Dec 11

IRA Financial Group Releases Cryptocurrency E-Info Kit for Solo 401(K) Plan Investors

New Bitcoin E-Kit will help investors understand how to purchase cryptocurrencies with 401(k) funds

IRA Financial Group, the leading provider of self-directed IRA LLC and Solo 401(k) Plans, announces the launch of a new Cryptocurrency E-Info Kit. The free cryptocurrency information kit will help retirement account holders looking to purchase cryptocurrencies, such as Bitcoins, with their retirement accounts to better understand what is involved in the process. “The IRA Financial Group Crypto E-Info Kit will help guide retirement account holders looking to use a Solo 401(k) plan to buy cryptocurrencies, such as bitcoins,” stated Adam Bergman, a partner with the IRA Financial Group.

IRA Financial Group’s Crypto 401(k) platform with checkbook control will allow retirement account holders to buy, sell, or hold Bitcoins and other cryptocurrency assets and generate tax-deferred or tax-free gains, in the case of a Roth Solo 401(k). The primary advantage of using a Solo 401(k) to make Bitcoin investments is that all income and gains associated with the 401(k) investment grow tax-deferred.IRA Financial Group Releases Cryptocurrency E-Info Kit for Solo 401(K) Plan Investors

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. The IRA Financial Trust Company, a self-directed IRA custodian, was founded by Adam Bergman, a partner with the IRA Financial Group.

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.

Adam Bergman, IRA Financial Group partner, has written six books the topic of self-directed retirement plans, including, “The Checkbook IRA”, “Going Solo,” Turning Retirement Funds into Start-Up Dreams, Solo 401(k) Plan in a Nutshell, Self-Directed IRA in a Nutshell, and in God We Trust in Roth We Prosper.

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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Dec 07

The Minimum Distribution Rules (RMD) for Solo 401(k) Plans

What is an RMD?

Once you reach the age of 70½, you must start to better understand the required minimum distributions (RMD) rules. That’s because, upon reaching this age, the IRS requires you to withdraw at least a minimum amount each year from all your IRAs and retirement plans—except Roth IRAs—and pay ordinary income taxes on the taxable portion of your withdrawal.

The Minimum Distribution Rules (RMD) for Solo 401(k) PlansDuring the April following the calendar year that the owner reaches age 70½ and is no longer employed (this does not apply in the case of a business whether the owner owns more than 10% of the stock), they are legally required to take a Required Minimum Distribution (RMD), also called a Minimum Required Distribution (MRD). Distributions taken late are taxed at the rate of 50%, whereas the account owner can elect the tax withholding rate for RMDs taken on time. RMDs are partial annual payments required by the IRS. The rule is in place to ensure that retirees actually withdraw from retirement accounts rather than using them as a vehicle to pass money to heirs. The RMD amount is based on the preceding December 31 value of the account balance and life expectancy tables.

For any account with an RMD, any distribution from that account during the year will count toward that year’s RMD. You may take more than your RMD in any given year. However, amounts withdrawn in excess of your annual RMD won’t satisfy your RMD requirements in future years.

That’s because the IRS requires each year’s RMD to be calculated using the previous year’s fair market value.

Are RMD Distributions Subject to Withholding?

When you take your RMD, you can have state or federal taxes withheld immediately, or you may be able to wait until you file your taxes.   An RMD distribution is not treated as an eligible rollover. If you request a rollover and an RMD is due for the year, you must satisfy the RMD before rolling over the remainder of your eligible money. In general, since an RMD is not an eligible rollover distribution it is not subject to the 20% withholding tax.  Hence, there is no 20% withholding tax on an RMD, but a 10% federal income tax would be withheld on the taxable portion of your RMD. RMDs may also be subject to state taxes. However, in most cases, you may elect to have no federal or state income tax withheld or to have more than 10% federal tax withheld would apply, although it may be waived.

Satisfying the RMD Rules

The Solo 401(k) plan participant is responsible for satisfying the RMD. The Code does not permit participants to satisfy their RMD from another plan of the same type [e.g., 403(b), 401(k), etc.].  RMDs are to be satisfied from each individual plan subject to that plan’s rules for RMDs.

