Archive for June, 2015

Two of the Best Ways to Fund a Self-Directed IRA. To Transfer or To Rollover.

Monday, June 29th, 2015

A Transfer or Rollover

What are two of the easiest ways to fund a self-directed IRA? A rollover or transfer are two of the easiest ways to fund a self-directed IRA. A rollover and transfer are easily confused though and if you make a mistake when doing a rollover or transfer you could be subject to certain penalties. We are here to help you understand the difference between a rollover and transfer so that you don't make any mistakes. If you still have any questions about rollover or transfers or your specific situation, again, feel free to contact us.

What is a transfer?

A transfer is when you take from one retirement account (IRA, 401k or self-directed IRA) and move it to another retirement account (IRA, 401k or self-directed IRA). A transfer is typically easier than doing a rollover because it is done as a custodian to custodian transfer. The money that you are moving goes directly from your one retirement account to the new retirement account. In general the new custodian where you will be moving your IRA monies/investments too will handle the move and you'll most likely only need to fill out and sign a transfer request form for them.

What is a rollover?

A rollover is when you take from one retirement account (IRA, 401k or self-directed IRA) and move it to another retirement account (IRA, 401k or self-directed IRA).

What makes a rollover different than a transfer? When you are moving the money from your old custodian to the new custodian you the account owner are given the money before it goes into the new retirement account. It is considered a tax-free distribution.

However, you must put this distribution into the new retirement account within 60 days of receiving it. If you don't put the money into the new retirement account within 60 days a myriad of negative consequences will come.

Another thing to note with rollovers is that you can only do one rollover a year. Since you have 60 days before the money has to be put into the new retirement account you could momentarily use it for something else and get a lot of benefit from it. They don't want you to continue to do this over and over again which is why they only allow it to happen once a year. Because of this, it is not a wise decision to do anything else with your money besides putting it into the new retirement account. The problem with doing other things with your money besides putting it into the new account is that you may arrive at the 60 days and not be able to deposit the money into the new account. What would happen then? You more than likely would be subject to different penalties and taxes.

Hopefully this helps explain a little more clearly what the difference is between a rollover and a transfer. If you need to know more how this works for your specific situation then contact us and we will make sure our professionals help you out.  Here is our transfer request form if you need to start the process of transferring your money to a great custodian.

4 Retirement Mistakes You’ll Want To Avoid

Tuesday, June 23rd, 2015

4 Retirement Mistakes To Avoid

For many of us, retirement is a big afterthought. We feel like we are young enough that we can start saving once we have a little more money. We must not think this way because there are plenty of things that we do everyday that can have an affect on our retirement nest egg. If we do not have retirement in our minds when we are young we may never begin to start making the right choices to be financially independent by the time we hit retirement.

While retirement is for those who are at least 62 and older, no matter what your age, you can sabotage your retirement financial independence by making crucial mistakes before you get to retirement. These are but a few of the mistakes that you may regret making when it comes to being financially independent by retirement.

Not saving at all in a retirement account

It is easier to put off saving. Saving money can make it harder to pay bills and anything else you may be wanting to buy or spend money on. The problem with putting off saving is that it actually makes things A LOT harder down the road when you want to start saving. Regardless, it probably will never be easy to start saving for retirement. The thing is, the earlier you start saving the more compound interest you can accrue and that is huge! Compound interest can be your greatest friend when saving and investing but can also be your greatest enemy when borrowing money. Learn more about compounded interest here…. 10 Things You Need to Know About Compound Interest. In order to make saving for your retirement work now you need to budget for it from the beginning. The more automated you can get with your retirement savings the more likely you are to actually save. For instance, automatically withdwrawing $100.00 (or whatever you can budget) from your checking account the day you get paid and having that transferred into a retirement account for investing is one of your best chances for making this work!

Roth IRA Withdrawals

Roth IRAs can be a great vehicle for retirement saving because the money grows tax-free. There are plenty of reasons why retirement experts love Roth IRAs, one reason in particular is their flexible way for withdrawals before retirement. For instance, if you were planning on using the money for a first time home buy, you can withdraw up to $10,000. You can also use Roth IRAs for unforeseeable expenses. How does this work? Five years after any contribution you can withdraw the principle without any penalty. While this is a benefit and security blanket for those saving in a Roth IRA, the truth is, any withdraw from your retirement accounts now hurts you of the compound interest and funds down the line.

Not Planning for the extra mile

There are so many variables that can happen when in retirement and even before retirement. Because there are so many variables to how much money we are actually going to need in retirement you must plan for the extra mile. You really don’t know how long you are going to live, yes it could be less than you plan for, but it could also be more than you plan for. For that very reason alone you will want to plan a little longer than you expect. You also don’t know how healthy you are going to be. While in retirement you tend to have a lot more health costs because things aren’t as good as they once were. If by chance a major health issue comes up you will need extra in your nest egg to be able to pay for the health issue and still have enough to go throughout your whole retirement. The idea here is to plan for more than what you expect because you never know.

