Finally! my IRA custodian approved Sale today!!!

Is this your first deal through your IRA? I have been wanting to set this up for awhile. How did you pick the IRA custodian?

Also, a great property and a win-win for the buyers.

this is great how you've put your self-directed IRA to work for you!
I recently 'borrowed' from my 401K to purchase (part of) a property too; it's different than the self-directed, but I think it's great that we can access those funds and invest them in real estate.

You'll have to tell us all the details at the Edge! lots of great stories to share over Margaritas!

Congrats!

Judi, this is actually my second deal with the self directed IRA. The first one we flipped to another investor. My wife is in the finance business and she researched a lot of companies based on response time and annual/set up fees. This is one thing about IRA custodian that sometimes you have to call them many times to get things done. Seek professional advise as you need to be aware of UBIT (Unrelated Business Income Tax) when dealing with self directed IRAs. This is one drawback for Roth IRAs, but if you understand the rules and how UBIT would apply then you should be in good shape. Thanks again for your message.

Thank you!

Great deal you are using your 401K to fund your deals! I understand 401Ks are less restricted than Roth IRAs. We are so excited about the edge that I am counting days. I really enjoy that place, the weather, the people and the hotel! See you soon there!

You are awesome and show us over and over how it works!
Thank you!

I don't have an IRA (yeah, dumb I know, especially at my age)... but my daughter does and she is ready to self direct!

Go do it!

-Tina

The nice things about Roth IRAs and Roth 401Ks is that you could find people with money in their retirement accounts and loan money from them, and you can pay them a higher interest rate that the regular market would pay. Valerie is doing very similar but she is lending to herself through Roth 401K. We are trying to get our 3 year old son contributions to his IRA so similar investments are done through real estate. It's fun!

Hi guys,

One thing I just heard, but haven't looked into for family / trust/ will type issues is setting up your private LLC as a FLC (I think it's called), a FAMILY LIMITED CORP. The idea is if something happens to us (the parents) there is no probate, no issues; the "RE Business" or any business I suppose is owned by the family and remaining family members simple step in.

Maybe you have or have heard of this. Something I and definitely looking into. I'll tell my daughter about the Roth IRA for her babies, too.

Thank you for sharing!

-Tina

Tina,

We can discuss this further at the Edge. I actually specialize in advanced planning for very wealthy clients. Family LLC's are one vehicle we use to pass wealth from one generation to the next, incuding family businesses (oil & gas, real estate, etc.). Depending on the situation, oftentimes, my clients (husband and wife) set themselves up as general partners with a 2% interest in the family LLC while the children own the other shares as a limited partner. As a limited partner, they are unable to sell the shares, use them for collateral, nada...nothing. Therefore, the IRS allows them to discount the amount of assets for estate tax purposes since the assets are non-transferrable and have no value while the general partners are alive. There are other vehicles and trusts that can be used to actually freeze an estate so that all of the growth is held outside of the estate so it will not be taxed for estate tax purposes!

With the $5MM exemption and $5MM lifetime gift limits, we are able to pass on major wealth to the next generation while maintaining full control of the assets! But, this time will run out at the end of the year. The Bush Tax Cuts were supposed to expire in 2010; if no further action is taken by Congress, the exemption amount will go back to $1MM and the death tax will be at 55%. Therefore, if you have any means of wealth, you need to set it up to be protected by the end of the year, if possible! It doesnt matter which political party you are affiliated with but everyone knows tax rates are going up. Wealth transfer tax (or death tax) is one of the most profitable taxes for the IRS.

I have probably given you too much information...we can talk more at the Edge. I'll tell you the story about how the $5MM exemption and gift limit came about from Obama's Russion Arms Treaty he wanted to pass...and shed some light on where we think Congress is heading for 2013 based on the 2010 negotiations! Or some stories about a few clients who have 10 wives (and husbands) picked out by the end of the year just to pass on their estate down to their kids! I am a little passionate about this subject, if you couldn't tell!

Also, to answer your question: you still need a trust (depending on the size of yoru estate), even if you have an LLC. The LLC needs to be owned by your personal trust so it won't go through probate. Different states may be different, so you would need to consult a local attorney. I can provide some general concepts for you to discuss with your local legal advisor; just make sure that he/she is a specialist in advanced planning. You do not want your general doctor/practicioner doing your brain surgery! I keep a team of professionals on hand to draw experience and legal docs, etc, when needed.

As for your grandbabies - as long as they have earned income, they can contribute to a roth account, ie. money earned from beauty pagents, mowing lawns, etc. We pay our son for using his pictures in our advertising. This way it is creating a tax deduction for our business and providing him earned income to contribute to a roth!

I hope this helps and not too much info. Take care and see you in a week!

*This is not meant to be tax or legal advice.

Awesome deal guys. I am sure you made the family that needed that house very happy also.

Keep up the great work. You guys are really rolling now.

Steve.

Thanks for stopping by! Yes family is very happy. Thanks again for your messages!

Look forward to seeing you guys soon.

Thinking outside the box was somethings Matt and Dean always spoke off. Like they say "there are many ways to skin a cat." Well done guys.

Sandra

The subject is something I know next to nothing about, evidenced by my 50 some year old status with not much planned. If we were only taught [in school] that financial planning should be something we all need to do, and that it should be done as matter of factly as going to the dentist, the country would be in a much better place.

Thank you and I will read this through, so I can speak to your expertise at the Edge.

Thank you for your time!

-Tina

I have been borrowing from myself similar to Val from my work 401K, but I am trying to set up a self directed IRA, can you address Roth vs pretax, does this make any difference, I assume the answer would be yes.

Judi

Feel free to private message me or talk more at the Edge. I'll do what ever I can to help.

5 more days!

Judi,

Yes, before/after tax makes a HUGE difference! Everyone is going to be different in what they need; however, since your a Dean student, I know you are going to be successful. I am unable to provide specific advice not knowing anything about you. So, here's the deal:

Pre-tax (Traditional IRA): tax a tax deduction now ($ has never been taxed), pull the money out and pay taxes on all of it, including the gains.

After-tax (Roth IRA): contribute money that has already been taxed, all earnings are tax-free after meeting certain criteria (59 1/2, 5 years, etc.).

In general: My wealthiest clients do not use their Traditional IRA's in retirement [until they have to @ 70 1/2] because 1) they don't need the money, 2) they do not want to pay any more taxes!!! Depending on age, income, other money, goals, etc., several people have been doing Roth Conversions since the income restriction has been removed in 2010.

Let me know if you have any further questions. If you need a recommendation on a Self-Directed IRA company, let me know.

Jeri
Thanks, this answered my question.

Judi