Archive for February, 2014

Plan For Your Retirement – Self Directed IRA & Other Retirement Accounts

Friday, February 28th, 2014

Plan For Your Retirement Regardless

Are you investing with your self directed IRA and are wondering how your retirement is going to fair? Each persons different situation calls for different swears and different calls to action but regardless of the types of retirement accounts you have, whether it be a self directed IRA or 401k, SEP IRA or another retirement account you can benefit from planning for your retirement. Can you believe that we are talking about planning for retirement again? Don't we just keep talking about the same thing over and over again? Well, maybe. Yes, you should already know that the earlier you start saving for your retirement the better your retirement will be. Yes, you should know as well that you need to figure out how much money you will need when you actually retire and hopefully you know that there are plenty of retirement calculators out there that will help you figure those numbers out. If you don't know that yet check out, Is Your Retirement Plan Ready?

The before mentioned tips are some of the most talked about ways to help secure a financially secure and happy retirement. Because these are the most hashed out ways to improve your retirement we wanted to look at some other alternatives to improving our retirement. We thought we would give you some new less talked about ways to improve your retirement. There is no better way to do this than to get some information from some of the biggest names in retirement. The following tips come from a great article done by CNNMoney. They got some of the greatest minds on retirement to give them some great advice to help secure a great retirement. Let's jump into the article.

Forget the 4% Withdrawal Rule

Typically while in retirement professionals as a general rule suggest withdrawing 4% from your retirement account and as long as you adjust for inflation each year you should have enough money to last you 30 years. Historically this suggestion worked. According to Wade Pfau who is the professor of retirement income at American College suggests going away from the typical 4% withdrawal rule. Because the past 10-year Treasury recently only yielded 2.6%. If you were to have 1 million dollars and still withdrawal 4% you have a 57% chance you will run out of money. If you were change that percent to 3% you would have a 24% chance that you'd run out of money.

The idea here is take less from your retirement account each year if you can. It will hugely affect your ability have enough money throughout your retirement. If you simply can't take less than 4% look into saving more if possible. That way the amount of money you need to withdrawal will be less than 4% because you'll have more in your account.

As You Age Your Spending Will Decrease

David Blanchett from Morningstar suggests that as you age you will lower your spending. It make sense. You will have less dependencies and less things to worry about. Your children will typically be out on there own by now and you won't have to worry about most of their needs. He suggests that many planners and calculators assume you'll need at least 70 to 80 percent  of your pre-retirement income to have a good retirement. Many times those simple tools can overestimate by as much as 20 percent how much you'll need for retirement.

For me the thing that I take from this is that knowing your true costs is crucial. I tend to want to overestimate costs so that I have a little safety net. I'd rather be safe than sorry. Figuring out your fixed and felxible yearly cost when you are close to your sixties will give you a better idea of your needs through your retirement but figuring out these costs each year is a wise decision.

All Things Health

The next advice is given by Carolyn McClanahan who is a financial planner and former ER doc. It can be super hard to know how long you'll live and even harder to figure out how healthy you will be. It is possible thought to get an idea of your overall health. If you typically have been healthy throughout your whole life with no major issues then you can guess that you should have a healthy retirement. More than likely as you age you will have some mishaps and there will be times when you have to fork out for medical expenses. Let's face it, the older and older you get your body doesn't work like it used too. You need to plan for these issues. Also, don't assume that since you are super healthy that you won't have or that you won't have to pay as much as others who are sick. Remember if you are super healthy you will more likely live longer and need money longer.  Men who typically pay the average amount on prescriptions needs $122,000 saved by the time he retires. A women would need $139,000. Remember, this is the amount you'll need at retirement just for prescriptions and not the total amount he will pay. Other health care costs can add up.

Health care costs is one of the hardest to plan for. Again, doing whatever you can to get an idea is going to help you. Over preparedness is key!

Plan For The First Decade

Michael Kitches a financial planner suggests being open to moving your portfolio around. Don't have a specific way of investing. You may need to be heavier in stocks or heavier in bonds. The idea is to be open to switching it up. He also mentions the idea that if you can keep your portfolio in tact (not much loss) during the first decade then you will have a much bigger chance of making your money last.