Calculating the RMD

RMD is calculated by dividing the adjusted market value of the account as of December 31 of the prior year by the applicable life expectancy factor, which is obtained from

the appropriate life expectancy table. The Uniform Lifetime Table is generally used to determine the RMD. If a participant’s spouse is more than 10 years younger and is the sole designated beneficiary, the Joint Life and Last Survivor Expectancy Table is used.

For example, to calculate your RMD you would do the following:

Your RMD amount is determined by applying a life expectancy factor set by the IRS to your account balance at the end of the previous year. To calculate your RMD:

  • Find your age in the IRS Uniform Lifetime Table.
  • Locate the corresponding life expectancy factor.
  • Divide your retirement account balance as of December 31 of the prior year by your life expectancy factor.

How is the RMD calculated Upon death of the Participant – Spousal Beneficiary

Spousal beneficiary refers to the surviving husband or wife who was legally married to the originating participant on the date of the originating participant’s death. The General Board will pay the benefit to the spousal beneficiary if the participant dies before receiving a benefit or a complete distribution from his or her account, unless another beneficiary is entitled to the plan’s benefits.

When is a spousal beneficiary required to begin taking RMDs?

If the participant dies before the required beginning date, and no election was made by the required beginning date prior to the participant’s death, the spousal beneficiary will begin receiving RMDs. The spouse’s required beginning date is December 31 of the year the deceased participant would have reached age 70ó or December 31 of the year following the year of his or her death, whichever is later. Subsequent RMDs must be paid no later than December 31 of every year thereafter.

The RMD is calculated by dividing the adjusted market value of the account as of December 31 of the prior year by the applicable life expectancy factor, which is obtained from the appropriate life expectancy table.

If the participant dies before his or her required beginning date, the spouse’s life expectancy is determined using the Single-Life Table and recalculated each year that an RMD is due. If the participant dies on or after his or her required beginning date, life expectancies are determined using the Single-Life Table. The life expectancy of the participant (using his or her age in the year of death) is compared to the life expectancy of the spouse, and the longer life expectancy is used. If the longer life expectancy is that of the participant, it is reduced each year by one. If the longer life expectancy is that of the spouse, it is recalculated each year. (Recalculation generally will reduce the amount of each RMD, causing the payments to be made over a longer period of time.)

How is the RMD calculated Upon death of the Participant – Non-Spousal Beneficiary

Non-spousal beneficiaries are the persons or entities (such as estates or trusts) to whom the General Board will pay account balances if the participant dies before receiving complete distributions of his or her accounts.

When is a non-spousal beneficiary required to begin taking RMDs?

If the participant dies before the required beginning date, and if no election is made by December 31 following the calendar year of death for a distribution over the life of the non-spousal beneficiar(ies), the non-spousal beneficiar(ies) will receive the entire account balance by December 31 of the fifth year following the participant’s death. If the participant dies on or after his or her required beginning date, the non-spousal beneficiary must continue to receive RMDs. If the non-spousal beneficiary is an estate, trust or other entity, it may elect to receive the remaining benefits in a lump-sum or to defer payment until as late as December 31 of the fifth year following the participant’s death.

What life expectancy table is used to calculate the RMD?

If the participant dies before his or her required beginning date, and if the beneficiary elects to receive distributions over his or her life, the beneficiary’s life expectancy is determined using the Single-Life Table. Each year thereafter, the life expectancy is reduced by one. If more than one beneficiary shares in each RMD, the life expectancy of the oldest beneficiary is used. If the participant dies on/after his or her required beginning date, the beneficiary must continue to receive annual RMDs. The life expectancy of the participant is compared to the life expectancy of the beneficiary, and the longer life expectancy is used. Each year thereafter, the life expectancy is reduced by one.

How to Calculate RMDs with multiple retirement accounts?

If you have more than one retirement plan, you’ll need to calculate the RMD of each plan separately. However, you may add the RMD amounts of all IRAs (including traditional, rollover, SIMPLE, and SEP-IRAs) and withdraw the total amount from any one or more of your IRAs. The same rules apply to 403(b) accounts.

