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.

Using a Self-Directed IRA to make investments is seen as a tax attractive option because the gains from the investment would generally flow back to the retirement account without being subject to tax. News that Mitt Romney had tens of millions of dollars in his IRA generated from numerous Bain Capital investments over the years has many people in the hedge fund and private equity world buzzing about the potential of using a self-directed IRA to start or fund an investment fund.

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.

In a petition filed November 17, 2016 with the U.S. District Court for the Northern District of California, the U.S. Department of Justice (DOJ) asked the court for a John Doe summons to be issued on bitcoin exchanger Coinbase Inc.

The John Doe summons would require Coinbase Inc., the largest bitcoin exchanger in the U.S., to provide the DOJ with information related to all bitcoin transactions it processed between 2013 and 2015. The DOJ would then share the information received with the Internal Revenue Service to be matched against filed tax returns. The IRS would be looking for bitcoin transactions that have the potential for successful criminal investigation and prosecution.

The terms of an independent retirement account or annuity must include several minimum distribution rules, which Congress imposed to ensure that IRAs are primarily used as retirement savings media, not as vehicles to build wealth for transmission to heirs. As discussed below, these rules provide separately for distributions to IRA owners and distributions to beneficiaries after the death of an IRA owner. An IRA owner is an individual who establishes and contributes to an IRA for the benefit of himself or herself and his or her beneficiaries.

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.”

Under Internal Revenue Code Section 408, the acquisition by an IRA or an individually-directed account under a qualified retirement plan of any collectible is treated as a distribution from the IRA or account in an amount equal to the cost to the IRA or account of the collectible (Code Sec. 408(m)(1)). A collectible is any work of art, rug or antique, metal or gem, stamp or coin, alcoholic beverage, or any other tangible personal property specified by IRS for this purpose (Code Sec. 408(m)(2)). However, the following are not considered collectibles for this purpose:

You may know you can invest in real estate with a Self-Directed IRA, also known as a Real Estate IRA LLC, but do you know the rules involving this type of investment? 

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 foreign exchange market, also known as Forex, allows someone to exchange currencies around the world. Currency trading is one of the safest investments since fluctuations in the price of currency are very small (less than one cent per day). You can open and close positions in hours or hold them for as long as you want. Trading is done electronically and the market is open 24 hours a day for five and a half days. It is also the largest market in the world, much bigger than the stock exchange.

A Self-Directed IRA gives you the ability to invest in foreign currencies at your leisure. Self-Directed IRAs from traditional financial institutions do not usually let you trade currencies. They push their products on you (typically stocks, bonds, mutual funds). However, with a Checkbook Control Self-Directed IRA from IRA Financial Trust, you are not limited in your investment options. You have the ability to use your retirement funds any way you see fit, such as Forex trading.

Assume individual Jane decides to set aside $1,000 of her pretax income for an IRA contribution. She could contribute the entire $1,000 to a traditional IRA because the deduction for the contribution would effectively eliminate any current tax on the $1,000. Since a contribution to a Roth IRA is not deductible, she could contribute to a Roth IRA only the amount remaining after paying tax on the $1,000. Assume T is, at all times, taxed at a flat 30 percent. She could therefore make a Roth IRA contribution of $700 ($1,000 less 30 percent thereof).

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

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.

Investors looking to buy real estate or other assets with a self-directed IRA can open an account for less than $100 with IRA Financial Trust

IRA Financial Trust Company, the market’s prominent self-directed IRA custodian for checkbook IRA and full service IRA custodian accounts, announces a special promotion through December 31, 2016 for new self-directed IRA accounts. “We are excited to offer investors the ability to open a new self-directed IRA account with IRA Financial Trust for just $90 through the end of 2016,” stated Adam Bergman, President of the IRA Financial Trust Company.

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.

