.  Whereas, under the fiduciary rules, broker-dealers would be required to act in their clients’ best interest rather than encouraging money moves that directly benefit the broker’s bottom line.  Opponents of the fiduciary have held that if enacted, it would prove harmful to retirement investors with small accounts and limit their investment opportunities and investment advice opportunities.

Here's the first of two articles that originally appeared on Forbes.com President Trump's plan to rescind the fiduciary rules -

On February 3, 2017, President Trump announced that he will use a memorandum to ask the labor secretary to consider rescinding a rule, better known as the fiduciary rules, set to go into effect in April 2017 that orders retirement advisers, overseeing about $3 trillion in assets, to act in the best interest of their clients.

The fiduciary rule, rolled out by the Obama administration, took many years to develop. The fiduciary rule aimed to protect retirement savers from bad advice and keep more money in their pockets. It also sought to indirectly change the way the industry structures its products and advisor compensation policies.

Under the fiduciary rules, broker-dealers would be required to act in their clients’ best interest rather than encouraging money moves that directly benefit the broker’s bottom line.  Among the requirements in the rule, brokers have to justify the varying compensation they can receive for recommending one investment product over another to a retirement saver. Brokers said that rule makes sales fees on some mutual funds, known as sales loads, and some funds’ differing share-class prices problematic for accounts that charge investors for each transaction made.

This article orignally appeared on Forbes.com -

In general, one may be able to claim a deduction on their individual federal income tax return for the amount contributed to a pre-tax Individual retirement account (“IRA”), also known as a Traditional IRA.  Whereas, after tax or Roth IRA contributions are not tax deductible.  For 2017, the maximum IRA contribution is $5500 and $6500 if over the age of fifty. However, in the case of an individual that is covered by an employer qualified retirement plan, such as 401(k) plan, the IRA contribution amount that individual can deduct could be limited by his or her modified adjusted gross income (“AGI”).  An individual’s AGI is essentially the amount of gross income earned during the year, less certain adjustments. One can find the allowable reductions to your income on the front page of IRS Form 1040.

A Self-Directed IRA LLC is a type of IRA that allows the IRA holder (you) to gain control over your retirement funds so you have the ability to self-direct the type investments that you want to make using your retirement funds. With a traditional Self-Directed IRA, you as the IRA holder must direct the IRA custodian to make the investment you wish to make using your retirement funds, which often triggers high custodian fees and transaction delays. Whereas, with a Self-Directed IRA LLC with Checkbook Control you as the IRA LLC manager will have the ability to make traditional investments (stocks, mutual funds) as well as non-traditional investments (real estate, precious metals, etc) tax-free and without custodian consent.

Using a Self-Directed Roth IRA LLC presents a number of exciting tax planning opportunities. Whether you currently have a Traditional IRA or a Roth IRA, IRA Financial Trust’s in-house tax and ERISA professionals have significant experience helping clients use a Self-Directed Roth IRA LLC to maximize their tax benefits and investment returns.

Here's another article written by our own Adam Bergman which 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.

This article orignally appeared on Forbes.com -

Nearly a quarter of Americans were born between 1946 and 1964, the typical definition of the baby boom generation. That is more than 75 million people. For baby boomers, the largest generation in U.S. history before the millennials, 2017 will begin a process where hundreds of billions of retirement dollars will be required to be taken as taxable distribution under the Internal Revenue Service’s required minimum distribution (“RMD”) rules. Some estimates peg baby boomer retirement account values at close to $10 billion dollars as of 2016.

In general, the penalty under Internal Revenue Code Section 4975 generally starts out at 15% for most type of retirement plans; however, the penalty is harsher for self-directed IRAs.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS only describes the type of investments that are prohibited, which are very few.

The following are some examples of types of investments that can be made with your Self-Directed IRA LLC:

  • Residential or commercial real estate
  • Domestic or Foreign real estate
  • Raw land
  • Foreclosure property
  • Mortgages
  • Mortgage pools
  • Deeds
  • Private loans
  • Tax liens
  • Private businesses
  • Limited Liability Companies
  • Limited Liability Partnerships
  • Private placements
  • Precious metals and certain coins
  • Stocks, bonds, mutual funds
  • Foreign currencies

Using a Self-Directed IRA LLC to make investments offers the investor the ability to make traditional as well as non-traditional investments, such as real estate, in a tax-efficient manner.

Individual retirement accounts, or IRAs, exist in many forms. In general, if you have income from working for yourself or someone else, you may set up and contribute to an IRA. The major advantage of using a traditional IRA is that contributions are tax-deductible. Furthermore, IRA funds can be used for any purpose, including investing in real estate, tax liens, stock, bonds, and gold.

Alternative investments such as real estate have always been permitted in IRAs, but few people seemed to know about this option- until the last several years. This is because large financial institutions have little incentive to recommend something other than stocks, bonds or mutual funds which bring in extremely profitable commission and fees for them.

Since the creation of individual retirement accounts (“IRAs”) the Internal Revenue Service (“IRS”) has always permitted an IRA or other retirement account to purchase, hold, or flip real estate. In fact, it states it right on the IRS website. By using a Self-Directed IRA, one will gain the ability to buy real estate, such as raw land, residential or commercial property, flip homes, and much more without paying tax. One of the major advantages of flipping homes with a retirement account is that all gains are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70 1/2). In the case of a Roth IRA, all gains are tax-free.


When engaging in real estate transaction, such as a house flipping transaction, one must keep in mind the Unrelated Business Taxable Income Rules (also known as UBTI or UBIT) which can be found in Internal Revenue Code Section 512.

In 1997, Congress 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 701/2).

Yes – you may have multiple IRA accounts in your Self Directed IRA LLC. Each account would be a member of the LLC and have an interest in the LLC based on the amount contributed. Profits and losses would be allocated to the IRA accounts based on the accounts percentage interest.

Please contact one of our Self Directed IRA Experts at 800-472-1043 for more information.