For example, assume that you have three IRAs. Your RMDs are $3,000 from the first IRA; $2,000 from the second IRA; and $2,000 from the third IRA. If you wish, you can take $7,000 from any one or more of your IRAs to satisfy your RMD for the year.

If you have accounts in several 401(k) or other employer-sponsored plans, such as a solo 401(k) Plan, the IRS generally requires you to calculate a separate RMD for each retirement plan in which you participate and withdraw the appropriate distribution from each plan.

Work with the IRA Financial Group

Your assigned tax partner and CPA will work with you to understand and help calculate the annual RMD amounts for your Solo 401(k) plan, if applicable. For additional information on the Solo 401(k) Plan RMD rules, please contact a retirement tax expert at 800-472-0646.

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Dec 04

2017 Solo 401(k) Contribution Deadline

The deadline for making Solo 401K Plan contributions is typically dependent on the type of entity that has adopted the Solo 401K Plan as well as the type of contribution – employee deferral vs. profit sharing contribution.

Sole Proprietorship

2017 Solo 401(k) Contribution DeadlineEmployee Deferral

In the case of a sole proprietorship, a business owner under the age of 50 may make employee deferral contributions up to $18,000 for 2017 (an employee over the age of 50 may make a $6,000 annual catch-up contribution for an annual deferral contribution imitation of $24,000). An Employee must elect to make the employee deferral contribution by December 31 of the year. However, the employer deferral contribution can be made up until the tax-filing deadline.

The employee deferral contribution can be made using pre-tax and/or after-tax (Roth) funds.

Profit Sharing Contribution

The sole proprietorship business may make annual profit sharing contributions for the business owner and spouse annually. Internal Revenue Code Section 401(a)(3) states that the amount of employer contributions is limited to 25 percent of the entity’s income subject to self-employment tax. Schedule C sole-proprietors must do an added calculation starting with earned income to determine their maximum contribution, which, in effect, brings the maximum 25% of compensation limit down to 20% of earned income. A step-by-step worksheet for this calculation can be found in IRS Publication 560. In general, compensation is your net earnings from self-employment. This definition takes into account both of the following items: (i) the deduction for one-half of your self-employment tax, and (ii) the deduction for contributions on your behalf to the plan.

The profit sharing contribution must be made by the business’s tax-filing deadline.

Single Member LLC

Employee Deferral

In the case of a single member LLC, the single member LLC owner under the age of age 50 may make employee deferral contributions up to $18,000 for 2017 (an employee over the age of 50 may make a $6,000 annual catch-up contribution for an annual deferral contribution limitation of $24,000). The single member LLC owner must elect to make the employee deferral contribution by December 31 of the year. However, the employer deferral contribution can be made up until the tax-filing deadline.

The employee deferral contribution can be made using pre-tax and/or after-tax (Roth) funds.

Profit Sharing Contribution

The single Member LLC business may make annual profit sharing contributions for the business owner and spouse annually. Internal Revenue Code Section 401(a)(3) states that the amount of employer contributions is limited to 25 percent of the entity’s income subject to self- employment tax. Schedule C single member LLC owners must do an added calculation starting with earned income to determine their maximum contribution, which, in effect, brings the maximum 25% of compensation limit down to 20% of earned income. A step-by-step worksheet for this calculation can be found in IRS Publication 560. In general, compensation is your net earnings from self-employment. This definition takes into account both of the following items: (i) the deduction for one-half of your self-employment tax, and (ii) the deduction for contributions on your behalf to the plan.

Profit-sharing contributions must be funded by the business’s tax-filing deadline.

Multiple-Member LLC

Employee Deferral

In the case of a multiple member LLC, the multiple-member LLC owners under the age of age 50 may make employee deferral contributions up to $18,000 for 2017 (an employee over the age of 50 may make a $6,000 annual catch-up contribution for an annual deferral contribution limitation of $24,000). The multiple-member LLC owners must elect to make the employee deferral contribution by December 31 of the year. However, the employee deferral contribution can be made up until the tax-filing deadline.

The employee deferral contribution can be made using pre-tax and/or after-tax (Roth) funds.