Get The Best Deal With Social Security

The last bit of advice comes from Alicia Munnell who has been one of the nation's leading retirement researchers. The idea is fairly simple here. Those who were born between 1943 and 1954 have a full retirement age of 66 and those born after that time at 67. If you were to claim at 62 you would get 25% less than if you waited until 66. Just because it is called full retirement doesn't mean that you'll get the most benefit possible. You can defer until 70. If you were to wait until 70 you would receive 76% more than at 62. The longer you wait for your social security payout the more you'll be able to get. In the long term it makes a huge difference.

Do whatever you can to wait as long as possible for your payout. If holding out until 70 is possible then you will reap the benefits.

If you want more in-depth analysis or to read this complete article take a gander at Have Enough Money For The Retirement You Want

PHEW. We made it through some great advice here. Hopefully you have more ideas on how to rock it during retirement. For myself I'd rather do a little work now figuring out as much as possible about my retirement  than having to worry about it when I actually do retire. Planning is crucial. At Accuplan we want you to have as much say in your retirement accounts as possible. We are always here to help you with self directed IRA rules. Feel free to contact us with questions pertaining to your retirement account and how we can help you invest it in the things you want.


A Real Estate IRA Allows You to Invest in Real Estate Through an IRA

Wednesday, February 26th, 2014

Real Estate Investment

Investing your in a Real Estate IRA is a great alternative to investing in the stock market.  Through a Self Directed IRA you can invest in non traditional investments such as real estate, gold and silver, private placements, loan, and other non traditional investments.  Below are some common questions I get from clients wanting to invest in real estate through their Self Directed IRA, also known as a real estate IRA.

Q.  Can I borrow funds or get a mortgage through a Self Directed IRA?
A.  Self-Directed IRA investors who choose to purchase investment real estate are able to leverage their purchase with a non-recourse loan. Because of the IRS regulations, it would be deemed a violation of the qualified retirement account status to personally guarantee any loan on real estate owned by a self-directed IRA.

Non recourse debt or a Non recourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender's recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the difference between the value of the collateral and the loan value becomes a loss for the lender.  Thus, non-recourse debt is typically limited to 50% or 60% loan-to-value ratios, so that the property itself provides "overcollateralization" of the loan.

Q.  Can I live in the property, earn a salary for managing the property or repair the property myself?
A.  Both ERISA and IRS rules prohibit certain transactions between a qualified plan and “disqualified persons.” The purpose of the rules is to prevent self dealing and to minimize conflicts of interest that could adversely affect the plan. ERISA §§ 406-408 and Internal Revenue Code § 4975 detail these rules. Other regulations and notices issued by the DOL and IRS further refine and explain the rules.  As a result, you could not live in the property, earn a salary, or do any of the repairs on the property.  This could be considered conveying and receiving a benefit from your IRA.

Q.  Do I need an LLC to purchase the real estate?
A.  You do not need an LLC to purchase the real estate.  It is possible for you to purchase the real estate directly through your Self Directed IRA Custodian.  When done this way, all rent checks and expenses will be paid to and through the Self Directed IRA Custodian.
If you would like checkbook control over your IRA, meaning you will be the one to collect the rent and pay all the expenses then you need to setup an IRA LLC.  Your IRA will become an owner of the IRA LLC and the IRA LLC will be able to purchase the property directly.

Q.  Can I partner with my IRA, have my Roth and Traditional IRA partner together, or combine multiple IRA accounts in order to purchase real estate?
A.  Yes, you can partner with your IRA.  If you decide to put personal funds and IRA funds together to purchase property you need to be careful that everything is structure property.  If you are strictly using retirement funds it because easier to control and manage.  
The best option when partnering with your IRA is to do so through and IRA LLC.  Through the IRA LLC each IRA account will become a partner in the LLC and all profits and expenses will be split per the ownership arrangement.

Q.  Can I live in the property after I turn 59.5?
A.  Yes you can, at any time, take a distribution of the real estate and have it put in your name.  Doing this would trigger taxes needing to be paid.  If you do the distribution before 59.5 you will be hit with a 10% penalty.  If you do so after 59.5 the real estate will just be taxable to you.