Not Adapting

Do you know what you will be making in 10 years? How about how much you’ll be spending or how your retirement investments are doing? Because of this you have to be adaptable while in retirement. One of the keys to adapting is to stay up on the changes that come upon you or your retirement nest egg. The best way to do this is to check your retirement plan on a yearly basis and adapt for any potential issues. This is a very important step and if you don’t adapt your retirement nest egg most likely won’t be what you need it to be when you arrive at retirement.

These are just a few of the things that you’ll want to make sure you aren’t doing. In fact, if you can do just the opposite of these pitfalls your retirement plan and nest egg should look pretty good by the time you get to retirement.


These Self-Directed IRA Rules Are Important

Friday, June 19th, 2015

Investing how you want with your IRA is important to us. A self-directed IRA is the way to invest how you want with your IRA. What you might not realize though is a self-directed IRA is really just a regular IRA. The key to a self-directed IRA or being able to invest in what you want with an IRA is having a custodian that will allow you to invest how you want with your IRA. We at Accuplan offer a truly self-directed IRA and will allow you to invest how you want with your IRA. What is the catch? The only catch is that you have to follow the rules set by the IRS for investing with your IRA. To help stay on the correct path when investing with your IRA let's talk about a few of the biggest self-directed IRA rules when investing with your IRA.

Self-Directed IRA Rules To Know

Disqualified Transactions

The IRS has outlined two things that are not allowed inside of an IRA and so you will want to stay clear of these types of investments or they will surely disqualify your IRA.  What are the two disqualified transactions?

  1. 1- Insurance Policies- You cannot take out a life insurance policy on yourself inside of an IRA. We will get more into why this is the case under the self dealings section.
  2. 2- Collectibles- This includes stamps, coins, artwork, guns, cars, and any other asset that could be deemed a collectible. If it seems like a collectible then the best bet is to stay clear of the investment. Note:  The IRS does allow gold and silver as long as it meets certain criteria. Find out more –> Gold Back IRA FAQs

Disqualified Persons

This is a very big issue when investing with a self-directed IRA. In regards to disqualified persons you cannot lend money to them through your IRA, invest in their businesses through your IRA or let them live in a real estate property that you purchased through your IRA. The following is directly from the IRS website and explains what constitutes someone as a disqualified person. So who is considered a disqualified person? The following image should help show you who is considered disqualified and who may be disqualified.

Disqualified Persons

This is the general rule to disqualified persons. You will want to make sure for your specific situation that you are not doing any dealings with disqualified persons. Contact us today for help in determining if you are dealing with a disqualified person.

Self Dealings

This is another topic that can be easily broken but easily forgotten. IRA owners cannot make investments that benefit themselves, even indirectly. For example, you cannot use your IRA to buy a house that you will be living in. Nor can you use your IRA to buy a house that any of your family members will be living in or renting. This is another area that you will want to make sure your specific situation is in line with the rules. If you need help trying to make sure you are not self dealing then contact us and we can help.

These are just a few of the biggest rules to investing with your IRA. We want you to be fully aware and educated so that you can have the best experience investing with your IRA. It should also be noted that if you fail to abide by any of these rules you risk significant tax liability to your IRA and in turn you would be removing all the benefits that come with IRAs.

We are here to help make sure you stay on the right course with your investing inside of an self-directed IRA. Please call us and talk to a professional for more information.


Why Do We Love Checkbook IRAs?

Monday, June 15th, 2015

Checkbook Control IRA

We love self-directed IRAs and being able to invest in the to the full potential of an IRA or 401k. That is one reason we love a checkbook IRA or a self-directed IRA with checkbook control.

Forming a limited liability company (LLC) with your self-directed IRA is a great way to use your self-directed IRA. This is just another bit of evidence to show that self-directed IRAs give you more control over your retirement account and investing.This type of account is commonly referred to as a checkbook IRA or IRA LLC.

What are the basic steps to how a checkbook IRA works?

  1. Your IRA forms an LLC
  2. The IRA owner becomes acting manager of the LLC
  3. The LLC opens a bank account in its name and funds are deposited into the account from the IRA.
  4. You are able to write checks out of the account to acquire investments as the LLC manager

So what are some of the benefits to having a self-directed IRA with checkbook control?

While there are multiple benefits to having checkbook control with your IRA let's go over some of the top benefits.

The main benefit to a checkbook IRA is that you are are able to write check directly from the LLC account to acquire investments. There is no waiting for the custodian to approve and then direct payment for you. You save time and back and forth with the custodian. This is really the only way to go about investing with your self-directed IRA without having to always go through the custodian.

