THE SELF DIRECTED IRA HANDBOOK TABLE OF CONTENTS

Transcription

1 THE SELF DIRECTED IRA HANDBOOK TABLE OF CONTENTS Acknowledgments 1 What is a Self Directed IRA? Introduction to Self Directed IRAs Self Directed IRA Investment Gain Tax Treatment Table 1.1, SDIRA & IRA Identical Tax Treatment Can I Self Direct My Current Retirement Account Funds? Transferring or Rolling Over Existing Retirement Funds to a Self Directed IRA Table 1.2, Can I Transfer/Rollover to a Self Directed IRA? viii 2 2 What Types of Investments Can a Self Directed IRA Own? Self Directed IRA Investment Options Table 2.1, Self Directed IRA Investment Examples 12 3 How Does a Self Directed IRA Invest? Understanding Self Directed IRAs Steps in Making a Self Directed IRA Investment Diagram 2.1, Self Directed IRA Investment Process 20 4 The Prohibited Transaction Rule Basics What is a Prohibited Transaction? Statutory History to the Prohibited Transaction Rules Per Se Prohibited Transactions What Constitutes a Transaction? Who is a Disqualified Person to my IRA? Summary of Disqualified Persons Table 4.1, Who is a Disqualified Person? Diagram 4.1, Per Se Prohibited Transactions What Companies are Prohibited to my IRA? Table 4.2, Per Se Prohibited Transaction Cases and Opinions 28 5 Personal Extension of Credit Prohibited Transactions and Nonrecourse Loans with an IRA Personal Extension of Credit Prohibited Transactions Nonrecourse Loan Requirements 43

2 Personal Guarantee & Prohibited Transactions Table 5.1, Extension of Credit Prohibited Transaction Cases and Opinions 6 Self Dealing Prohibited Transactions Self Dealing Prohibited Transactions Explained IRA Investment in Company Where IRA Owner or Disqualified Persons Work Diagram 6.1, Finding Self Dealing Prohibited Transactions Self Dealing Prohibited Transaction Case Analysis IRA Investment Into Company Where Disqualified Persons Own/Control Less Than 50% Significant Self Dealing Prohibited Transaction Cases Table 6.1, Self Dealing Prohibited Transaction Cases and Opinions Identifying Self Dealing Prohibited Transactions 54 7 The Consequences of a Prohibited Transaction Consequences of a Prohibited Transaction Between an IRA and the IRA Owner What Taxes are Due From Distribution? Traditional IRAs & Distribution Roth IRAs & Distribution How is the 10% Penalty Applied? Diagram 7.1, Roth IRA Distributions & Taxes Following a Prohibited Transaction Accuracy Related Penalty Separate IRA or Retirement Accounts Prohibited Transaction Case Example Prohibited Transaction with The IRA Owner Table 7.1, Prohibited Transaction Consequences Prohibited Transactions Between an IRA and a Disqualified Person Other than the IRA Owner Prohibited Transaction Consequences to Qualified Plans, Such as Self Directed 401(k)s How Are Prohibited Transactions Discovered or Alleged? Statute of Limitations for Prohibited Transactions 74 8 Advanced Self Directed IRA Investment Issues Exclusive Benefit Rule Step Transaction Doctrine The Plan Asset Rule When Does the Plan Asset Rule Apply? 97

