Jul 29

First Handbook Published on Self-Directed Solo 401(k) Retirement Plan Now Available on Amazon

Adam Bergman, IRA Financial Group Partner, authors second book discussing the self-directed Solo 401(k) Plan

Adam Bergman, President of the IRA Financial Trust Company, announces the release of his second book on the self-directed Solo 401(k) plan titled, The Solo 401(k) Plan in a Nutshell. After the success of his first book, Going Solo: America’s Best Kept Retirement Secret For the Self-Employed – What Financial Institutions Won’t Tell You About Saving for Retirement, Mr. Bergman wanted to provide a more basic explanation of the self-directed Solo 401(k) plan. “I am very excited to offer readers a high-level review of the Solo 401(k) plan that laypeople can use to help them save for retirement,” stated Adam Bergman.

According to Mr. Bergman, “the Solo 401(k) is the gold standard for retirement savings and has enabled countless self-employed individuals to retire in comfort. But getting started with it can be stressful, and more often than not, books that try to explain it only make the proposition more complicated. I believe my new book will offer a easy to understand resource that simplifies the process while at the same time providing everything one needs to maximize their retirement assets and achieve financial freedom. The Solo 401(k) account is the key to building wealth for those who are self-employed or small business owners without full-time employees, and it is my hope that this book demystifies what it takes to establish and manage the plan. Unlike books that delve into the often-confusing intricacies of these accounts, Solo 401(k) in a Nutshell cuts through extraneous details and provides exactly—and only—what the layperson needs to put the investment in place and get started down the road to financial freedom.”

First Handbook Published on Self-Directed Solo 401(k) Retirement Plan Now Available on AmazonAdam Bergman is a partner with the IRA Financial Group, LLC, the markets leading provider of Self-Directed IRA and Solo 401(k) plans. Mr. Bergman is also the President of the IRA Financial Trust Company, a self-directed IRA custodian. Mr. Bergman is the author of four previous books on the taxation of retirement accounts: Going Solo, The Checkbook IRA, Turning Retirement Funds into Start-Up Dreams, and In God We Trust—In Roth We Prosper, which are all available on Amazon.com and Barnes & Nobles. In addition, Mr. Bergman is a recognized expert on IRAs and 401(k) Plans and is the founder of the BergmanIRAReport.com and the Bergman401KReport.com, and is a frequent contributor to Forbes. Mr. Bergman has advised over 12,000 clients on the self-directed IRA and Solo 401(k) Plan solutions.

Mr. Bergman has been quoted in a number of major publications on the area of self-directed retirement plans. Mr. Bergman has been interviewed on CBS News and has been quoted in Businessweek, CNN Money, Forbes, Dallas Morning News, Daily Business Review, Law.com, San Francisco Chronicle, U.S. Tax News, the Miami Herald, Bloomberg, Arizona Republic, San Antonio Express, Findlaw, Smart Money, USA Today, Houston Chronicle, Morningstar, and American Lawyer on the area of retirement tax planning.

Prior to joining the IRA Financial Group, LLC, Mr. Bergman worked as a tax and ERISA attorney at White & Case LLP, Dewey LeBoeuf LLP, and Thelen LLP, three of the most prominent corporate law firms in the world. Throughout his career, Mr. Bergman has advised thousands of clients on a wide range of tax and ERISA matters involving limited liability companies and retirement plans. Mr. Bergman received his B.A. (with distinction) from McGill University and his law degree (cum laude) from Syracuse University College of Law. Mr. Bergman also received his Masters of Taxation (LL.M.) from New York University School of Law.

Mr. Bergman is recognized as a leading retirement tax-planning expert and has lectured attorneys on the legal and tax aspects of Self-Directed IRA LLC and Solo 401(k) Plans. Mr. Bergman has also been retained by several leading IRA custodians to offer expertise on the Self-Directed IRA structure. Mr. Bergman is a member of the Tax Division of the American Bar Association and New York State Bar Association.