Another benefit that might be important to you is an LLC has some more personal protection when you are investing in multiple properties with multiple LLCs. If you want to know about these possible protections, contact us.

No matter what your reasoning is for being interested in a checkbook IRA you will want to make sure you are properly educated. A checkbook IRA gives you a lot more flexibility and control and with that control you'll want to make sure you are doing things correctly. Checkbook control offers you the ability to invest without having to go directly through your custodian. Because of this you must make sure that the investments that you invest with follow the rules of IRA investing. There are also rules/taxes for LLCs that may be applicable depending on the state you are in.

As long as you do sufficient due diligence before you invest in anything and follow the rules to IRA investing then you shouldn't have to worry. One of the biggest rules to be aware of for investing with any self-directed IRA is not dealing with disqualified persons. There are also other prohibited transactions to be aware of. If you want more info on other prohibited transactions please contact us.

We want to make investing with a checkbook IRA to be the best experience that you can have. We are here to help inform you and answer any questions to your checkbook IRA investing. Contact us now for help setting up your checkbook IRA or answering any questions you may have with your account.


Be Financially Independent When Retired

Thursday, June 11th, 2015

Financial Independence

Financial independence is used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses. This is something that many of us yearn for and strive to have, especially when it comes to our retirement. This is something that for most of us is quite hard to achieve, not impossible, but hard to achieve. It is something that we have to work at and strive for. Financial independence takes an all out effort. It takes us truly analyzing our situation and figuring out where we are at and how we get to where we need to be in order to be financially independent.

Why Financial Independence?

One huge benefit to financial independence is security. The security that if your current job goes south it doesn't mean disaster or when in retirement if an unexpected health bill arises that you can cover the expenses. Retirement is one of the biggest things financial independence will benefit. Many times in retirement there will come a time when you can no longer work. During this time the best situation you can put yourself in is to be financially independent.

How To Get Financially Independent?

Two major things should happen to have the best chances of becoming financially independent. The first thing you need to do is save and save until it hurts. This is something that you are going to need to do all the time in order to achieve your goal of financial independence. It comes down to two major things. The first thing you need to do is to start saving and saving hard. Save until it hurts.

How much should I be saving?

This can be a huge debate and I have written extensively about this. You have to decide which way to calculate how much you should be saving is right for you. One way I like to figure it out is by first planning out my retirement with this retirement guide.  Once I know where I am at with my current retirement savings and where my retirement nest egg needs to be then I will have a much better idea of what that means I should be saving. 

One easy way to break down what you should be saving is to look at how much you spend a year. Again, the retirement guide can help you figure this out. Once you know what you spend a year then the idea is to save roughly 15 times your yearly spend (expense coverage ratio). If you spend $50,000.00 a year your goal for retirement should be to save roughly $750,000.00. Seem way to hard to save that much? That is why you need to start saving and planning today for your retirement. 

One thing to note is that while you may currently be spending a certain amount that typically changes over time. Because of this you should continually be checking your spending and savings to make sure it is in line to help you save roughy 15 times your spending by retirement. This should be done on a yearly basis or at least every other year. The closer you get to retirement the more often you will want to make sure your expense coverage ratio is still on par to be where you need it for retirement. 

Expense coverage ratio by age (how much money you have saved to cover yearly expenses) 

Age  |   ECR

  25   |  .5 times 

  35   |   4 times 

  45   |   7.5 times

  55   |   11 times

  65   |   15 times

This is a rough guideline that will change over time for most of us. We may notice there are times that are easier to save than others throughout our lives. Typically though the earlier we start saving towards this goal of 15 times our yearly expenses the ore likely we are to obtain that goal. 

Investing to reach your retirement goals

One way to help achieve that retirement goal of an expense coverage ratio of 15 times is by investing. There are plenty of ways to invest for retirement. The two best vehicles to invest with for retiremen is through an IRA and 401K. These two types of accounts are specifically retirement accounts that give you specific benefits for retirement.

Once you know the type of account you want to use for retirement investing the next step is to start investing. There are way too many different investment accounts to go through what types of investments are best for you. One thing to know though is that a diversified retirement nest egg that is invested in a wide range of investments is a smart decision. One way to invest in a wider range of investments through an IRA or 401k is through a self-directed IRA or self-directed 401k. We specialize in self-directed IRAs and 401ks and are here to answer your questions about how you can go about investing in real estate, gold or private placements with your IRA or 401k.

Hopefully we have begun to show you how important saving and investing for retirement is. If you don't start early enough it can be very overwhelming to save enough for what you will need during retirement. Even if you are too close to retirement and you won't be able to save up enough it still make sense to start now to save. Every little bit really does help.

Retirement is a big time in our lives and it should be great. The more you plan, save and invest for retirement the better chance you have to enjoy that retirement you have always wanted.