With a Self-Directed IRA with checkbook control, flipping homes or engaging in a real estate transaction is as simple as writing a check. As manager of your Self-Directed IRA LLC, you will have the authority to make real estate investment decisions on behalf of your IRA on your own without needing the consent of an IRA custodian. One of the true advantages of a checkbook control IRA is that when you want to purchase a home with your self-directed IRA, you can make the purchase, pay for the improvements, and even sell or flip the property on your own without involving the IRA custodian.  And the best part is that all gains generated from the house flipping transaction will flow back to the IRA LLC tax-free!

A Simplified Employee Pension or SEP is established by adopting a SEP agreement and having eligible employees establish SEP-IRAs. There are three basic steps in setting up a SEP, all of which must be satisfied.

2017 Self-Directed IRA Contribution Limits

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.

Individuals may generally transfer Roth IRA or rollover eligible qualified retirement plan assets into a self-directed Roth IRA LLC structure. Individuals may not rollover Roth IRA funds into a qualified retirement plan, such as a Solo 401(k) Plan or a pre-tax IRA account, such as a Traditional IRA or SEP IRA.

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

Transfers and rollovers are types of transactions that allow movements of assets between like IRAs – Roth IRA to Roth IRA. Note – only after-tax funds can be rolled into a Roth IRA. No pre-tax retirement funds are eligible to be rolled into a Roth IRA.

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, including raw land.

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.

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.

No, you do need IRA Financial Trust's permission to invest with our 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.

In general, a self-directed IRA LLC may be funded by a transfer from another IRA account or through a rollover from an eligible defined contribution plans, defined benefit plans 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.

The Self-Directed IRA Structure has been in use for some 35 years, however, the concept of using an entity owned by an IRA to make an investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in ruling against the IRS, held 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. The Swanson Case was later affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011. In FSA 200128011, the IRS, in providing guidance to IRS agents for purposes of conducting audits, confirmed the Tax Court’s holding in Swanson and held 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. In October 2013, the Tax Court in T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M) held that establishing a special purpose limited liability company (“LLC”) to make an investment did not trigger a prohibited transaction, as a newly established LLC cannot be deemed a disqualified person pursuant to Internal Revenue Code Section 4975. The impact of the impact of this ruling is enormous because it directly supports the position that a retirement account can fund a newly established LLC without triggering a prohibited transaction. The Ellis case is decisive because it will silence anyone who claims that using a special purpose LLC to make IRA investments would trigger a prohibited transaction.

When it comes to making IRA investments the IRS does not state which transactions are allowed, but only states what types of transactions are prohibited. The IRA prohibited transaction rules are outlined in Internal Revenue Code Sections 408 & 4975 and generally involve the prohibition against using IRA funds to buy life insurance, collectibles, or enter into any transaction with a “disqualified person”. As per the Internal Revenue Code, a “disqualified person” is generally defined as the IRA holder and any of his or her lineal descendants or any entity controlled by such person(s).

In general, the type of transactions that could fall under the prohibited transaction rules pursuant to Internal Revenue Code Section 4975 can be viewed in the context of three categories:

Most people mistakenly believe that their 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 IRA 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.”

Distributions from Self-Directed Roth IRAs are not required to begin at any particular time, and there are no limitations on death benefits. Distributions from a traditional IRA, in contrast, must begin by April 1 following the year in which the owner reaches age 70 1/2 or (if later) retires and must generally be made in ways that will exhaust the account during the lifetimes or over life expectancies of the owner and his or her spouse. In other words, while congressional policy is that traditional IRAs be for retirement savings only, Congress acquiesces in the use of Roth IRAs for accumulating wealth to be transmitted at death.

The IRA Financial Trust Company will take care of setting up your entire Self Directed IRA LLC structure 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 maximum contribution limit for a self-directed IRA for 2016 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.

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.

A Self-Directed IRA LLC is a retirement vehicle used to make investments other than the usual stocks, bonds and mutual funds.  Making an investment through a Self-Directed IRA LLC can be done in a few easy steps:

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:

When it comes to making investments with a self-directed Roth IRA LLC, the IRS generally does not tell you what you can invest in, only what you cannot invest in.  The types of investments that are not permitted to be made using retirement funds is outlined in Internal Revenue Code Section 408 and 4975.  These rules are generally known as the “Prohibited Transaction” rules.