IRA Financial Group is the market’s leading “checkbook control” Self Directed IRA and Solo 401(k) Plan provider. 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.

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Jul 26

How Does the Self Directed Solo 401(k) Plan Work?

With IRA Financial Group, you no longer have to spend $2000 to $5,000 or more to set up your Self Directed Solo 401(k) Plan or pay excessive administration fees. Work directly with our in-house tax and ERISA professionals to customize your Solo 401(k) Plan based on your investment and retirement goals.

We provide the following, all for one low price:

1. Establish your IRS Compliant Solo 401(k) Plan:

  • Free tax consultation with our in-house tax and ERISA professionals
  • 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 Solo 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 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.

How Does the Self Directed Solo 401(k) Plan Work?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 Solo 401(k) Plan quickly and without any tax.

3. Open Local Trust Bank Account – Open a local bank account for your Solo 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 Solo 401(k) Plan, you will have the freedom to make all investment decisions for your Solo 401(k) Plan (“Checkbook Control”). 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 Solo 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 Solo 401(k) Plan, you will have “checkbook control” to make investments on behalf of your Solo 401K Plan.

For more information about establishing a Self Directed Solo 401(k) Plan, please contact us @ 800.472.0646.

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Jul 22

Growing Number of Lyft Drivers Seeking to Use Retirement Funds to Fund Their Vehicle Purchase Without Tax

Increase demand for ROBS product for independent contractor Lyft drivers looking to fund the purchase of a new vehicle

IRA Financial Group, a provider of Rollover Business Startup Solution (“ROBS”) solutions, has seen a growing interest in people across the country looking to use their retirement funds to fund the purchase of a new vehicle for purpose of working with Lyft or Uber.

Lyft is a ride sharing service that connects riders and drivers by a phone application. Lyft has become extremely popular and is quickly becoming a solid source of income for thousands of Americans across the country who wish to offer their services. Lyft is creating new kinds of opportunity for people who want neither a 9-to-5 job nor a boss. However, there is a cost people must pay to operate their own cars as modern-day taxis and be accepted by Lyft. “We have seen a growing demand from people across the country looking to use their IRA or 401(k) plan funds to purchase a vehicle for purposes of driving for Lyft,” stated Adam Bergman, a partner with the IRA Financial Group. “The relatively low start-up costs and independence involved that comes with driving for Lyft or Uber is one reason for its popularity with entrepreneurs looking to use the retirement funds to fund a business,“ stated Mr. Bergman.

The rollover business start-up (“ROBS”) arrangements typically involves rolling over a prior IRA or 401(k) plan account into a newly established 401(k) plan, which a start-up C Corporation business sponsored, and then investing the rollover 401(k) Plan funds in the stock of the new C Corporation. The funds are then deposited in the C Corporation bank account and are available for use for business purposes. The ROBS 401k solution is a tax efficient way for any entrepreneur looking to use IRA fund to buy a business or franchise without incurring any tax or penalty from a IRA distribution.

Growing Number of Lyft Drivers Seeking to Use Retirement Funds to Fund Their Vehicle Purchase Without TaxWith IRA Financial Group’s ROBS structure, the limitation imposed using a Self-Directed IRA LLC to buy a business can be sidestepped because the individual retirement account business owner would not be able to be actively involved in the business, earn a salary, or even personally guarantee a business loan. Whereas, if the business owner used a ROBS strategy, that individual would be able to be actively involved in the business, earn a salary, as well as personally guarantee a business loan without triggering the IRS prohibited transaction rules. “IRA Financial Group’s ROBS solution will allow entrepreneurs the ability to use IRA or 401(k) plan funds to help fund a new business or finance an existing business, “stated Mr. Bergman. “However, the one major downside of using the ROBS solution is that a C Corporation must be used, which is not the most tax efficient entity and can trigger additional taxes to the shareholders,” continued Mr. Bergman.

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 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.