Profit Sharing Contribution

The multiple-member LLC business may make annual profit sharing contributions for the business owners annually. Internal Revenue Code Section 401(a)(3) states that the amount of employer profit sharing contributions is limited to 25 percent of the entity’s income subject to self-employment tax. Profit-sharing contributions must be funded by the business’s tax-filing deadline.

C Corporation & S Corporation

Employee Deferral

An employee of a corporation will receive a W-2. When it comes to making employee deferral contributions, the employee must make the deferral contribution during the year. The timing of the deferral contribution will typically depend on the business. In the case of a corporation that uses a payroll company, the employee deferral will typically be deducted from the employee’s paycheck. If the company does not use a payroll system, the employee can elect to make deferral contributions at anytime during the year. Once the election is made the Department of Labor safe harbor is that the funds are deposited into the Solo 401(k) Plan account within 7 days. The employee making the employee contribution should make sure that he or she has earned enough compensation during the pay period to cover the employee contribution. For example, if the employee wishes to make a employee deferral contribution of $18,000 on December 30th, the employee will need to be sure that he or she has earned sufficient compensation during the pay period to cover the deferral contribution.

The employee deferral contribution can be made using pre-tax and/or after-tax (Roth) funds.

Profit Sharing Contributions

The corporation may make profit sharing contributions for corporation’s owner(s)/employee(s) annually. Internal Revenue Code Section 401(a)(3) states that the amount of employer profit sharing contributions is limited to 25 percent of the entity’s income subject to self-employment tax.

Profit-sharing contributions must be funded by the business’s tax-filing deadline.

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

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Nov 30

Are All Individual 401(k) 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 401(k) Plans, often called Individual 401(k) 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 Individual 401(k) 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 2017, IRA Financial Group’s Solo 401(k) Plan will allow a plan participant to make annual contributions up to $54,000 annually with an additional $6,000 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).

Are All Individual 401(k) Plans the Same? 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.

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Nov 21

How To Use Your Self-Directed Solo 401k to Invest in Tax Liens

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 underappreciated money-maker, however learning how they can magnify your earnings in a tax-deferred 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.

How To Use Your Self-Directed Solo 401k to Invest in 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 check book 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. If you use a Self-Directed Roth Solo 401(k), your investment will grow tax-free and you can withdraw the funds tax-free once you reach the age of 59 1/2.

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

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Nov 17

When Are Roth Solo 401(k) Distributions Taxed?

When Are Roth Solo 401(k) Distributions Taxed?Generally, distributions from a designated Roth Solo 401(k) account are excluded from gross income if they are (1) made after the employee attains age 59 1/2 , (2) “attributable to” the employee being “disabled,” or (3) made to the employee’s beneficiary or estate after the employee’s death. However, the exclusion is denied if the distribution occurs within five years after the employee’s first designated Roth contribution to the account from which the distribution is received or, if the account contains a rollover from another designated Roth account, to the other account. Other distributions from a designated Roth account are excluded from gross income under Internal Revenue Code 72 only to the extent they consist of designated Roth contributions and are taxable to the extent they consist of trust earnings credited to the account.

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

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Nov 10

Advantages of a Checkbook Control Individual 401(k) Plan

An Individual 401(k) plan, also known as 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.

Advantages of a Checkbook Control Individual 401(k) PlanWith 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 Individual 401(k) with checkbook control, please contact us @ 800.472.0646.

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Nov 07

Are You Eligible for a Self-Employed 401(k) Plan?

A Self-Employed 401(k) Plan, also called a  Solo 401(k) Plan, is well suited for businesses that either do not employ any employees or employee certain employees that may be excluded from coverage. A Solo 401(k) plan is perfect for any sole proprietor, consultant, or independent contractor.

To be eligible to benefit from the Solo 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.

Are You Eligible for a Self-Employed 401(k) 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 Solo 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, a Solo 401K 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, a Solo 401k 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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Nov 02

Learn Everything You Need to Know About a Solo 401(k) Plan

With a Solo 401(k) Plan – Make High Contributions, Borrow up to $50,000, and use your retirement funds to invest in real estate and much more tax free!

