Mar 31

Are All Solo 401k Plans the Same?

When it comes to determining what type of 401(k) qualified retirement plan is best for a self-employed individual or small business owner with no employees, it is important to look at all the options the plan provides to make sure it will satisfy your retirement planning, tax, and investment goals.

Most financial institutions offer Solo 401K Plans, often called individual 401K Plans. However, if you do not want to be forced to invest all your hard earn retirement savings in the stock market, then these type of financial institution Solo 401(k) Plans are not very attractive. In addition, most financial institution Solo 401(k) Plans will not offer a loan feature or allow you to make Roth Type contributions.

IRA Financial Group’s Solo 401K plan is unique and so popular because it is designed explicitly for small, owner-only business.  There are many features of the IRA Financial Group’s Solo 401K plan that make it so appealing for small business owners.

High Contributions: Like all Solo 401K Plans, for 2014, IRA Financial Group’s Solo 401(k) Plan will allow a plan participant to make annual contributions up to $52,000 annually with an additional $5,500 catch-up contribution for those over age 50. The high contribution feature is one of the reasons a Solo 401K Plan is the most popular retirement vehicle for the self-employed.

 

Calculate Your Solo 401k Plan Maximum Contribution Limit Please click here to calculate your Solo 401(k) Plan Maximum Contribution Limit.

 

Tax and Penalty free loan: Unlike most Solo 401K Plans offered by the traditional financial institutions such as Fidelity, IRA Financial Group’s Solo 401K Plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, or anything else. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate).

It's Time To Let 401(k) Holders Invest Like the Pros Checkbook Control: The most attractive feature of the IRA Financial Group Solo 401k Plan is that it offers the plan participant checkbook control over his or her retirement funds. In the case of a conventional Solo 401K Plan offered by most financial institutions, the plan participant is relegated to making traditional investments such as stocks and or mutual funds. In addition, the Solo 401KPlan account is required to be opened at the financial institution. With IRA Financial Group’s Solo 401K Plan, the plan account can be opened at any local bank, including Chase, Wells Fargo, and even Fidelity. In addition, with IRA Financial Group’s Solo 401K Plan, the plan participant can make almost any traditional as well as non-traditional investments, such as real estate, precious metals, tax liens, and much more. With IRA Financial Group’s Solo 401K Plan, the Plan participant has the freedom to make the investments he or she wants while at the same time opening the 401K account at any local bank. As trustee of the Solo 401K Plan, the Plan Participant (you) can serve as the trustee providing you checkbook control over your retirement funds. With IRA Financial Group’s Solo 401K Plan, making a Solo 401K Plan investment is as simple as writing a check.

Roth Contributions & Conversion: Unlike a conventional Solo 401K Plan offered by most financial institutions, IRA Financial Group’s Solo 401K Plan contains a built in Roth sub-account which can be contributed to without any income restrictions. In addition, the IRA Financial Group’s Solo 401K Plan allows for the conversion of a traditional 401(k) or 403(b) account to a Roth subaccount. However, the Solo 401K Plan participant must pay income tax on the amount converted.

Offset the Cost of Your Plan with a Tax Deduction: By paying for your Solo 401(k) with business funds, you would be eligible to claim a deduction for the cost of the plan, including annual maintenance fees. The deduction for the cost associated with the Solo 401(k) Plan and ongoing maintenance will help reduce your business’s income tax liability, which will in-turn offset the cost of adopting a self-directed Solo 401(k) Plan. The retirement tax professionals at the IRA Financial Group will help you take advantage of the available business tax deduction for adopting a Solo 401(k) Plan.

Easy Administration: Like all Solo 401K Plans, IRA Financial Group’s Solo 401K Plan is easy to operate. There is generally no annual filing requirement unless your solo 401K Plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ). However, unlike a financial institution, the tax professionals at the IRA Financial Group will assist you in completing this form is required.

To learn more about the advantages of the Solo 401K Plan with Checkbook Control please contact a 401K Expert at 800-472-0646.  Plus, be sure to like us on Facebook and follow us on Twitter!

Mar 28

The Pros and Cons of a 401k Loan

If you contribute to a 401(k) Plan, you may be able to borrow money from the plan in the form of a loan.  Not every plan/employer allows this, but if so, this can be a great benefit or a costly one.  Here are a few pros and cons of taking out a 401(k) loan.