IRA Financial Group proudly announces the latest book titled written by tax partner Adam Bergman, Turning Retirement Funds into Start-Up Dreams – financing and retirement funding options for your start-up business is now available for purchase on Amazon. This is the third book in a four-part series on self-directed retirement plans. The first two books: “The Checkbook IRA” and “Going Solo” are also available on Amazon.

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

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Jul 21

How Does the Rollover Business Start-up Work?

The legality of using retirement funds to purchase employer corporate stock is firmly established in the Internal Revenue Code and under ERISA law. The IRA Financial Group’s in-house retirement tax professionals have spent the last two years developing an IRS and ERISA compliant structure for using retirement funds to acquire or invest in a business tax-free! 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 the structure satisfies IRS and ERISA rules and procedures. The retirement tax professionals at the IRA Financial Group have developed a process that ensures speed and compliance, by using standardized procedures that work via phone, e-mail, fax, and mail. Your funds will be ready for investment into your new or existing business within 14-21 days.

Step 1 – Establishment of New Corporation

IRA Financial Group’s in-house tax and ERISA professionals will establish a corporation and ensure that the incorporation process is completed accurately in accordance with state law. Our in-house retirement tax professionals have significant experience with the incorporation process in all 50 states and the District of Columbia. Your corporation will be incorporated in the State where you will conduct business or in multiple states if the business will be conducted in more than one state. The IRA Financial Group’s retirement tax professionals will assist you in satisfying all internal corporate formalities, such as establishing a board of directors, appointing officers, and completing the corporate resolution and minutes. Upon the incorporation of the entity, our in-house retirement tax professionals will acquire an Employer Tax ID Number with the IRS for your new corporation.

Step 2 – New Corporation Adopts 401(k) Plan

The IRA Financial Group’s in-house ERISA professionals will establish an IRS approved 401(k) Plan for your new corporation. Plan documents will be drafted so that the new corporation will be the sponsor of the new 401(k) Plan. The Plan documents will appoint the new business owner as the trustee of the plan and will be customized based on the financial goals of you and the business. The Plan will be specifically drafted to allow for investment in your new corporation.

Step 3 – Rollover/Transfer of Funds to your New Corporation

The IRA Financial group’s in-house ERISA professionals will guide you through the process of opening a bank account for your new 401(k) Plan (the account can be opened at any local bank, credit union, or financial institution) as well as helping you complete the necessary transfer/rollover documents to transfer your retirement funds from your previous employer or IRA to your company’s new 401(k) Plan tax-free. Our in-house ERISA professionals will guide you through the entire rollover/transfer process so your retirement funds will be transferred to your new 401(k) Plan in an expedited and tax-free manner.

Step 4 – 401(k) Plan Invests in the new Corporation

The IRA Financial Group’s in-house retirement tax professionals will draft a customized stock purchase agreement detailing the 401(k) Plan’s purchase of new company stock. The IRA Financial Group will coordinate with the selected independent business appraisal to assure that the stock purchase agreement is in compliance with IRS and ERISA rules. Once the 401(k) Plan has purchased stock in the new corporation, the corporation will have the funds to purchase new business assets or help grow the business.

Step 5 – Compliance with IRS and ERISA Rules

Once your retirement funds have been invested in your new business, the retirement tax professionals at the IRA Financial Group will continue to work with you to ensure that the structure remains compliant with IRS and ERISA rules and procedures. In the case of a corporation with employees, the IRA Financial Group will work with a third-party administrator to ensure that the Plan remains compliant so that the structure continues to meet IRS and ERISA rules and requirements.

Work Directly with our on-site tax and ERISA professionals!

Each client of the IRA Financial Group is assigned an individual retirement tax professional who will customize a structure that satisfies his or her financial and retirement needs while ensuring the structure is developed in full IRS & ERISA compliance!

We have developed a process that ensures speed and compliance, by using standardized procedures that work via phone, e-mail, fax, and mail. Your funds will be ready for investment into your new or existing business within 14-21 days.

