Call: 1-866-454-2649   Text: 702-728-3322

Top 10 Self Directed IRA/401k Mistakes – #10 Self Directed IRA Owners Flipping Real Estate is Not UBTI

The receipt of rental income is considered to be passive income and therefore not subject to UBTI. However, some self directed IRA owners fall into the trap of thinking that this means that they can buy and sell properties on a routine basis (i.e. flipping), and that this would not be active income or running […]

Read More…

Top 10 Self Directed IRA/401k Mistakes – #9 Self directed IRA owner attempts to receive fees and commissions from IRA transactions

There are cases where the self directed IRA owner is a real estate agent and they want to earn a commission from selling property to their IRA or some other disqualified party’s self directed IRA. Such a transaction would be viewed as conducting a transaction with your IRA or receiving an indirect benefit. Either way, […]

Read More…

Top 10 Self-Directed IRA/401k Mistakes #8

Number 8: Self-directed IRA owner thinks a passive investment in the active business is not subject to UBTI UBTI is the tax that levels the playing field for tax-exempt entities that invest and compete against businesses that pay taxes. Self-directed IRA account owners find a unique business or investment opportunities in small businesses. Even though the […]

Read More…

Top 10 Self Directed IRA/401k Mistakes – #7 IRA owner uses personal assets or “Sweat Equity” for the benefit of the IRA

A self directed IRA owner is clearly allowed to guide and manage the investments of the self directed IRA. The management can be relatively involved and substantial. As an example, the self directed IRA owner (or even the self directed IRA LLC manager – the account owner), could potentially expend considerable effort in finding the […]

Read More…

Top 10 Self Directed IRA/401k Mistakes – #6 Two or more IRA owners agree to “loan” each other money to avoid prohibited transactions

Interacting with your IRA is considered a prohibited transaction. So, unrelated, self directed IRA owners will attempt to enter into a reciprocal agreement to loan each others self directed IRA money so that the IRA owners can indirectly tap their funds for personal use. This is a flawed design and approach. Even though the parties […]

Read More…

Top 10 Self Directed IRA/401k Mistakes – #3 – Active Business Investment Is Not Subject To UBTI

Unrelated Business Taxable Income (UBTI) is generated when an Self Directed IRA engages in active business.  A business activity would be one in which the business is buying and/or selling goods and services. A good example would be if you purchased interest in a restaurant , oil and gas exploration, or even a apartment complex. […]

Read More…

Top 10 Self Directed IRA/401k Mistakes – #2 – Making Contribution To The IRA LLC

The Self Directed IRA owner makes their annual contribution directly into the bank account of the LLC rather than with the custodian of the  Self Directed IRA. In this case, you are personally interacting with your ICO (IRA-LLC).  That is considered a prohibited transaction. Additionally, an IRA contribution is only considered valid when it has […]

Read More…