One of the major benefits is that you are considered both the borrower and the lender.  After all, you are borrowing your own money.  The advantage here is that when you repay the loan, you are paying interest back to yourself.  That beats having to pay any other type of lender, like a bank or mortgage company.  Furthermore, the interest you pay yourself is tax-deferred, meaning it comes from your pre-tax paycheck you don’t pay taxes until you take distributions during retirement.

Be careful when taking out a loan from your 401(k)Next, there are no application and/or processing fees to pay out (which only adds to the debt of a regular loan).  A 401(k) loan is usually offered at a very reasonable interest rate.  You do have to apply for the loan, but it’s rare that you will be turned down.  There are very little restrictions and you don’t need to pass a credit check.  Moreover, if you default on this type of loan, it’s not as bad for your credit standing as other loans.

There are restrictions to a 401(k) loan.  First, you may only borrow up to 50% of your 401(k) balance or $50,000, whichever is lower.  Some plans may call for a minimum loan (usually around $1,000).  The term for the loan is usually five years and sometimes less.  In the case of using the loan to purchase a house, you may be given up to 15 years to repay the loan.  Lastly, since you are the account owner, you can decide to liquidate the assets you wish, meaning your best performing investments may not have to be touched.

As typical with most things in life, there are some drawbacks to taking out a loan from your 401(k).  First and foremost, if that what ever money you borrow is no longer earning for you.  The biggest advantage of a 401(k) Plan is compounding tax-deferred growth.  The more money in your account and the longer it’s in there, the more earning power it has.  While it’s impossible to time the market, it’s best to borrow when the market is on the decline.

The second biggest con of a loan is if you default.  If you lose your job, most plans require you to pay back the entirety of the loan within sixty days.  If you fail to repay the full amount, it will be defaulted and be considered as a distribution.  Not only will you owe taxes on the entire amount, but if you’re under age 59 1/2, you’ll likely be hit with a 10% early withdrawal penalty.

The real question now is: Is a 401(k) Loan the best choice for me?  The answer depends on your situation.  What are your plans for the money?  If you absolutely need it and have no other choice, then of course you should take out a loan. It’s better than withdrawing the money entirely.  If it’s something you can do without (say a brand new car), then it’s best to just leave the money where it is.  Lastly, if you are looking to use that money to make an investment (to open a new business for example), you need to be sure it’s a safe and secure investment.  You don’t want to borrow from your retirement and then have your investment implode along with it.

If you have any questions about taking out a loan from your 401(k), please contact one of the tax experts at the IRA Financial Group @ 800.472.0646.  Don’t forget to like us on Facebook and follow us on Twitter!

Mar 26

The True Solo 401k

The IRS approved Solo 401(k) Plan has been used by hundreds of thousands of small businesses for over 30 years. However, the scope of options available to Solo 401(k) Plan participants is determined based on the plan documents. To this end, most financial institutions that offer Solo 401(k) Plan restrict the Plan participant to invest plan assets solely in their financial products and do not permit plan loans. Even though the IRS allows for 401(k) plans to invest in nontraditional investments, such as real estate, and allows for Plan loans (IRC 72(p)), those options are typically not offered by financial institutions because it would cut into the commissions they can earn from your plan investments. For example, if you use your 401(k) plan assets to purchase real estate or do a loan, you will have less money to buy their financial products.

The “True” Solo 401(k) Plan offered by the IRA Financial Group offers the self-employed business owner the ability to use his or her retirement funds to make almost any type of investment, including real estate, tax liens, private businesses, precious metals, and foreign currency on their own without requiring custodian consent tax-free! In addition, a Solo 401K Plan will allow you to make high contribution limits (up to $57,500) as well as borrow up to $50,000 for any purpose. Also, you will be able to open up the Solo 401(k) Qualified Plan Trust account at any local bank or credit union.

The True Solo 401(k) Plan Advantages

The IRA Financial Group’s “True” Solo 401K plan is unique and so popular because it is designed explicitly for small, owner only business.  There are many features of our “True” Solo 401(k) plan that make it so appealing and popular among self-employed business owners.

High Contribution Limits: Under the 2014 Solo 401(k) contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $17,500. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $52,000, an increase of $1,000 from 2013.

For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $23,000. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $57,500, an increase of $1,000 from 2013.

 

Calculate Your Solo 401k Plan Maximum Contribution Limit Please click here to calculate your Solo 401(k) Plan Maximum Contribution Limit.