Call us today at 800-472-0646 to learn more about how you can use your retirement funds to start a new business or grow an existing business tax-free, in full IRS compliance, and without penalties!

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Jul 19

What are the Eligibility Requirements for an Individual 401(k) Plan?

An Individual 401(k) Plan plan is well suited for businesses that either do not employ any employees or employee certain employees that may be excluded from coverage. An Individual 401(k) Plan is perfect for any sole proprietor, consultant, or independent contractor.

To be eligible to benefit from the Individual 401(k) Plan, investor must meet just two eligibility requirements:

1. The presence of self employment activity.

2. The absence of full-time employees.

The Presence of Self Employment Activity

Self employment activity generally includes ownership and operation of a sole proprietorship, Limited Liability Company (LLC), C Corporation, S Corporation, and Limited Partnership where the business intends to generate revenue for profit and make significant contributions to the plan.

Generate Revenue for Profit

There are no established thresholds for how much profit the business must be generated, how much money must be contributed to the plan, or how soon profits and contributions must happen. It is generally believed that the IRS will consider you eligible if the business being conducted is a legitimate business that is run with the intention of generating profits. The self employment activity can be part time, and it can be ancillary to full time employment elsewhere. A person can even participate in an employer’s 401(k) plan in tandem with their own Individual 401(k). In such a case, the employee elective deferrals from both plans are subject to the single contribution limit.

The Absence of Full-Time Employees

Unlike a regular 401(k) plan, an Individual 401(k) Plan can be implemented only by self-employed individuals or small business owners who have no other full-time employees and are not employed by any business owned by them or their spouse (an exception applies if your full-time employee is your spouse). The business owner and their spouse are technically considered “owner-employees” rather than “employees”.

The following types of employees may be generally excluded from coverage:

  • Employees under 21 years of age
  • Employees that work less than a 1000 hours annually
  • Union employees
  • Nonresident alien employees

If you have full-time employees age 21 or older (other than your spouse) or part-time employees who work more than 1,000 hours a year, you will typically have to include them in any plan you set up. However, an Individual 401(k) eligible business can have part time employees and independent contractors.

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

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Jul 18

The Self-Employed 401k Solution

The Solo 401(k) Plan, also known as the Self-Employed 401(k) Plan, is an IRS approved type of qualified retirement plan which is suited for business owners who do not have any employees, other than themselves and perhaps their spouse. The Solo 401(k) plan is not a new type of plan. It is a traditional 401(k) plan covering only one employee.

Solo 401k PlanAs a self-employed business owner you know how important it is to maintain financial security for yourself and your family. The Solo 401(k) is designed for the self-employed and offers powerful features not found in traditional 401k or IRA retirement plans. Tired of being forced to invest in stocks or mutual funds? Have an investment opportunity, such as real estate or a business investment that you would love to make with your 401(k) funds? Then the Solo 401(k) is your solution!

In addition to the tremendous 401(k) benefits (tax-free profits, high tax contribution deductions – up to $59,000, asset protection and estate planning), the Solo 401(k) allows you to invest tax-free in investments that you know and understand and even allows you to borrow up to $50,000 or 50% of the account value for any purpose. Aside from certain “prohibited transaction” investments outlined in Internal Revenue Code Section 4975, a Solo 401(k) Plan can invest in most commonly made investments, including real estate, private business entities, public stocks, private stocks, and commercial paper.

A Solo 401k plan is perfect for any sole proprietor, consultant, or independent contractor. In addition, to being able to make high contributions (up to $59,000 for 2016) and borrow up to $50,000 tax-free, the Solo 401(k) Plan offers the same investment opportunities as a Self Directed IRA LLC, but without having to hire a custodian or create an LLC.

See Why the Solo 401(k) Plan Has Become the Most Popular Retirement Plan for the Self-Employed?

