Self-Direct Your Retirement with Real Estate!

Transcription

1 Self-Direct Your Retirement with Real Estate! Brought to you by: Presented By: Michael McNair Trust Officer IRA Services Trust Company Silicon Valley REIG Webinar Tuesday, March 5, 2013

2 DISCLAIMER This presentation is for general information only and does not represent tax, legal or investment advice and may not be relied on as such. Self-Directed Accounts and the selection of investments and performance therein are the sole responsibility of the investor and not IRA Services Trust Company. IRA Services Trust Company does not perform due diligence on any investment selected by an investor in their Self-Directed Account. IRA Services Trust Company strongly recommends that the investor seek professional advice from appropriate legal, accounting and/or tax advisors of their own choosing. Our attendance at this event is solely for the purpose of describing how a Self-Directed Account may be utilized to make investments in both traditional and alternative assets.

3 BEST QUESTION WINS! The participant who submits the best question by the end of this webinar wins this FREE book!!

4 THE IRA MARKET IRA accounts ($6 Trillion) 96% in standard IRAs 4% in self-directed IRAs Employer Sponsored Plans 401k, Profit Sharing, Defined Benefit Plan Government Employees 457 Public School Teachers 403b

5 WHAT IS A SELF-DIRECTED IRA? The term "Self-Directed" does not refer to a type of IRA, but rather, it describes who is responsible. Self-Directed IRAs have opened the door for investors to truly take charge of their own retirement. Investor makes the ultimate investment choices and decisions regarding the IRA. Allows for true portfolio diversification by allowing a much greater range of investment opportunities. Standard IRA Qualified Retirement Plan Self-Directed IRA Alternative Investments!

6 ALTERNATIVE INVESTMENTS Real Estate Promissory Notes Secured & Unsecured Tax Liens REITs (Real Estate Investment Trusts) LLCs, LPs and private companies Precious Metals Foreign Currency and Futures Hedge Funds and more Can t invest in collectibles, life insurance, S-corps

7 CHOOSING A CUSTODIAN Experience How long they have been in business? Are they regulated and, if so, by whom? Are they a member of any industry associations? Diversification Confirm that they will accept the asset in which you have chosen to invest. Fee Schedule Determine how much you are going to pay to establish and maintain the account based on the asset(s) you have chosen and the amount you are going to invest. Service Determine where are they located and their hours of operation Determine if you can view your account activity through their website.

8 CUSTODIAN S RESPONSIBILITIES Assisting in opening & funding your account Making the investment(s) on your behalf Providing custody of the assets Making distributions & paying expenses per your request Providing quarterly statements Explaining IRS regulations, and answering questions about your account and our policies Reporting specific information to the IRS 1099R Distributions from your IRA 5498 Contributions, Rollovers and Fair Market Value

9 A CUSTODIAN DOES NOT Give investment advice Give legal advice Give tax advice

10 YOUR RESPONSIBILITIES Choosing the investment(s) Performing due diligence on the investment company Understanding the risks you are taking before making your investment(s) Monitoring the performance of your investment(s) Knowing whether your investment is liquid and how to liquidate Understanding Prohibited Transaction rules and avoiding them Providing annual valuations to your custodian for all assets Understanding their fees and minimum balance requirements

11 REAL ESTATE INVESTMENTS Real Estate Asset Types Residential property Rental or fix & flip Commercial property Mobile or Manufactured homes Vacant Land Tax liens Notes secured by deed of trust

12 CHECKBOOK CONTROL For checkbook control of your retirement money: IRA LLC IRA Trust Standard IRA IRA LLC Qualified Retirement Plan Self-Directed IRA OR IRA Trust Investments!

13 PROHIBITED TRANSACTIONS Transactions between the IRA and a disqualified person Transactions between the IRA and an entity for which the IRA holder or disqualified person has controlling interest Any transaction whose primary purpose is to benefit a disqualified person See IRS Publication 590 or IRC Section 4975 for more information!

14 DISQUALIFIED PERSONS yourself any lineal ascendants (i.e. parents, grandparents, etc) any lineal descendants (i.e. children, grandchildren, etc.) spouse, spouse s ascendants, descendants any entity for which a disqualified person has over 50% ownership

15 EXAMPLES OF PROHIBITED REAL ESTATE TRANSACTIONS You can t personally use, improve or occupy property bought with your IRA You can t rent property, bought with your IRA, to your kids or parents, but you can rent it to a sibling You can t pay any expenses (property taxes, repair bills, etc.) using personal (non-ira) money You can t personally guarantee a loan to your IRA

16 PENALTIES The penalty for participating in a prohibited transaction : A FULL (TAXABLE) DISTRIBUTION OF THE IRA & SUBSEQUENT PENALTIES

17 HOW TO GET STARTED 1.) Identify your source of funds IRA with another custodian Liquidate your securities Qualified retirement plan 401k, 403b, 457, profit sharing plan, etc. Contributions (SEP IRA?) Pool your resources with other investors Borrow from a bank or private lender Non-recourse loan Unrelated Business Income Tax

18 2.) Open your account Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA 3.) Fund the account HOW TO GET STARTED Custodian-to-custodian transfer (non-taxable) Rollover from a qualified retirement plan (non-taxable if rolled over in 60 days) Contribution Traditional & Roth: $5,500 + $1,000 (age 50+) SEP: $51,000 (25% of before tax earnings) SIMPLE: $12,000 + $2,500 (age 50+) 4.) Make the investment Give us your investment instructions & supporting agreements

19 Thank You! Questions? It s Time To Think Differently About Growing Your Retirement Money!

20 AND THE BEST QUESTION AWARD GOES TO Congratulations! You just won this book!!