 

Loan Feature: With the “True” Solo 401k Plan, a plan participant is eligible to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, personal or business investments, a car, vacation, or anything else. The loan has to be paid back over a five year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate)

“Checkbook Control”: The most noteworthy benefit of the “True” Solo 401k Plan is that it does not require the participant to hire a bank or trust company to serve as trustee. This flexibility allows the plan participant (you) to serve in the trustee role. This means that all assets of the 401(k) trust are under the sole authority of the Solo 401k participant.  A “True” Solo 401(k) plan allows you to eliminate the expense and delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself. Making a Solo 401K Plan investment is as simple as writing a check.

Flexible Contribution Options: With the “True” Solo 401(k) Plan, contributions are completely discretionary. You always have the option to try to contribute as much as legally possible, but you always have the option of reducing or even suspending plan contributions if necessary.

Roth Type Contributions: The “True” Solo 401(k) plan contains a built in Roth sub-account which can be contributed to without any income restrictions.

Offset the Cost of Your Plan with a Tax Deduction: By paying for your Solo 401(k) with business funds, you would be eligible to claim a deduction for the cost of the plan, including annual maintenance fees. The deduction for the cost associated with the Solo 401(k) Plan and ongoing maintenance will help reduce your business’s income tax liability, which will in-turn offset the cost of adopting a self-directed Solo 401(k) Plan. The retirement tax professionals at the IRA Financial Group will help you take advantage of the available business tax deduction for adopting a Solo 401(k) Plan.

Cost Effective Administration: The “Tue” Solo 401(k) Plan is easy to operate and effortless to administer. There is generally no annual filing requirement unless your solo 401(k) Plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ).

Roth Conversion: The “True” Solo 401(k) Plan allows for the conversion of pre-tax 401(k) funds to a Roth. However, the 401(k) Plan participant must pay income tax on the amount converted.

 

Financial Institution Solo 401(k) Plan

IRA Financial Group “True” Solo 401(k) Plan

High Contribution Limits (up to $52,000 if under the age of 50 and $57,500 if Participant is over 50 1/2)

Yes

Yes

Loan Feature (borrow up to $50,000 tax-free)

No

Yes

Traditional Investment Options (i.e. stocks and mutual funds)

Yes

Yes

Nontraditional Investment options (i.e. real estate, precious metals, tax liens, etc.)

No

Yes

Unlimited Investment Options

No

Yes

“Checkbook Control”

No

Yes

Roth sub-account

Yes

Yes

Roth conversion feature

No

Yes

Direct Access to your Retirement Funds

No

Yes

Serve as trustee of your Solo 401(k) Plan

Yes

Yes

Unlimited bankruptcy protection

Yes

Yes

 

Please contact one of our Solo 401(k) Experts at 800-472-0646 for more information.

Mar 25

Special Rollover Business Start-Up Strategy Third-Party Recordkeeping Services for Small Businesses

Third-party recordkeeping services will help ROBS clients administer their 401(k) plan

IRA Financial Group, the leading provider of self-directed retirement solutions announces the introduction of the specialized third-party recordkeeping services for all Rollover Business Start-Up Strategy (“ROBS”) clients. The ROBS strategy is an IRS approved solution that allows one to use their retirement funds to invest in a business that they will be personally involved in. The transaction involves the establishment of a “C” corporation and the adoption of a 401(k) qualified retirement plan. The individual retirement holder would then roll his or her retirement funds into the new 401(k) plan without tax or penalty. The 401(k) plan would then purchase stock in the newly established “C” Corporation, which is called “Qualifying Employer” securities. The Corporation would then have the necessary funds to use for the purchase of the business assets. “When it comes to using the ROBS solution to buy a business, it is crucial that the 401(k) plan be properly administered and satisfy all IRS and ERISA rules, “ stated Joel Baum, a CPA with the IRA Financial Group.

According to Mr. Baum, IRA Financial Group’s ROBS third-party recordkeeping services provides an affordable, comprehensive retirement program backed by knowledgeable 401(k) professionals who ensures a ROBS 401(k) plan runs smoothly. “Our experienced retirement services professionals will manage many of the daily operations of your plan, relieving much of the stress of sponsoring a plan,” stated Susan Glass, a retirement tax professional with the IRA Financial Group.

