What type of retirement accounts can I move into a Self Directed IRA LLC?
Any retirement account that allows a transfer to a traditional or Roth IRA including 401k plans, a traditional IRA, a Roth IRA , and a Simplified Employee Pension plan, or SEP-IRA.
Is this a new law?
No. It has been allowed for many years. Few people seemed to know about this option - or even care - until the stock market began to decline. Financial institutions, meanwhile, had little incentive to recommend something other than stocks, bonds or mutual funds, since these provided a source for their fees. You can also see Section 408 of the Internal Revenue Code.
How do I know this is legal?
Discuss this strategy with your tax advisor. If he is unfamiliar with it have him contact Entrust Arizona or consult resources such as The Journal of Taxation, the Journal of New York CPA's and Trust and Estates magazine and other resources used by tax attorneys and CPAs.
Can my LLC purchase real estate I already own?
No, not without filing for an exemption. Property that you or a disqualified person has ever owned is not eligible to be purchased by your LLC since this would be a prohibited transaction.
Can I co-invest with the IRA of my spouse or other investors?
Yes, both IRAs can be owners of the LLC, in fact so can other individuals and entities as long as the other owners are not disqualified persons. This is very useful for large investments.
Can I buy vacation property?
Yes, but you can not personally use it. Neither you nor any other disqualified person can have any personal use or benefit of the property while it is held in your retirement account. The property must be purchased for investment purposes only. However upon reaching retirement age you could take the property as a distribution.
Can my LLC make loans with its funds?
Yes, you can make loans to any person or entity that does not violate the “related party” rules.
We have clients in need of short term real estate loans that typically earn 15% to 18% plus fees.
Can my LLC invest outside the country?
Yes, there are a lot of investment opportunities outside the country that are now available to you including international real estate.
Can I still invest in stocks and bonds?
Yes, you can invest in anything that is not a prohibited transaction.
Must I have a custodian for my IRA?
Absolutely, all IRAs are required to be held by a custodian approved by the IRS. Only a few of these allow truly self-directed IRAs. We work closely with Entrust Arizona.
Will my custodian assist me in setting up an IRA LLC?
No, they will not. We have an excellent team of tax, entity and real estate attorneys that can assist you in establishing an LLC.
How much time does it take to implement this strategy?
We can have your IRA earning 8% to 12% in three to six weeks. It really depends upon how long it takes your current IRA holder to transfer your funds to your new custodian. Some are fast some are slow. The entire process should take three to six weeks.
Can my LLC borrow funds to finance a real estate purchase?
Yes, but only with the use of a non-recourse promissory note issued by a lending institution or by the seller of the property. We have a list of institutions that fund non-recourse notes. The non-recourse promissory note cannot be personally guaranteed, and the lending institution can only look to the property securing the note as collateral. Important: Debt-financed property may generate Unrelated Business IncomeTax (“UBIT”), and any taxes due must be paid by the account. For more information regarding UBIT, please consult your tax advisor.
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