Internal Revenue Code Sections 4975 & 408 prohibit fiduciary and other Disqualified Persons from engaging in certain types of “prohibited transactions”. “Prohibited transactions” are any direct or indirect:

Do you live in or around the Dallas-Forth Worth area?  Are you looking to invest in real estate?  Did you know you can use your retirement funds to invest in almost anything, including real estate, tax free?  If you currently have a retirement plan at a traditional financial institution, you may not know this.  That’s because they want to push the investments they’re familiar with, such as stocks, bonds and mutual funds.  With an IRA Financial Trust Self-Directed IRA LLC, you can invest in almost anything without the consent of your custodian.  Further, with checkbook control, you can make an investment by simply writing a check.  Now is the time to invest in the Dallas-Fort Worth area.  In a recent client survey, Dallas-Fort-Worth was ranked #1 for real estate investments.  Continue reading to see how to use your IRA funds to invest.

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.

No. A “prohibited transaction” is a transaction that, directly or indirectly involves loan of money or other extension of credit between a plan and a disqualified person. Normally, when an individual purchases real estate with a mortgage, the traditional loan provides for recourse against the borrower (i.e., personal liability for the mortgage). However, if the IRA purchases real estate and secures a mortgage for the purchase, the loan must be non-recourse; otherwise there will be a prohibited transaction.

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

IRA Financial Trust Company, a self-directed IRA custodian, will begin offering self-directed HSA & Coverdale accounts beginning in August 2016

IRA Financial Trust – a self-directed IRA custodian – is proud to announce that beginning in August 2016, it will begin offering self-directed Health Savings Accounts and Coverdale Education Savings Accounts to its clients. IRA Financial Trust clients will have the opportunity to hold their retirement funds held at Northern Trust, one of the most respected banks in the world, offering our self-directed HSA and Coverdale clients with a safe and secure way to make alternative asset investments, such as real estate, precious metals, tax liens, and much more though a self-directed IRA or solo 401(k) plan.

In general, to avoid being penalized for delaying distributions, you must comply with what are called the required distribution rules. Those rules require that you take a minimum amount from your Self-Directed IRA each year, beginning in the year you retire if you turn 70 and 1/2 or, under certain circumstances, in the year you retire. In general, you may withdraw everything by your required beginning date, or RBD, which for most people is April 1 of the year after turning 70 and 1/2. Alternatively, you may distribute your retirement plan money over a period of years. Most people will use the Uniform Lifetime Table to determine the number of years over which they may spread distributions. If your spouse is your beneficiary and is more than ten years younger than you are, you will be required to use a different and more favorable table called the Joint Life and Last Survivor Table.

Note: A Roth IRA holder is not required to take minimum distributions like an owner of a traditional IRA.

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

When a tax-exempt organization like an IRA or charity borrows money for a transaction on a nonrecourse basis, the IRA or charity must complete IRS Form 990-T and Schedule E and report the income, as the income is likely subject to tax. In general, a tax-exempt organization like a charity or IRA is permitted to borrow funds on a nonrecourse basis (a loan that is not personally guaranteed by the borrower), however, a prorate percentage of the income or gains associated with the nonrecourse loan will be considered “unrelated debt financed income” which will likely trigger the “unrelated business taxable income” tax. Note: A recourse loan, a loan that the IRA holder will be required to personally guarantee is not a permitted transaction and is treated as a prohibited transaction pursuant to Internal Revenue Code Section 4975 as the loan would require the IRA holder to personally guarantee the obligation of the IRA.

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 800-472-0646 for more information.