IRA Financial Group Introduces Special Rollover Business Start-Up Strategy Third-Party Recordkeeping Services for Small BusinessesThe IRA Financial Group’s in-house retirement tax professionals spent a number of years carefully studying IRS guidance in order to design an IRS and ERISA compliant structure for using retirement funds to acquire or invest in a business tax-free. “Unlike many companies who have been working with the ROBS structure for many years, prior to receiving guidance from the IRS, the IRA Financial Group has patiently waited for clear IRS guidance before working with a structure that would be fully compliant with IRS and ERISA rules and procedures, “ stated Ms. Glass.

According to Mr. Baum, because the IRS has stressed the importance of compliance when using retirement funds to purchase a business, it is crucial to work with a company that is operated by a team of in-house tax and ERISA professionals who have worked at some of the largest law firms in the United States, including White & Case LLP and Dewey & LeBoeuf LLP to ensure a fully compliant ROBS structure.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading provider and administrator of self-directed retirement solutions. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Mar 24

The Solo 401K and the UBIT Rules

One of the advantages of using retirement funds, such as a 401(k), Solo 401K or an IRA to make investments is that in most cases all income and gains from the investment will flow back to the Solo 401K tax-free. This is because a 401(k) is exempt from tax pursuant to Internal Revenue Code 401 and Section 512 of the Internal Revenue Codes exempt most forms of investment income generated by a 401(k) and a Solo 401K from taxation. 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.

However, the IRS enacted a set of rules in the 1950s in order to prevent charities and later 401(k) and IRAs from engaging in an active trade or business and, thus, having an unfair advantage because of their tax-exempt status. These rules can be found under Internal Revenue Code Sections 511-514 and have become known as the Unrelated Business Taxable Income rules or UBTI or UBIT. If the UBTI rules are triggered, the income generated from that activities will generally be subject to a 35% tax. Of note, a 401(k) or Solo 401K investing in an active trade or business using a C Corporation will not trigger the UBTI tax.

The UBTI generally applies to the taxable income of “any unrelated trade or business…regularly carried on” by an organization subject to the tax. The regulations separately treat three aspects of the quoted words—“trade or business,” “regularly carried on,” and “unrelated.”

Trade or Business: In defining “unrelated trade or business,” the regulations start with the concept of “trade or business” as used by Internal Revenue Code Section 162, which allows deductions for expenses paid or incurred “in carrying on any trade or business.”

Regularly Carried On: The UBIT only applies to income of an unrelated trade or business that is “regularly carried on” by an organization. Whether a trade or business is regularly carried on is determined in light of the underlying objective to reach activities competitive with taxable businesses. Short-term activities are exempted if comparable commercial activities of private enterprises are usually conducted on a year-round basis.

Before it can be determined whether an activity is seasonal or intermittent, the relevant activity must be identified and quantified, a step that is often troublesome.

Interestingly, unlike an IRA, using nonrecourse financing to purchase real estate will not trigger the UBIT/UBTI tax since it will not be treated as Unrelated Debt Financed Income (exception exists for 401(k) qualified retirement plans but not IRAs under Internal Revenue Code Section 514(c)(9).

The type of income that generally could subject a 401(k) or Solo 401K to UBIT or UBTI is income generated from the following sources:

  • Income from the operations of an active trade or business through a pass-through entity (i.e. LLC or partnership). For example, a store, restaurant, manufacturing business, real estate development company.
  • Using margin on a stock purchase.

For more information about the solo 401k Plan and UBIT rules, please contact a tax expert at the IRA Financial Group @ 800.472.0646 today!  Don’t forget to follow us on Twitter and like us on Facebook!

Mar 20

Purchasing Tax Liens With Your 401(k)

It’s a little-known fact that tax liens can be purchased with retirement account funds. By Self-Directing your Solo 401(k) Plan investments into tax liens, your profits are tax-deferred back into your retirement account. More importantly, if you have full checkbook control over your Solo 401(k), the purchases can be made on the spot as fast as you can write a check. Tax Liens have been a lesser known and under-appreciated money-maker, however learning how they can magnify your earnings in a tax-deferred or 401(k) will make them one of the soundest investments in your retirement account.

The purchase of tax lien certificates is a surprisingly safe investment. The transaction is fast and its characteristics make tax liens a perfect investment for the individual with full checkbook control of an IRA Financial Group Solo 401(k) Plan.

Using a Solo 401(k) to Purchase Tax LiensThe Solo 401(k) Plan offers a highly attractive loan feature allowing for the purchase of tax liens. Under the Solo 401(k) Plan, a participant can borrow up to either $50,000 or 50% of their account value – whichever is less. The IRA Financial Group Solo 401(k) Plan documents will allow you to use a loan from your Solo 401(k) to finance your tax lien purchase.