Solo 401k Solution

The Solo 401(k) Plan Advantage

Traditional IRA
SEP IRA
Solo 401K Plan
Maximum Annual Contributions $5,500 or $6,500 if individual is over the age of 50 25% of individual’s compensation up to $53,000 (20% in the case of a self-employed individual) $53,000, or $59,000 if individual is over the age of 50
IRA Custodian Required Yes Yes No – account can be opened at any local bank
Checkbook Control Yes – but only with a Self-Directed IRA LLC which requires the formation of an LLC Yes – but only with a Self-Directed IRA LLC which requires the formation of an LLC Yes – no LLC is required to be formed since the 401(k) Plan Trust is used as the investment vehicle
Loan Feature No No Yes – you can borrow $50,000 or 50% of your account value
Nonrecourse Financing Yes – but the nonrecourse financing would be subject to tax Yes – but the nonrecourse financing would be subject to tax Yes – generally no tax on the nonrecourse financing
Roth Feature No – must establish a Roth IRA which has income restrictions No – must establish a Roth IRA which has income restrictions Yes – no income restrictions

To learn more about the advantages of the Solo 401K Plan with Checkbook Control please contact a 401K Expert at 800-472-0646.

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Jul 15

How to Use Your Solo 401(k) to Invest in Bitcoins

Bitcoin is usually described as virtual currency. That’s useful shorthand, but is it really money? And should it be taxed as if it is? Or is it a capital asset? How about a commodity? Or what about a collectible? Most commentators have viewed bitcoins either as a virtual type of currency or capital asset. However, the potential still exists that the IRS could argue that bitcoins do not satisfy the main functions of money and acts more like a stamp or other collectible than a currency.

In Notice 2014-21, the IRS stated that it would tax digital money such as bitcoin like property, not currency. On March 25, 2014, the IRS issued Notice 2014-21, which for the first time set forth the IRS position on the taxation of bitcoins. According to the IRS, “Virtual currency is treated as property for U.S. federal tax purposes,” the notice said. “General tax principles that apply to property transactions apply to transactions using virtual currency.” By treating bitcoins as property and not currency, the IRS is providing a potential boost to investors but it is also imposing extensive record-keeping rules—and significant taxes—on its use. In a notice, the IRS said that it generally would treat bitcoin held by investors much like stock or other intangible property. If the virtual currency is held for investment, any gains would be treated as capital gains, meaning they could be subject to lower tax rates. The top long-term capital gains tax rate is 20%, while the top ordinary income-tax rate is 39.6%, although add-on taxes often make both rates somewhat higher. But as capital investments, loss deductions from bitcoin often would be limited, whereas currency losses can be easier to deduct up front.

The IRS guidance in Notice 2014-21 targets a new crop of digital currencies used by a small number of merchants, consumers and investors. Bitcoin, the best-known of the group, is created using a computer process and can be exchanged for dollars online.

Although IRS Notice 2014-21 did not address whether bitcoins would be considered an approved investment for retirement purposes, the fact that the Notice is treating bitcoins as property, like stock, and not as a collectible, it should be clear bitcoin is an approved investment for 401(k) plans and would not violate IRC 408(m).

For many retirement investors, the investment in bitcoins via a Solo 401(k) plan could prove a very tax efficient manner for transacting with bicoins as use of bitcoin in a retail transaction typically would be a taxable “event” for many buyers, requiring them to figure out the gain they had made on the virtual currency—and eventually pay tax on it, whereas, the gains would likely not be subject to tax with retirement funds. However, the IRS stated in the Notice that bitcoin “miners”—including people who use computers to validate bitcoin transactions or maintain transaction ledgers—also would be subject to tax on payments received in bitcoin and that “mining” that constitutes a trade or business would be subject to self-employment taxes. Accordingly, dealers in bitcoin—much like dealers in other types of property—would be subject to different tax principles than individual investors, and their gains generally would be taxed as ordinary income.