The Department of Labor (“DOL”) Plan Asset Rules were generally enacted to limit an investment fund participant from using his retirement funds to transact with the investment fund or its assets. The Plan Asset Rules set forth the circumstances that can cause assets owned by an entity to be deemed to be assets of an ERISA qualified plan (i.e. 401(k) Plan) or an IRA unless an exemption applies.  Under the Plan Assets Rules, if an IRA Plan owns greater than 25% of an investment entity that is neither a “publicly-offered security” nor a mutual fund, the equity interests and assets of the “investment company” will be deemed assets of the IRA. This is sometimes referred to as the “Look- Through Rule”. Under the “Look-Through Rules, if a retirement plan owns 25% or more of any class of equity interests in an “investment company”, the Plan Asset Rules state that the assets of the entire “investment company” are deemed to be assets of the IRA.  In other words, if your IRA owns 25% or more of the membership interests of a LLC engaged in passive investments (i.e. private equity fund, hedge fund, or real estate fund), the assets of the LLC are deemed to be assets of the IRA. If the Plan Asset Rules cause the assets of an “investment company” to be deemed to be assets of the IRA, any transaction involving the “investment company” and a disqualified person will be a prohibited transaction. 

The advantage of contributing to a self-directed Roth IRA is that income and gains generated by the Roth IRA investment can be tax-free and penalty-free so long as certain requirements are satisfied. Unlike with a traditional self-directed IRA, contributions to a self-directed Roth IRA are not tax deductible.

Unlike the self-directed Traditional IRA, there is no 70 1/2 age limit on making contributions. Individuals of any age with compensation are eligible to contribute to a self-directed Roth IRA. The total amount you may contribute to a self-directed Roth IRA for 2016 cannot exceed the lesser of $5,500 ($6500 if over the age of 50) or 100% of compensation ($11,000 for married couples - $13,000 if over the age of 50).

If you maintain a Traditional self-directed IRA, the maximum contribution to your self-directed Roth IRA is reduced by any contributions made to your Traditional self-directed IRAs.

Individual retirement accounts are designed to help people set money aside to increase financial security later in life, but IRA owners don't always live long enough to use all of their savings. If an IRA owner passes away before withdrawing all of the funds from the account, the remaining assets pass on to the account's beneficiary. IRA beneficiaries have a few different options when it comes to taking cash from an inherited account.

In general, most Americans have an enormous amount of financial exposure to the financial markets. Whether it is through retirement investments such as IRAs or 401(k) plans, or personal savings, many of us have most of our savings connected in some way to the stock market. In fact, over 90 percent of retirement assets are invested in the financial markets. With what is believed to be approximately $25 trillion in retirement assets as of 2014, you can see the scope of that exposure. Investing in nontraditional assets such as real estate offers a form of investment diversification from the equity markets.

In general, the more diversified your portfolio, the greater the chance that your assets will offer lower correlation, meaning they are less likely to move in the same direction. However, diversification does not assure profit or protect against loss. The use of nontraditional asset classes can help protect your portfolio when the market is down and help protect you from losing more than the market.

A Self-Directed Roth 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 tax-free! The IRS only describes the type of investments that are prohibited, which are very few.

To permit tax-free transfers of retirement savings from one type of investment to another, as well as to increase the portability of qualified plan rights for employees moving from one job to another, Congress included a complicated web of rollover provisions in ERISA. These provisions cover transfers from one IRA to another, transfers from qualified pension, profit-sharing, stock bonus, and annuity plans to IRAs, and transfers from IRAs to qualified plans. An IRA may also, under limited circumstances, make a rollover distribution to a health savings account (HSA). In other words, if you receive a distribution from a qualified plan, you might decide to put some or all of the distribution amount into an IRA. The IRA that receives the qualified plan distribution is called a rollover IRA.

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.

Individuals may generally transfer IRA or rollover eligible qualified retirement plan assets into a self-directed IRA LLC structure. Individuals may also roll over after-tax retirement funds to a Self-Directed SIMPLE IRA.

Average self-directed IRA client with IRA Financial Trust pays less than 0.10% in annual IRA custodian fees

IRA Financial Trust Company, the market’s prominent self-directed IRA custodian for checkbook IRA and full service IRA custodian accounts announces the findings of an internal report which showed that the average self-directed IRA client pays account fees of less than 0.10% of their IRA account value. With checkbook IRA annual account fees of $180 flat per year and with the average client having around $200,000 in IRA funds, IRA Financial Trust’s self-directed IRA clients are paying less than 0.10% in account value fees.