If you have any more questions about Real Estate IRA feel free to contact me.

Author: , Self Directed IRA Professional
[email protected]

Forgotten Factors That Affect Your Retirement

Monday, February 24th, 2014

Forgotten Factors

There are many factors that can affect how our retirement will be. Two factors that many people look over that can have a big affect on your retirement are the rules associated to retirement accounts and on a more fun level, where you retire.

If you aren't careful with self directed IRA rules or any other retirement account rules you could hurt your retirement and face penalties that could have been avoided. More than focusing on the rules I thought it would be fun to focus on why where you retire can affect your retirement.

We don't take a lot of time to think of where we want to retire because maybe we just want to be by our family, wherever they are. Maybe warm weather is a no brainier so you are going south. There are more things you need to consider though when retiring and one important one is the affect where you retire will have on your taxes.

Because where you retire affects the taxes you will pay these here are a few other things to consider.. Will you work at all during retirement? Do you plan to spend lots? Depending on the retirement you want taking a look at states with great income tax and sales tax can really put a great buffer on your retirement.

So which states are the most tax-friendly? Let's take a look.

First place- Wyoming!

A few others- Alaska, Florida, Mississippi, New Hampshire, Nevada, South Dakota, Tennessee, Texas, and Washington.

There are plenty of states on the naughty list but we won't discuss those here. If you would like to see a more comprehensive list check it out at MarketWatch

I thought it would be a great idea to get another opinion as to which places are the best to retire in. After scouring the web I stumbled upon another great resource that breaks it down just a bit more. It actually breaks it down by city. They take into consideration more than just tax rates. They also take into consideration home prices, low crime, quality health care to name a few. A few of the top on the list of 25

1- Albuquerque, NM
2- Portland, OR
3- Louisville, KY
4- Tuscon, AZ
5- Austin, TX

To read more of the reasons why these cities make the list and to find out the final 20 check out CNNMoney.

Take into consideration where you will be retiring because your taxes can really benefit if you retire in the right place. One important thing to note is that taxes shouldn't be the only factor to decide where you will retire but it should be considered.


Gold IRA Investing – Gold and Silver In Your Retirement Account

Friday, February 21st, 2014

Gold IRA

Do you know what your plan is for retirement? Have you started planning and saving for it? Do you even know how much money you are going to want or need by the time you actually retire? If you do have a retirement account set up and are saving for it do you know what stocks and bonds you have purchased through the brokerage that runs your account? Have you ever thought about doing it yourself or have you ever wanted to have some say in what you are actually investing in?

These are many questions that you may know or you may not. You also may want to take a bigger role in your retirement or you actually may not. Either way today we will be talking about one way that can greatly improve the diversity of your retirement account.

Investing in gold and silver in an IRA is a great alternative to investing in stock and bonds. Many times doing this is called a gold backed IRA or a gold IRA. If you are interested in purchasing gold for your retirement account there are some good rules to live by in order to get the most out of your investment. If you aren't too sure there are some good reasons that you should know of before you completely say no to a gold backed IRA.

Below are rules you should follow and reasons why investing in metals in your Self Directed IRA is a good idea:
1.     Always buy from a reputable source.
2.    Avoid paying high premiums if you can
3.    In considering what type of metals to buy keep the following in mind
a.    Bullion is better if you plan to buy and hold and sell the metals in the future
b.    US silver eagles  is ideal if you plan on holding the metals in the future as currency
4.    Buy silver then gold.  Silver has more upside potential than gold.  We will discuss the benefits of owning silver in a later post
5.    You cannot buy rare or collector coins inside of an IRA
6.    Make sure the depository where your IRA funds are stored is insured and secured
7.    Choose an IRA custodian who has a good reputation and track record
8.    All metals stored in a Self Directed IRA are kept private
9.    You can take possession of the metals if you choose to.  Taxes will be paid on the transfer though
10.    You cannot store metals at your house without it being considered a distribution

Investing in gold and silver is a great investment and a great way to diversify your investment. It can be an even greater investment when doing it through your retirement accounts. On a side note there are other types of metals that can be purchased through your IRA and it is commonly referred to a precious metals IRA. If you would like to know more about investing in gold and silver or any other precious metal in your IRA feel free to contact me.