IRS Approved PlanIn 1981, the IRS formally described the rules for 401k Plans. The Solo 401(k) Plan is an IRS approved type of qualified plan. The Solo 401k plan” is not a new type of plan. It is a traditional 401k plan covering only one employee. The plans have the same rules and requirements as any other 401(k) plan. The surging interest in these Solo 401k plans is a result of the EGTRRA tax law change that became effective in 2002.

Before the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) became effective in 2002, there was no incentive for an owner-only business to establish a 401(k) plan because the business owner could generally receive the same benefits by adopting a profit sharing plan or SEP IRA. However, EGTRRA changed everything and turned the Solo 401(k) Plan into the most popular retirement plan for the self-employed. EGTRRA cleared the way for an owner-only business to defer more money into a retirement plan and to operate a more cost-effective, less complex type of plan. One of the key features of EGTRRA was that it added the employee deferral feature founded in a traditional multiple employee 401(k) Plan to the Solo 401(k) Plan. This feature turned the Solo 401(k) Plan into the retirement vehicle that provided the highest contribution benefits to the self-employed.

A Solo 401k plan is perfect for any sole proprietor, consultant, or independent contractor. A Solo 401(k) Plan offers the same abilities as a Self-Directed IRA LLC, but without having to hire a custodian or create an LLC. With the IRS approved Solo 401(k) Plan, roll over your existing IRA or 401(k) plan funds tax-free into a new Solo 401(k) Plan and use those funds to make tax-deferred investments, such as real estate, while also gaining the ability to borrow up to $50,000 as well as make annual plan contributions up to $60,000 – almost 10 times the amount of an IRA.

The Solo 401(k) Plan – The Ultimate Retirement & Investment Solution

A Solo 401(k) plan is an IRS approved retirement plan, which is suited for business owners who do not have any employees, other than themselves and perhaps their spouse. The “one-participant 401(k) plan” or individual 401(k) Plan is not a new type of plan. It is a traditional 401(k) plan covering only one employee.  Unlike a Traditional IRA, which only allows an individual to contribute $5500 annually or $6500 if the individual is over the age of 50, a Solo 401k Plan offers the Plan participant the ability to contribute up to $60,000 each year.  Before the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) became effective in 2002, there was no compelling reason for an owner-only business to establish a Solo 401(k) Plan because the business owner could generally receive the same benefits by adopting a profit sharing plan or a SEP IRA.  After 2002, EGTRRA paved the way for an owner only business to put more money aside for retirement and to operate a more cost-effective retirement plan than a Traditional IRA or 401(k) Plan.

There are a number of options that are specific to Solo 401(k) plans that make the Solo 401(k) plan a far more attractive retirement option for a self-employed individual than a Traditional IRA for a self-employed individual.

1. Maximize Your Retirement Nest Egg: A Solo 401(k) Plan includes both an employee and profit sharing contribution option, whereas, a Traditional IRA has a very low annual contribution limit.

Under the 2017 Solo 401(k) contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $18,000. 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 $54,000.

For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $24,000. 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 $60,000.

Whereas, a Traditional IRA would only allow an individual with earned income during the year to contribute up to $5500, $6500 is the individual is over the age of 50.

2. Open Architecture Plan: IRA Financial Group’s Solo 401(k) Plan is an open architecture, self-directed plan that will allow you to make traditional as well as nontraditional investments, such as real estate by simply writing a check.  As trustee of the Solo 401(k) Plan, you will have “checkbook control” over your retirement assets and make the investments you want when you want.

The Solo 401k plan is unique and so popular because it is designed explicitly for small, owner only business.  The many features of the Solo 401k plan discussed above is why the Solo 401k Plan or Individual 401k Plan it so appealing and popular among self employed business owners

3. Borrow-Up to $50,000 Tax-Free: With a Solo 401K Plan you can borrow up to $50,000 or 50% of your account value, whichever is less.  The loan can be used for any purpose.  With a Traditional IRA, the IRA holder is not permitted to borrow even $1 dollar from the IRA without triggering a prohibited transaction.