These unique IRS approved structures are created by IRA Financial Group’s in-house tax and ERISA professionals who personally customize your account structure to suit your needs. Only a handful of institutions are skilled in these specialized account structures and IRA Financial Group is the “gold standard” for Compliance, Leadership, Customer Service, and Technological Innovation.

Facts & Opportunities Surrounding Tax Liens

Real estate has long been considered one of the best (and safest) investment opportunities for both the large and small capitalist. Savvy investors know that the trick to making money in a downward spiraling market is to purchase properties for a fraction of their value. The question is…How? Many are finding the perfect answer in the high-profit possibilities of investing in Tax Lien Sales.

When a property owner falls behind on their taxes, failing to pay for one or more years, the local taxing authority has the legal right to place a lien or repossess the property and sell it at auction to recoup the lost tax revenue. How long local authorities wait to seize individual properties, and how much they allow to be owed on it before one of these events is up to the lien laws in their particular area. In many cases properties may be acquired for a few thousand dollars, regardless of how much it’s actually worth! Similarly, paying off the lien on others may cost more than the house or land is worth. A savvy investor takes the time to research each property carefully prior to sale day.

Tax Lien Sales

Tax lien sales usually happen at public auctions once or twice a year, depending on the area in which it is located, and how many properties the government may seize annually for back taxes. Larger urban areas may hold monthly auctions, while smaller rural ones might only have one a year.

Types of Tax Liens

There are two types of tax lien sales through auction: the tax lien certificate; and the tax lien deed. Both can be a safe yet profitable opportunity for investors with checkbook control.

Tax Lien Certificate sales offer the delinquent homeowner one last chance to retain ownership of their property, by using third-party investment money to pay off the taxes and give them a bit more time to collect the money needed to pay their debt without the risk of losing their home. When an investor bids on a tax lien certificate, he is in essence agreeing to loan the homeowner the money needed to pay all taxes due. The homeowner, in turn, agrees to pay back the tax lien certificate holder – with interest – by a specified date. If the homeowner fails to pay the debt on time, the deed to the property is transferred to the investor for the amount paid on the taxes. Either way the investor makes a profit: either on the interest he earns on the loan; or by obtaining the property for a fraction of its value through the tax lien sale, and then reselling it.

Tax Lien Deed sales are handled a bit differently, since the investor is actually bidding (or buying), the complete property at the time of auction, with no responsibility to give the homeowner more time to pay his/her tax debt. Once the selling price is approved, the deed is automatically transferred to its new owner, giving the investor full reign as to what to do with the property next: renovate it; sell it as-is; or raze the existing house and build anew.

Investors usually pay more for properties in this type of tax lien sale, which may lower their profit margins compared to the acquisition of tax lien certificate properties. But, many investors prefer outright purchases to eliminate problems with current homeowners. Either way, investing in tax liens is a profitable and easy way to enter the real estate market in virtually any area.

How Much Money Can I Make and How?

1. Double Your Money Quickly. A Solo 401(k) plan can be supercharged when you buy tax lien certificates. Example: A tax lien certificate can earn up to 16% annually in your Solo 401(k). When you buy tax lien investments you generally receive the amount invested plus interest within 12 months. If you continue to reinvest in tax liens year after year at 16%, you can double your money in about 4.4 years.

2. Your Money Grows Tax-Free. By buying tax liens in an IRA Financial Group Solo 401(k), you can avoid all taxes until the money invested is withdrawn from the 401(k), which is usually around age 59 1/2. The money can be invested once, twice or a thousand times and continue to grow tax-free, so long as it is not withdrawn for personal use.

3. The Flexibility to Buy Time Sensitive Investments. IRA Financial Group’s Solo 401(k) Plan allows the participant to serve in the trustee role. This means that all assets of the 401(k) trust are under your sole authority (“checkbook control”). This gives you incredible freedom to fund the investment at a moment’s notice. In this arrangement, you can buy tax liens with the stroke of the pen, without a custodian or other bureaucrat saying no or otherwise trying to slow down the process.

Tax liens are backed and leveraged by real estate and guaranteed by the governmental taxing authority. In most states, they are a first lien on real estate, and when foreclosed, they wipe out all junior liens, including mortgages. This allows you to potentially receive a valuable piece of real estate for pennies on the dollar!