Notice 2014-21 is important because it sets forth some clarity by the IRS about the tax treatment of virtual currencies, but it also raised new questions, such as what government body would be in charge of regulation.

With IRA Financial Group’s self-directed retirement plans, retirement account investors have the ability to make traditional as well as alternative asset investments, such as real estate and bitcoins, in a tax-deferred or tax-free basis.

Why Work With the IRA Financial Group?

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. Over the years, we have helped thousands of clients establish IRS compliant Self-Directed IRA LLC solutions. With our work experience at some of the largest law firms in the country, our retirement tax professionals’ tax and IRA knowledge in this area is unmatched.

To learn more about using a Solo 401(k) to make bitcoin and other investments without tax, please contact one of our 401(k) Experts at 800-472-0646 for more information.

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Jul 12

How Should a Solo 401(k) Plan Trustee Administer a 401(k) Plan with Roth Contributions?

A trustee of a Solo 401(k) Plan with a qualified Roth contribution program must establish separate accounts including only designated Roth contributions and “earnings properly allocable to the contributions,” and the plan administrator must maintain separate records for these accounts. Since distributions from accounts containing elective deferrals are included in distributees’ gross income, while distributions from accounts containing designated Roth contributions are generally excluded from gross income, an employee’s designated Roth contributions cannot be commingled with elective deferrals. Forfeitures may not be allocated to Roth accounts.

How Should a Solo 401(k) Plan Trustee Administer a 401(k) Plan with Roth Contributions?The Roth Solo 401K Plan is the ultimate tax-free retirement solution for the self-employed. With federal and state income tax rates expected to increase in the future, gaining the ability to generate tax-free returns from your retirement investments when you retire is the last surviving legal tax shelter. With a Roth Solo 401K you can make almost any investment tax-free, including real estate, tax liens, precious metals, currencies, options, and private business investments and once you hit the age of 59 1/2 you will be able to live off your Roth 401K assets without ever paying tax. Imagine if someone told you that if you started making Roth 401K contributions in your forties and by just generating a modest rate of return, you could have over a million dollars tax-free when you retire. With a Roth 401K, live off the Roth 401K investment income tax-free or take a portion of your Roth 401K funds and use it for any purpose without ever paying tax.

For more information about, or to set up, a Roth Solo 401K, please contact us @ 800.472.0464 today.

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Jul 11

Adam Bergman, IRA Financial Group Partner, To Release Three New Books on Self-Directed Retirement in 2016

New three book Nutshell series will be become available in August 2016 on self-directed IRA, Solo 401(k) Plan, and ROBS structure

Adam Bergman, tax attorney and IRA Financial Group partner, announces the coming release of a three-part book series on self-directed retirement plans. The new nutshell series will offer a comprehensive overview of the self-directed IRA, Solo 401(k), and Rollover Business Start-Up or ROBS solution in three separate books. “I hope the three new nutshell books will offer a clear and concise overview of the self-directed IRA,, Solo 401(k) plan, and ROBS solution,” stated Adam Bergman. The first book, “The Solo 401(k) in a Nutshell”, will be available on Amazon and Barnes and Nobles in August 2016.

According to Mr. Bergman, the self-directed nutshell book series will finally offer high-level advice that laypeople can use regarding the self-directed IRA, Solo 401(k) plan, and the ROBS solution.

Adam Bergman – IRA Financial Group Partner –To Release Three New Books on Self-Directed Retirement in 2016Adam Bergman is a partner with the IRA Financial Group, LLC, the markets leading provider of Self-Directed IRA LLC and Solo 401(k) plans. Mr. Bergman is also the President of the IRA Financial Trust Company, a self-directed IRA custodian. In addition, Mr. Bergman is a recognized expert on IRAs and 401(k) Plans and is the founder of the BergmanIRAReport.com and the Bergman401KReport.com. Mr. Bergman is a frequent contributor to Forbes. Mr. Bergman has advised over 10,000 clients on the self-directed IRA LLC and Solo 401(k) Plan solutions.