The Self-Directed IRA Structure has been in use for some 35 years, however, the concept of using an entity owned by an IRA to make an investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in ruling against the IRS, held 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. The Swanson Case was later affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011. In FSA 200128011, the IRS, in providing guidance to IRS agents for purposes of conducting audits, confirmed the Tax Court’s holding in Swanson and held 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. In October 2013, the Tax Court in T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M) held that establishing a special purpose limited liability company (“LLC”) to make an investment did not trigger a prohibited transaction, as a newly established LLC cannot be deemed a disqualified person pursuant to Internal Revenue Code Section 4975. The impact of the impact of this ruling is enormous because it directly supports the position that a retirement account can fund a newly established LLC without triggering a prohibited transaction. The Ellis case is decisive because it will silence anyone who claims that using a special purpose LLC to make IRA investments would trigger a prohibited transaction.

Yes. The mortgage would need to be a non-recourse type of loan. With a nonrecourse loan, if your IRA fails to make the payments, the only recourse the lender has is the property itself. Also, note that if your IRA obtains a loan, unrelated debt financing income tax (UDFI) will apply, which will subject the portion of the income or gains that are debt financed to Unrelated Business Taxable Income (UBTI).

IRA Financial Trust has developed a business relationship with Northern Trust Company to serve as the banking custodian for all its Self-Directed IRA client accounts.  IRA Financial Trust clients will benefit from the experience and security of knowing that all rollover and IRA contributions made to a Self-Directed IRA account with IRA Financial Trust will be held at Northern Trust Company before the client then directs them for investment.

IRA Financial Trust is a non banking IRA Trust Company that is responsible for administering your Self-Directed IRA account.  IRA Financial Trust’s client’s IRA assets will be held with Northern Trust, providing it with FDIC protection up to $250,000.

Northern Trust first opened its doors for business in 1889. Northern Trust (Nasdaq:NTRS) is a global leader in delivering innovative investment management, asset and fund administration, fiduciary and banking solutions to corporations, institutions and affluent individuals. For over 125 years, the bank has evolved with the changing needs of their clients and our world.

Individuals may generally transfer Roth IRA or rollover eligible qualified retirement plan assets into a self-directed Roth IRA LLC structure. Individuals may not rollover Roth IRA funds into a qualified retirement plan, such as a Solo 401(k) Plan or a pre-tax IRA account, such as a Traditional IRA or SEP IRA.

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. One significant reason why retirement account investors will generally not borrow money (also called debt or leverage) as part of an investment of real estate acquisition is the Internal Revenue Code Section 4975 prohibits the IRA holder (you) from personally guaranteeing a loan made to the IRA. Pursuant to Internal Revenue Code Section 4975(c)(1)(B), a disqualified person (i.e. the IRA holder) cannot lend money or use any other extension of credit with respect to an IRA. In other words, the IRA holder cannot personally guarantee a loan made to his or her IRA.

The tax advantage of an IRA is that income is tax-free until distributed. In general, an exempt organization is not taxed on its income from an activity that is substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Such income is exempt even if the activity is a trade or business. However, to prevent tax-exempt entities from competing unfairly with taxable entities, tax-exempt entities are subject to unrelated business taxable income (UBTI) when their income is derived from any trade or business that is unrelated to its tax-exempt status.

A Self-Directed Roth 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 Roth 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 Roth 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 Roth IRA holder, any ancestors or lineal descendants of the Roth IRA holder, and entities in which the Roth IRA holder holds a controlling equity or management interest.

The maximum contribution limit for a self-directed IRA for 2016 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.

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

1. Set up a Self-Directed IRA LLC

With IRA Financial Trust, you no longer have to spend $2,000 to $5,000 or more to set up your Self-Directed 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 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 IRA LLC Structure
  • Expedited Service Guarantee!
  • Satisfaction Guaranteed!