Time to Act

Real property has been the cornerstone of wealth for thousands of years. While ill-informed speculators have fled real estate because of the housing bust, intelligent real estate investors are enjoying immense profits by expanding their geographic scope and investing for predictable income.

Why are we significantly less than everyone else and “The best in the business”?

Establish a  Solo 401(k) with IRA Financial Group and have immediate “checkbook control” to make tax lien investments.

Our in-house tax and ERISA professionals will take care of setting up your Solo 401(k) Plan. Our tax and ERISA professionals are onsite greatly reducing the setup time and cost. You will find that our fee for this service is significantly less than other companies that perform the same or similar services.

Please contact a tax expert at 800-472-0646 for more information.

Mar 19

The No Custodian Fee Real Estate Solo 401k Plan

Real estate solo 401(k) plan will be designed specifically for real estate investors looking to take advantage of no custodian fees

IRA Financial Group Introduces the No Custodian Fee Real Estate Solo 401(k) Plan IRA Financial Group, the leading provider of self-directed solo 401(k) retirement plans, introduces a specially customized real estate solo 401(k) plan with no custodian fee. The real estate solo 401(k) plan is designed specifically for retirement investors looking to make real estate investments from a local bank account without requiring custodian consent or paying custodian fees. IRA Financial Group’s self-directed solo 401(k) plan for real estate, also known as an individual 401(k) plan is a specially customized retirement plan, which offers strong retirement benefits and diversified investment options for real estate investors with no custodian transaction fees. With IRA Financial Group’s self-directed 401(k plan for real estate, a self-employed individual has the ability to make annual contributions of up to $52,000 ($57,500 for those over the age of 50), borrow up to $50,000, as well as use his or her retirement funds to make almost any type of investment on their own, including real estate, tax-deferred (tax-free in the case of a Roth solo 401(k)) without requiring the consent of any custodian. “With IRA Financial Group’s real estate solo 401(k) plan, real estate investors can take advantage of a hot real estate market without paying excess custodians fees and earning tax-deferred income, stated Adam Bergman, a tax partner with the IRA Financial Group. “IRA Financial Group’s self-directed real estate solo 401(k) plan is an open architecture plan which can be opened at any local bank allowing one to make real estate investments without paying custodian fees, “ stated Mr. Bergman.

There are many features of the IRA Financial Group’s solo 401(k) real estate plan that make it so appealing for small business owners.

-High Contributions: IRA Financial Group’s real estate solo 401(k) plan will allow a plan participant to make annual contributions in 2014 up to $52,000 annually with an additional $5,500 catch-up contribution for those over age 50. The high contribution feature is one of the reasons a self-employed 401K plan is the most popular retirement vehicle for the self-employed.

Checkbook Control: With IRA Financial Group’s real estate solo 401(k) plan, a plan participant will be granted checkbook control over his or her retirement funds to make real estate investments. With IRA Financial Group’s real estate 401(k) plan, making a real estate investment is as easy as writing a check or executing a wire.

-Tax and Penalty free loan: IRA Financial Group’s real estate solo 401(k) plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including funding a personal real estate transaction. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate).

-Roth Contributions & Conversion: IRA Financial Group’s real estate solo 401(k) plan contains a built in Roth sub-account which can be contributed to without any income restrictions. In addition, the self-directed 401(k) plan allows for the conversion of a traditional 401(k) or 403(b) account to a Roth subaccount.

-Easy Administration: IRA Financial Group’s real estate solo 401(k) plan is easy to operate. There is generally no annual filing requirement unless the self-employed 401(k) Plan assets exceeds $250,000, in which case a short information return with the IRS (Form 5500-EZ) must be completed.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading “provider of IRS approved real estate solo 401(k) plans. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Mar 17

Leveraging Your 401(k) to Buy a Franchise

Here’s an article from Gaebler.com about using your 401(k) funds to buy a franchise:

Not sure how to fund your franchise? There may be benefits to using your retirement account to fund your dream of franchise ownership.

Funding franchise ownership is no small feat. Although you may be able to secure financing for franchises as part of the purchase price, count on the fact that you will have to somehow come up with a significant amount of capital just to get your foot in the door.

Use 401K Money to Buy Franchise Business

The task of funding franchise ownership can be even more difficult for entrepreneurs who are entering the world of business ownership for the very first time. Individuals coming straight from the salaried workforce often lack available capital and are forced to scramble for funds from a variety of personal sources.