3 Table 8.1, Plan Asset Rule Exceptions DOL Interpretive Bulletin to Prohibited Transactions 9 Self Directed IRAs and Real Estate Purchasing Real Estate with an IRA Nonrecourse Loans & Real Estate Multiple Owner Title Holding Options Leasing the Real Estate & Management Structures Table 9.1, Methods to Manage Real Property Owned by a Self Directed IRA Diagram 9.1, IRA/LLC Structure for Real Estate Managing the Real Estate Table 9.2, Permissible and Prohibited Management Actions by Disqualified Persons Real Estate Development & Short Term Flipping Avoid Overextending the IRA Checklist for IRA Ownership of Real Estate Promissory Notes and Loan Investments With a Self Directed IRA Note/Loan Investments with a Self Directed IRA Promissory Note Terms & Checklist Secured Notes Note Secured by Real Estate Table 10.1, Loan Document Explanations Notes Secured by Personal Property Unsecured Notes Avoiding Prohibited Transactions in Promissory Notes Profit/Equity Participation in Promissory Notes Private Stock and Self Directed IRAs: Start ups, LPs, LLCs, Hedge Funds, Private Equity, PPMs, and Crowdfunding IRA Investment into Company where Disqualified Persons are Existing Owners Diagram 11.1, When Can an IRA Invest into a Private Company? IRA Investment into Company Where Disqualified Persons are Officers, Directors, or Employees IRA Investment into Hedge Fund or Private Offering IRA Investment into Hedge Fund or Private Offering Where a Disqualified Person is Part of Management IRA Investment into High Risk/High Return Classes of Stock, Private Equity & The 140

4 Romney/Bain Model Considerations When an IRA owns Preferred or High Risk/Return Classes of Units/Shares IRS Notice , Prohibition on Roth IRA Value Shifting IRA Investment into Crowdfunding Offerings UBIT Tax & IRA Private Company Ownership Table 11.1, Private Company Ownership Subject to UBIT Tax Checklist for IRA Investment Into Private Company Stock/Units 12 Precious Metals and IRAs What Precious Metals may be Owned by an IRA? What Coins may be Owned by an IRA? Table 12.1, Acceptable Precious Metals for IRAs Storage Rules for Precious Metals Owned by an IRA Consequences of Violation of Precious Metals IRA Rules Checklist for Purchasing Precious Metals with an IRA The IRA/LLC Structure Diagram 13.1, IRA/LLC Structure Tax Reporting for the IRA/LLC Table 13.1, Advantages of the IRA/LLC Administrative Benefits of the IRA/LLC Asset Protection Advantages of the IRA/LLC Self Directed IRA Owner may be Personally Liable for the Actions of the IRA Cases and Laws Affecting the IRA/LLC Structure The Swanson Case The Hellweg Case The Ellis Case IRA Owner or Disqualified Person as IRA/LLC Manager Extent of Services Provided by an IRA Owner as Manager Getting Money out of the IRA/LLC Nonrecourse Loans & IRA/LLCs Precious Metals & IRA/LLCs Operating the IRA/LLC Table 13.2, IRA/LLC Do s & Don ts Establishing an IRA/LLC 168

5 14 The Multimember IRA/LLC Structure Diagram 14.1, Multi Member IRA/LLC Structure Tax Reporting for a Multi Member IRA/LLC Ownership Allocation in a Multi Member IRA/LLC Getting Money into a Multi Member IRA/LLC Multi Member IRA/LLC Structuring Options IRS Field Service Advisory # IRA/LLC Structuring Option #3 Diagram 14.2, Multi Member IRA/LLC with an Individual Investor and an IRA DOL Advisory Opinion A IRA/LLC Structuring Option #4 Diagram 14.3, Multi Member IRA/LLC with an IRA and a Service/Work Partner Additional Structuring Options and Guidelines Understanding UBIT and UDFI Tax For IRAs Unrelated Business Income Tax & IRAs Table 15.1, Common Self Directed IRA Investments Subject to UBIT Tax Exemptions to UBIT Tax Table 15.2, UBIT Tax Exemptions Capital Gain on Real Estate Exemption to UBIT Tax Short Term Real Estate Flips Real Estate Development Projects Calculating & Reporting UBIT Tax Table 15.3, UBIT Tax Rate (2014) Comparing UBIT Tax to Corporate Tax Use of Blocker Corporations to Avoid UBIT and UDFI Tax Table 15.4, Blocker Corp Tax Savings Table 15.5, Corporate Tax Rates (2014) UDFI Tax Explained Calculating & Reporting UDFI Tax Strategies to Avoid UDFI Tax 401(k)s and Other Employer Plans are Exempt from Certain UDFI Tax Due Diligence for Self Directed IRA Investments Role of your Self Directed IRA Custodian SEC Notice 5866 Due Diligence Top Ten List 238