ROLL YOUR 401(k) OVER TO AN IRA

You don’t have to leave your 401(k) or other employer retirement plan money in an existing plan if you no longer work for that employer. The same rule applies to an inherited 401(k) or employer retirement plan. Whether it’s your plan or it’s inherited, you can legally and advantageously move those funds into an IRA […]

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Self Directed IRA – Unrelated Debt Finance Income (UDFI)

A subset of UBIT is the Unrelated Debt-Financed Income (UDFI) tax. Under IRC § 514, the IRS will assess a tax on any income that is derived from the use of “acquisition indebtedness” in passive Self Directed IRA investments. For example, if your Self Directed IRA uses $30,000 of its own funds and also borrows […]

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Self-Directed IRA Unrelated Business Income Tax (UBIT)

This is an important topic because many people, especially those who have never had a self-directed ira, are unaware of the tax treatment for certain types of investments. UBIT was never an issue when investing in the set of mutual funds, or individual stocks, offered by a brokerage IRA account. Such investments simply earn dividend […]

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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 […]

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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, […]

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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 […]

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