It's Time To Let 401(k) Holders Invest Like the Pros 4. Buy Real Estate with Leverage Tax-Free: With a Solo 401(k) Plan, you can make a real estate investment using nonrecourse funds without triggering the Unrelated Debt Financed Income Rules and the Unrelated Business Taxable Income (UBTI or UBIT) tax (IRC 514).  However, the nonrecourse leverage exception found in IRC 514 is only applicable to 401(k) qualified retirement plans and does not apply to IRAs. In other words, using an IRA to make a real estate investment (Self Directed Real Estate IRA) involving nonrecourse financing would trigger the UBTI tax.

5. No Need to Establish an LLC:  With a Solo 401(k) Plan, the plan itself can make real estate and other investments without the need for an LLC, which depending on the state of formation could prove costly. Since a 401(k) plan is a trust, the trustee on behalf of the trust can take title to a real estate asset without the need for an LLC.

6. Strong Creditor Protection:  In general, a Solo 401(k) Plan offers greater creditor protection than a Traditional IRA.  The 2005 Bankruptcy Act generally protects all 401(k) Plan assets from creditor attack in a bankruptcy proceeding.  In addition, most states offer greater creditor protection to a Solo 401(k) qualified retirement plan than a Traditional IRA outside of bankruptcy.

7. Easy Administration: With a Solo 401(k) Plan there is no annual tax filing or information returns for any plan that has less than $250,000 in plan assets.  In the case of a Solo 401(k) Plan with greater than $250,000, a simple 2 page IRS Form 5500-EZ is required to be filed.  The tax professionals at the IRA Financial Group will help you complete the IRS Form.

8. IRS Audit Protection:  The Solo 401(k) Plan is an IRS approved qualified retirement plan.  IRA Financial Group’s Solo 401(k) Plan comes with an IRS opinion letter which confirms the validity of the plan and is a safeguard against any potential IRS audit.

9. Roth After-Tax Benefit: A Solo 401k plan can be made in pre-tax or Roth (after-tax) format.  Whereas, in the case of a Traditional IRA, contributions can only be made in pre-tax format.  In addition, a contribution of $18,000 ($24,000, if the plan participant is over the age of 50) can be made to a Solo 401(k) Roth account.

The Solo 40IK Solution

A Solo 401k Plan offers a self-employed business owner the ability to use his or her retirement funds to make almost any type of Solo 401k Planinvestment, 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 contributions (up to $60,000) as well as borrow up to $50,000 for any purpose. Have an investment opportunity, such as real estate or a business investment that you would love to make with your 401k funds? Want the ability to make high tax-deductible or Roth contributions? Need to access up to $50,000 of your retirement funds for personal use? Then the Solo 401k Plan is your solution!

With IRA Financial Group’s Solo 401k Plan– you now can:

  • Make maximum contributions nearly 10 times higher than the IRA.
  • For 2017, contribute up to $54,000 per year or $60,000 if you are over age 50. If your spouse is involved in the business, they can contribute an additional $54,000 (or $60,000 if they are over the age of 50) per year.
  • Invest in real estate, private companies, precious metals, and virtually anything else.
  • Borrow up to $50,000 from your Solo 401k Plan for any purpose.
  • No need to hire a custodian.
  • Gain control of your retirement funds – serve as trustee of the Solo 401k Plan.
  • Make Roth contributions to your Solo 401k Plan.
  • Use non-recourse leverage to purchase real estate without penalty or tax with your Solo 401k Plan.
  • Maintain a qualified retirement plan and help save for the future.
  • Diversify your retirement portfolio with a Solo 401k Plan!
  • Access your retirement funds to make the investments you want when you want tax-free!
  • Help grow your retirement funds tax-free with a Solo 401k Plan!
  • Make investment quickly without delay with a Solo 401k!
  • Make Solo 401k Plan investment decisions without requiring custodian consent!
  • Work directly with our retirement tax professionals to establish an IRS compliant Solo 401K Plan structure that works best for you and your investment goals.