Most prospective franchise owners avoid tapping into their 401(k) funds at all costs. But recently Franchise King identified several reasons why using you’re your 401(k) to fund your franchise might not be a bad idea.

  • No Debt. Depending on the size of your 401(k), it may be possible to purchase the franchise without debt financing. But even if your 401(k) reduces the amount of financing you require, you will be further ahead than franchisees who are financed to the hilt.
  • No Collateral. Franchise financing requires collateral, usually in the form of your home or other personal assets. If your franchise fails, it’s probably better to lose retirement savings than it is to lose the house that you and your family call home.
  • Control. If you go the investor route, you will inevitably have to relinquish a certain amount of control over your franchise. But if you fund your franchise with your own assets, you retain complete control over your franchise as well as your fate as a business owner.
  • No Interest. Interest payments can severely cripple a new franchise’s ability to operate in the black. By reducing or eliminating the amount of the purchase price you finance, you can minimize interest expenses and improve the profitability of your operation.
  • Invest in Yourself. Many franchisees are hesitant to risk their 401(k) accounts because they represent their nest eggs. But under the right circumstances, using a 401(k) to fund a franchise represents an investment in yourself and can potentially generate even greater returns than a 401(k) fund.

Leveraging retirement funds to finance a franchise isn’t the right decision for everyone. But it’s a concept that is definitely worth exploring as you begin to flesh out the details about how you will fund your transition to franchise ownership.

Further, if you are self-employed, you can open a Solo 401(k) from the IRA Financial Group to invest in just about anything, including a franchise or small business.  For more information, please contact a 401(k) expert @ 800.472.0646!  Be sure to give us a like on Facebook when you get a chance as well!

Mar 14

What is Checkbook Control?

A Solo 401(k) is perfect for sole proprietors, small businesses and independent contractors.

A Solo 401(k) plan is generally also referred to as a “checkbook control” Qualified Retirement Plan. In each case, a 401(k) plan is established whereby the participant serves as trustee and administrator of the Plan providing the participant with “checkbook control” over his or her retirement funds.

With a “checkbook control” Solo 401(K) Plan 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.

By having “checkbook control” over your retirement funds you will gain the following advantages:

“Checkbook Control”: You’ll no longer have to get each investment approved by the custodian of your account. Instead, all decisions are truly yours. To make an investment, simply write a check and use the funds straight from your Solo 401(k) Plan bank account.

When making a real estate investment or purchasing tax liens, a “checkbook control” Solo 401(k) Plan, will allow you as manager of the LLC the ability to simply write a check from your Solo 401(k) Plan bank account.

Example 1: Joe has a Solo 401(k) set-up by the IRA Financial Group. Joe has established his Solo 401(k) Plan bank account with Bank of America. Joe wishes to use his retirement funds to purchase a home from Steve, an unrelated third-party (non-disqualified person). Steve is anxious to close the transaction as soon as possible. With a “checkbook control” Solo 401(k) Plan, Joe can simply write a check using the funds from his 401(k) Plan bank account or can wire the funds directly from the account to Steve. Joe, as trustee of the plan, no longer needs to seek the consent of the custodian before making the real estate purchase. With a custodian controlled Solo 401(k) Plan without “checkbook control” Joe may not be able to make the real estate purchase since seeking custodian approval would likely take too much time.

Example 2: Joe has a Solo 401(k) set-up by the IRA Financial Group. Joe has established his Solo 401(k) Plan bank account with Bank of America. Joe wishes to use his retirement funds to invest in tax lien certificates via auction. Purchasing tax lien certificates requires Joe make the payment at the auction. With a “checkbook control” Solo 401(k) Plan, Joe can simply bring his 401(k) Plan bank account checkbook to the closing or secure a certified check from the bank in order to make payments at the auction. With a custodian controlled Solo 401(k) Plan without “checkbook control” Joe would not be able to make tax lien certificate investments because he would need custodian approval before each tax lien certificate purchase and would not have sufficient time to seek the consent of the custodian.

