Archive for August, 2015

What Experts Are Saying About Investing in Gold

Monday, August 31st, 2015

Gold Investing 3

Gold, of all commodities, has had its hectic ups and downs, so it’s needless to say that investing in precious metals isn’t for the faint of heart. Or is it? There’s a lot of misinterpretation when it comes to precious metals, especially gold. Let’s shed some light on the matter, and see what the pros are saying about investing in gold in the 21st century.

About interest rates

Some analysts are saying that the on-going threat of the Federal Reserve rate hiking is a big reason to avoid investing in precious metals. The reality is that it remains to be seen whether or not the Fed will follow through on this rhetoric of a hike in September 2015. But nominal interest rates do not determine whether precious metals are more or less attractive than interest-bearing debt instruments.

As a retirement option

A gold-backed IRA as a retirement option, is a self-directed IRA that holds precious metals, namely, gold. By diversifying, it adds more stability to your IRA. Adding gold and other precious metals to your portfolio lowers risk by diversifying from paper assets, consequently hedging against the economy and inflation.

Buying low, selling high

Everyone’s heard this term before, and its meaning still holds true today, and frankly, those are words to live by with gold investing. When the Stock Market is uneasy, and starts to take a downturn, a lot of reactions are the same; sell. Sell it all. It is difficult to suppress these reactions, but we all need to do what is counter-intuitive, and that’s when we should be buying. The reason for this is that value price of gold and our economy are inversely related. Our economy is based on currency that is known as fiat, meaning that it is worth only the value of the actual paper it is printed on. So when we experience market decline, stocks and the dollar move downward. They become less desirable. Gold then becomes more desirable and according to the law of supply and demand it’s value increases as well.

Bottom line is that gold is recognized as the true standard of value across the globe. It is a standard for world wide exchange, and has been since the dawn of time. It maintains its value from one country to another, and is not subject to the same systematic risk that the stock market has been known for.

Investing in Real Estate with Your Self-Directed IRA

Thursday, August 27th, 2015

Investing in real estateInvesting in real estate has become increasingly popular as an alternative to more traditional investing, like stocks and bonds, especially when it comes to those who are looking at real estate as an option to grow their retirement account.

While real estate is big for those interested in flipping homes, or renting out to tenants, only 2% of retirement account holders invest in real estate. And we at Accuplan think that’s a crying shame. To put it simply, think of it this way, say you currently have $100,000 in your IRA, if you buy a home with that IRA, fix it up, and resell it for $120,000, your IRA just gained $20,000. This is exactly why real estate investing is hot right now.

Some custodians offer IRA owners checkbook access to their IRA balances, and with it, investors can get significant flexibility in investing options, and greater control over their retirement assets.

Sounds pretty great, doesn’t it? Because it is. Investing in alternatives with your IRA can significantly grow your IRA, so let’s go over how it’s done.

How does it work?

First, in order to invest in real estate with your IRA, you have to find a financial services firm that will allow you to open a self-directed ira real estate. A self-directed IRA is essentially the same as a traditional IRA, but allows you to purchase a broader range of investments, including real estate (note: some IRA custodians don’t allow their customers to invest in real estate, so always make sure you’re fully looking into who you’re dealing with). Although you get to choose your own investments in a self-directed IRA, you cannot be the custodian of your own IRA, so you should find a firm that is familiar with handling real estate investments in IRAs.

Say you have now set up and account, and you have your assets sorted out, the next step would be to find what type of real estate you would like to invest in. What’s so great about a self-directed IRA is that you have freedom to choose, and your options, just in real estate are very, very broad. Options include:

  • Single-family and multi-unit homes
  • Apartment buildings
  • Condominiums
  • Commercial property
  • Improved or unimproved land (leveraged or unleveraged)

Once you’ve provided the documentation and proper instructions for purchasing the property, your IRA custodian will initiate the property purchase for your IRA. The title of the property will reflect the name of your IRA custodian. All property management and property specific expenses must be made through the IRA, so the IRA must have sufficient cash to pay these amounts. Having to rely on outside funds to manage expenses can lead to the loss of tax benefits or penalties.

What is and is not allowed?

What might play a role in how you decide what type of property is for you might lean left or right after learning what is and is not allowed. You can purchase property in your IRA as long as it does not result in what is called “self-dealing”. This means you cannot purchase a home or building in which you will reside or do in business in your IRA. Your IRA also cannot purchase any property owned by you or a business in which you or certain members of your family have a specified percentage of ownership. The IRA is also prohibited from selling any property to you or any of the aforementioned parties.