Mr. Bergman has written four other books on the topic of self-directed retirement plans, including “The Checkbook IRA”, “Going Solo”, “Turning Retirement Funds into Start-Up Dreams” and “In God We Trust, In Roth We Prosper”.

Prior to joining the IRA Financial Group, LLC, Mr. Bergman worked as a tax and ERISA attorney at White & Case LLP, Dewey LeBoeuf LLP, and Thelen LLP, three of the most prominent corporate law firms in the world. Throughout his career, Mr. Bergman has advised thousands of clients on a wide range of tax and ERISA matters involving limited liability companies and retirement plans. Mr. Bergman received his B.A. (with distinction) from McGill University and his law degree (cum laude) from Syracuse University College of Law. Mr. Bergman also received his Masters of Taxation (LL.M.) from New York University School of Law.

IRA Financial Group is the market’s leading provider of self-directed retirement 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.

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Jul 08

What Type of Corporation Do You Use when Using ROBS?

The Internal Revenue Code and ERISA law require the use of a “C” Corporation for using retirement funds to acquire stock in a business. The reason for this is that Section 407(d)(1) of ERISA defines the term “employer security,” in part, to mean a security issued by an employer of employees by the plan, or by an affiliate of such employer. Under section 407(d)(5) of ERISA, the term “qualifying employer security” includes an employer security, which has been understood to mean stock. The term “stock” is not defined in Title I of ERISA, however, most tax commentators believe this to mean the stock of a corporation and not an interest in a limited liability company or partnership. The use of an S Corporation for this structure is not permitted because a qualified plan cannot be an S Corporation shareholder. Generally only individuals are permitted to be S Corporation shareholders.

What is a C Corporation?

A C Corporation is a business term that is used to distinguish this type of entity from others, as its profits are taxed separately from its owners under sub-chapter C of the Internal Revenue Code. A C corporation is owned by shareholders who must elect a board of directors to make business decisions and oversee policies. A C Corporation provides its shareholders with limited liability protection. Thus, the C Corporation’s shareholders would not stand personally liable for debts incurred by the C Corporation. They cannot be sued individually for corporate wrongdoings.

What Type of Corporation Do You Use when Using ROBS?Will I pay more tax if my business is set-up as a C Corporation?

In general, a C corporation can be used to split the corporate profits among the owners and the corporation. This can result in overall tax savings. The tax rate for a corporation is usually less than that for an individual, especially for the first $50,000 of taxable income. In addition, a C Corporation can deduct the cost of business expenses, such as salary, thus, further reducing the company’s taxable income. For example, the operators of the corporation may withdraw reasonable salaries, which are deductible by the corporation. These salaries are therefore free from tax at the corporate level (though the recipients will have to pay income tax, and both recipients and the business will have to pay FICA tax, on them). In some cases, the entire net profit of a C Corporation may be offset by salaries to the shareholders, so that no corporate income tax is due.

Do I need an independent appraisal for the purchase of the new corporation stock?

Yes. Pursuant to ERISA rules, a 401(k) Plan is permitted to acquire “qualified employer security” provided that the acquisition or sale is for adequate consideration. In the October 1, 2008 Memorandum, the IRS stated that an exchange of company stock between the plan and the new company sponsor would be a prohibited transaction, unless the requirements of ERISA Section 408(e) are met. Therefore, valuation of the capitalization of the new company is a relevant issue. Since the company is new, there could be a question of whether it is indeed worth the value of the tax-deferred assets for which it was exchanged. If the transaction has not been for adequate consideration, it would have to be corrected. On August 27, 2010, on the public phone forum, the IRS reaffirmed their position on the need for an independent appraisal to value the purchased corporate stock. The IRA Financial Group will assist you in identifying an independent third-party business appraisal or CPA to help value the stock of the new or existing company.

For more information about using ROBS to start your business, please contact us @ 800.472.0646.

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