No Custodian Fees or Transaction Fees: The most significant cost benefit of the Solo 401(k) plan is that it does not require the participant to hire a bank or trust company to serve as trustee. In other words, there are no custodian fees or transaction fees when establishing a Solo 401(k) Plan with the IRA Financial Group. This flexibility allows the participant to serve in the trustee role. This means that all assets of the 401(k) trust are under the sole authority of the Solo 401k participant.  A Solo 401(k) plan allows you to eliminate the expense and delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

Speed: You can act quickly on a great investment opportunity. When you find an investment that you want to make with your retirement funds, simply write a check or wire the funds straight from your Solo 401(k) Plan bank account to make the investment. The Solo 401(k) Plan allows you to eliminate the delays associated with using an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

Offset the Cost of Your Plan with a Tax Deduction: By paying for your Solo 401(k) with business funds, you would be eligible to claim a deduction for the cost of the plan, including annual maintenance fees. The deduction for the cost associated with the Solo 401(k) Plan and ongoing maintenance will help reduce your business’s income tax liability, which will in-turn offset the cost of adopting a self-directed Solo 401(k) Plan. The retirement tax professionals at the IRA Financial Group will help you take advantage of the available business tax deduction for adopting a Solo 401(k) Plan.

Cost Effective Administration: In general, the solo 401(k) plan is easy to operate. There is generally no annual filing requirement unless your Solo 401K plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ).

Solo 401k Solution

For more information about the Solo 401(k) Plan with checkbook control, please contact a tax expert at the IRA Financial Group today!

Mar 12

Setting up a Self-Directed 401(k) Plan

When looking to establish a self-directed  401(k) Plan it is imperative that one works with tax and ERISA experts who understands the rules and regulations surrounding the adoption, maintenance.

With IRA Financial Group, you will work directly with tax attorneys and CPAs to help establish your IRS compliant solo 401(k) Plan.

The Self-Directed 401(k) plan is unique and so popular because it is designed explicitly for small, owner-only business.  It’s a tax efficient and cost effective plan that offers all the benefits of a Self-Directed IRA plan, and includes additional benefits.  There are many features of the solo 401(k) plan that make it so appealing and popular among self-employed business owners.

1. Establish your IRS Compliant Self-Directed 401(k) Plan:.  Establishing a solo 401(k) Plan involves the drafting of the following documents.  The tax professionals at the IRA Financial Group will help you customize your plan based on your investment, tax, and retirement goals.

  • Adoption Agreement
  • Basic Plan Document
  • EGTRRA Amendment
  • Summary Plan Description
  • Trust Agreement
  • Appointment of Trustee
  • Beneficiary Designation
  • Loan Procedure
  • Loan Promissory Note
  • Free tax updates
  • Free tax and ERISA support
  • Satisfaction Guaranteed!

2. Tax-Free Transfer of Retirement Funds – Transfer retirement funds (IRA, SEP-IRA, 401(k), 403(b), etc.) tax-free from your current custodian to any financial institution or credit union who can serve as your custodian for no fee. Direct the current custodian to transfer the retirement funds to your new Solo 401(k) Plan bank account. This transfer, also called a direct rollover is tax-free. The retirement tax professionals at the IRA Financial Group will assist you in completing this task in an expedited and tax-free manner. With a self directed 401(k) Plan with “checkbook control” you no longer have to pay excessive custodian fees based on account value and transaction fees. Instead, with a “checkbook control” Solo 401(k) Plan, you can use any local bank or credit union to serve as your custodian. By using a self-directed solo 401(k) Plan with “checkbook control” you can take advantage of all the benefits of self-directing your retirement assets without incurring excessive custodian fees and custodian created delays.

IRA Financial Group will assist you in completing all the necessary custodian documents so your retirement funds are transferred to a local bank account established in the name of your self-directed 401(k) Plan quickly and without any tax.

3. Open Local Trust Bank Account – Open a local bank account for your self-directed 401(k) Plan at any bank or credit union of your choice. Our in-house tax and ERISA professionals will guide you through the process.

4. “Checkbook Control” – As the trustee of the self-directed 401(k) Plan, you will have the freedom to make all investment decisions for your self-directed Solo 401(k) Plan.  IRA Financial Group’s solo 401(k) plan is an open architecture and trustee directed plan that will allow you as the trustee of the solo 401(k) plan to make investments by simply writing a check.  A Solo 401(k) plan allows you to eliminate the expense and delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself. As trustee of the self-directed 401(k) Plan, you will be able to write a check or wire money from the 401(k) bank account to make an Investment.

5. Tax-Free Investment is Made – The Investment is then made in the name of your Solo 401(k) account. As trustee and administrator of the self-directed solo 401(k) Plan, you will have “checkbook control” to make investments, such as real estate, precious metals, hard money lending, private business investments, and stocks on behalf of your solo 401(k) plan.

To learn more about how to set-up a self-directed 401(k) plan, please contact a tax professional at 800-472-0646