Author: , Self Directed IRA Professional
[email protected]

Make the Right Choice With A Self Directed 401k

Wednesday, February 19th, 2014

Right Choice SD401k

Does your company offer a 401k account? If they do be grateful because you are with a company that isn't following the trend.Less and less companies are offering 401k benefits. Make sure you take advantage of your companies 401k as it is one of the smartest things you can do for your retirement. If you are self employed you might be looking to set up your own 401k account. It is wise to set up a 401k account for yourself if you are self employed. Take advantage of as many retirement options as you possibly can. The more prepared you are the better your retirement will be.

I was reading through different articles about retirement as I usually do but one article struck me more than others. I thought I would share some of the insight from that article along with my own insight to help you plan for your retirement the best way possible.

Insights from the article

Some good news came out last week that the average balance of Americans' 401k accounts had grown to a $89,300. That number is nearly double the average that was in those accounts five years ago.

While that is some great news Stephen Gandel, the author of the article goes on to talk about something that is fundamentally wrong with one of the most popular options out there for 401ks. The so called target-date funds. Roughly half a trillion dollars are invested in these fund, mostly through 401k accounts.

What is a a target-date fund? They are supposed to give you a per-calibrated portfolio based on your age and the age when you'll retire. The portfolio is typically spread between stocks and bonds. It is supposed to be riskier and heavier in stocks at first and the closer you get to retirement the more bonds and typically less risky your portfolio should be. This is not flawed in concept but it is more flawed in execution. There seems to be no uniformity in how these portfolios are put together. A 2015 target-date retirement fund from two different brokerages can have very different holdings of stocks and bonds.

He goes on to say that there was some good news from the Wall Street Journal stating that target-date funds had a redemption year last year. Target-date funds, even those that were close to their target retirement year, did well in 2013.

Stephen says this really isn't good news. Why so? He said that they performed well because they held too many bonds, relative to what they should. Bonds fell last year, which is usually rare. So the funds' good performance was not because they are safer than they seem. It is because they are riskier, putting more money in stocks than they should.

To read more of this article I am refering to check out A popular 401k choice is still badly broken

Why do I like this article? I like it because it shows some of the flaws that are occurring between these huge brokerages and custodians. Why would they do this? Why would they make your portfolio riskier than you thought? Simply because over time stocks perform better than bonds. Now to me they aren't really performing like target-date funds. The closer you get to retirement you want to feel safer with less risk. If a down year comes and you were to have more stocks than you thought you could loose much more than if you had bonds. Typically when stocks loose they loose at a much higher rate than bonds.

What does this really mean for you? It is very wise to know your stuff. It is great to know what you are invested in. One of the smartest things you can do is to take some of your retirement into your own hands. Nobody knows what you are looking for better than yourself. You are probably saying to yourself that it is way to hard and too confusing. It really isn't. With a self directed 401k or self directed IRA if you don't have the ability to set up your own 401k.

A self directed 401k gives you the ability to invest in alternative investments that most brokerages don't allow. With a self directed 401k you can invest in real estate, gold and a slew of other things. What is so great about gold or real estate in your 401k? It is a great way to diversify and a great way to invest in something other than the stock market. Many investors suggest that gold or real estate is a safer investment than stocks.

What should you do? Start now! There is no better time than now to invest in your retirement. If you aren't up to investing your retirement yourself then why not just take a small chunk and try investing a little in gold or something else you are interested in? It doesn't have to be a lot of money a thousand here or there.

A self directed 401k gives you many different options that aren't usually there. As the article I mentioned above suggests that there are some flaws with some of the current brokerages and how they invest your money.  Take control today with a self directed 401k. self directed 401k information, Fund Your Business With A Self Directed 401k,

Contact us today for any questions regarding self directed 401k investing. We allow you to invest in your retirement the way you want.