Our Solo 401k Plan Establishment Service Includes:

  • Solo 401k Adoption Agreement
  • Solo 401k Basic Plan Document
  • EGTRRA Amendment
  • Solo 401k Summary Plan Description
  • Trust Agreement
  • Appointment of Trustee
  • Action by Board of Directors
  • Beneficiary Designation
  • Solo 401k Loan Procedure
  • Solo 401k Loan Documentation
  • Election Not To Participate
  • Transfer Request Forms for incoming funds transfers
  • Newly assigned Employer Identification Number from the IRS
  • IRS Determination letter stating that this is a Prototype Plan that meets the requirements of a qualified plan
  • Free tax and ERISA support on the Solo 401k Plan structure
  • Direct access to our on-site retirement tax professionals
  • Satisfaction Guaranteed!

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 Solo 401k Plan within 24 hours.

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 self-directed Solo 401(k) Plans. With our work experience at some of the largest law firms in the country, our retirement tax professionals’ tax and ERISA knowledge in this area is unmatched.

To learn more about the advantages of using a Solo 401(k) Plan, please contact one of our Solo 401(k) Plan experts at 800-472-0646 for more information.

You can use Solo 401(k) Plan funds to invest in a friend's business.

The Solo 401k Plan offers a 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 and tax-free! For more information on the Solo 401k Plan, check out the books by IRA Financial Group’s Adam Bergman entitled “Going Solo – America’s Best-Kept Retirement Secret For The Self-Employed” and “Solo 401(k) In A Nutshell” available on Amazon.

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Oct 23

IRS Announces 2018 Solo 401(k) Contribution Limits

Under the 2018 Solo 401(k) contribution rules, a plan participant under the age of 50 can make a maximum annual employee deferral contribution in the amount of $18,500. That amount can be made in pre-tax, after-tax or Roth. On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) annual profit sharing contribution up to a combined maximum, including the employee deferral, of $55,000, an increase of $1,000 from 2017.

IRS Announces 2018 Solo 401(k) Contribution LimitsFor plan participants over the age of 50, an individual can make a maximum annual employee deferral contribution in the amount of $24,500. That amount can be made in pre-tax, after tax, or Roth. On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) annual profit sharing contribution up to a combined maximum, including the employee deferral, of $61,000, an increase of $1,000 from 2017.

One of the main benefits of a Solo 401(k) Plan is the opportunity to make higher annual contributions in pre-tax, after-tax or Roth.

IRA Financial Group’s Solo 401(k) plan is unique and so popular because it is designed explicitly for small, owner-only business. In addition, to the high annual contribution limitations. There are many features of the IRA Financial Group’s Solo 401(k) plan that make it so appealing for small business owners.

Tax and Penalty Free Loan

Unlike most Solo 401(k) Plans offered by the traditional financial institutions such as Fidelity, IRA Financial Group’s 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 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).

Checkbook Control & No Transaction Fees

The most attractive feature of the IRA Financial Group Solo 401(k) Plan is that it offers the plan participant checkbook control over his or her retirement funds. In the case of a conventional Solo 401(k) 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 401(k) Plan account is required to be opened at the financial institution. With IRA Financial Group’s Solo 401(k) 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 401(k) 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 401(k) Plan, the Plan participant has the freedom to make the investments he or she wants while at the same time opening the 401(k) account at any local bank. As trustee of the Solo 401(k) Plan, the Plan Participant (you) can serve as the trustee providing you checkbook control over your retirement funds. With IRA Financial Group’s Solo 401(k) Plan, making a Solo 401(k) Plan investment is as simple as writing a check.

Invest in Real Estate & Much More Tax-Free

With IRA Financial Group’s Self-Directed Solo 401(k) plan, you will be able to invest in almost any type of investment opportunity that you discover, including: real estate, tax liens, precious metals, private notes, hard money loans, private business, etc.; your only limit is your imagination. The income and gains from these investments will flow back into your Solo 401(k) tax-free.

Roth Contributions & Conversion

Unlike a conventional Solo 401(k) Plan offered by most financial institutions, IRA Financial Group’s Solo 401(k) 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 401(k) Plan allows for the conversion of a traditional 401(k) or 403(b) account to a Roth subaccount. However, the Solo 401(k) Plan participant must pay income tax on the amount converted.

Easy Administration

IRA Financial Group’s Solo 401(k) Plan is easy to operate. 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). However, unlike a financial institution, the tax professionals at the IRA Financial Group will assist you in completing this form, if it is required.

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

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