An IRA trustee, also called a custodian, is the institution that administers your plan. By law, every qualified retirement plan must have a custodian or trustee. A trustee may be a bank, credit union or a large brokerage firm that is licensed by the IRS. IRS regulations require that either a qualified trustee or custodian hold the IRA assets on behalf of the IRA owner. A Self-Directed IRA custodian, also called a passive custodian, allows IRA holders to engage in non-traditional investments (i.e. real estate), but generally does not offer investment advice.

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.

A SEP is a simplified employee pension plan. Any employer can establish a SEP. An employer can maintain both a SEP and another plan. Annual contributions an employer makes to an employee's SEP-IRA cannot exceed the lesser of (i) 25% of compensation, or $53,000 for 2016. However, special rules apply when figuring out the maximum deductible contribution for a self-employed individual (typically 20% of compensation).

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.

A taxpayer's contributions to Roth IRAs during any year may not exceed a dollar ceiling (or, if less, the taxpayer's compensation income), reduced by deductible contributions for the year to traditional IRAs. For years after 2012, the dollar ceiling will be $5,500. For years after 2002, the ceiling is raised by $1,000 for individuals who are at least 50 years old at year-end.

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 Trust Company has designed a special Checkbook Control Self-Directed IRA LLC program designed specifically for hard money lenders.

It’s a little-known fact that Real Estate can be purchased with retirement account funds. When using a Self-Directed IRA LLC for investments in real estate, your profits are tax-deferred back into your retirement account. More important, if you have full checkbook control over your Self-Directed IRA LLC, the purchases can be made on the spot as fast as you can write a check. In the case of a Self-Directed Roth IRA LLC, your gains are tax-free and you can take personal ownership of the property tax-free at the age of 59 1/2.

Once an IRA account owner dies, his or her IRA will be passed on to the beneficiary.  Typically, this will be a spouse or child, but can be anyone the account owner has named.  If there is no beneficiary, then the account will usually go through probate.  Contributions, in addition to taxes, will depend on who the beneficiary is.

The Substantial Equal Period Payments (SEPP) provide an exception to the early distribution tax. Under the Substantial Equal Periodic Payments method, you do not have to pay the early distribution tax on money that you take out of your plan in regular payments over either your life expectancy or the joint life expectancy of you and your beneficiary even if you are younger than 59 and 1/2.

The following are some basic rules about the exception:

  • There are no age restrictions.
  • The payments must be substantially equal, which means you cannot alter the payments each year.
  • You must compute the payments as though you intend to distribute the retirement plan over your entire life or over the joint life of you and your spouse.
  • You may not discontinue payments or alter the computation method for at least 5 years and if you have not reached age 59 and 1/2 at the end of the 5 year period, you must wait until you reach that age before making a change.

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

In general, most passive investments that your Self-Directed IRA LLC might invest in are exempt from UBTI. Some examples of exempt type of income include: interest from loans, dividends, annuities, royalties, most rentals from real estate, and gains/losses from the sale of real estate.

When an exempt organization such as an IRA undertakes any development activities in connection with selling real estate, beyond passively placing the property for sale either directly or through a broker, the issue arises under Internal Revenue code 512(b)(5)(A) whether the real estate is “property held primarily for sale to customers on the ordinary course of the trade or business.” An organization that engages in the sale of property to customers in the ordinary course of the trade or business is characterized as acting as a “dealer.”

If you fund an IRA and are in the envious position of not needing it for your own retirement, you can pass it on to your loved ones.  They can then use it for whatever reason, including their own retirement.  This is what's known as a Stretch IRA where the account is "stretched out" for multiple generations.  There are several key factors to consider when setting up this wonderful gift.

First and foremost you need to speak with your loved ones about your intentions.  You don't want them inheriting your hard earned IRA and have them cash it out right away.  They end up paying all the taxes while losing out on years of tax-deferred savings.  Make your intentions fully known and explain how the IRA works and the benefits of it.

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!

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.

IRA Financial Trust Company is one of the few IRA custodians in the country that specializes in establishing Self-Directed IRA with Checkbook Control accounts.

IRA Financial Trust Company was founded by tax attorneys who worked at some of the largest law form 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.

A Self-Directed IRA 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.