Neither you nor your immediate family can benefit from the investment before you reach the IRA’s distribution age. If you do, you could be hit with a tax penalty and could have your IRA invalidated.

Everything you use to fund an IRA investment property must come out of your IRA. Likewise, money that comes out of the investment property must be given back to your IRA. So if you buy an apartment and rent it out, that rent money must go back into your IRA—not your wallet. This is because your IRA is the owner of that property, and should directly benefit from the monetary gains.

If your investment property requires repairs like a new water heater, you need to use your IRA to pay for it, which is where a tool like checkbook control would most definitely come in handy.

Get a hold of Accuplan today if you have questions about opening up your own self-directed IRA, or if you’re interesting in using your existing IRA to invest in real estate.

It’s Time for a Checkbook Control Q&A!

Monday, August 24th, 2015

Checkbook

Gaining checkbook control through your IRA is a powerful tool for managing your assets as a self-directed IRA owner. But what is it? Checkbook control is a term used when a person who has a self-directed IRA has ownership, and signing authority over their retirement funds.

Q. How do I set it all up?

A. To get going on your own checkbook for your IRA, you will first need to establish an LLC that’s owned by your IRA. After that, a business checking account will be set up in its name, and that requires an EIN, or tax ID number.
The funds in your IRA and business checking account will then be linked together, and once this is done, you’ll be issued a checkbook that is attached to that checking account. You will then need to elect yourself the Managing Member of your LLC, and will then have control over the checkbook. Tada! Checkbook control!

Q. What about the rules?

A. The best thing about checkbook control is just that, control. It allows you to invest in just about any type of opportunity that you come across. Investments like:

  • Real estate – repairs on properties, property taxes, HOA fees, contractor fees, etc.
  • Precious metals
  • Hard money lending
  • Stock options
  • Foreign currency
  • Private business

You’ve gained more freedom to quickly invest in what you want to invest in. Of course, more traditional investment options like mutual funds and bonds are still great options, but who doesn’t want more variety?

Q. With great control, comes greater responsibility?

A. This isn’t just Spider-Man’s (sort of) motto, it’s also just solid advice. There are some limitations to all this checkbook control you’ve been loving, just as there are with a typical self-directed IRA. There are prohibited transactions, especially when you’re using a single-member LLC. For instance, disqualified persons, with yourself included, cannot vacation on the property that your IRA owns. You also cannot directly benefit from your investments, all of the money that’s made from say, a rental property, have to go back into your IRA.
If it’s found that rules have been broken, penalties could be issued, and in some cases, lead to disqualification of your retirement account.

Q. Are there specifics to Accuplan?

A. The use of a qualified IRA custodian is required to gain checkbook control, and here at Accuplan, we use the services of American Estate & Trust. The benefits to using American Estate & Trust and Accuplan are:

  • Experience – dedicated to dealing with self directed IRA accounts
  • Flexibility – focused on providing self directed IRA account services tailored to the needs of the self directed IRA account holder
  • Seamless integration – Accuplan Benefits Services and American Estate & Trust are owned by the same principals with common support staff, so you will get a completely integrated, one-stop solution for your self directed IRA needs

There are definitely more pros than cons when it comes to checkbook control, but it’s all about using it wisely and responsibly. Checkbook control might not be for everyone, and that’s to be expected, but for those of us that want true control over their self-directed IRA, there’s no better option.

Author: Tanya

Three Key Financial Strategies for a Successful Retirement

Thursday, August 20th, 2015

Financial strategy

Meet the Match

You’ve heard it before, so say it with us! Always, always, always max out your employers 401k contribution. This cannot be said enough, because there are so many people that don’t take full advantage of the 401k match, and they’re losing out on free money because of it. According to a recent survey, only 77% of employees who participate in an employer-sponsored retirement plan contribute enough to receive the full employer match.

meet match graph

Do Some Heavy Lifting

Don’t solely rely on the advice of others when it comes to investments. As they say, get your hands dirty, do some research for yourself on what you want to invest in, find a strategy that works for you, find that balance. While it most definitely is easier to allow someone else —or more accurately, an algorithm— to make those decisions for you, it’s not necessarily in your best interest.

Explore Alternative Options

For a majority of people, when retirement investing it brought up, they think about either of a 401k, or stocks and bonds, and investing with an IRA doesn’t have to be so cut and dry like that. If getting a little more involved is your thing, consider a self-directed IRA. It’s pretty self-explanatory. It’s an IRA, that is self-directed. By you. You now are taking the helm, so where do you want to go? Interested in real estate? Go for it. How about oil and energy? You can do that. Business? Precious metals? Livestock? You can invest in it all.

Unfortunately, there really isn’t a one size fits all when it comes to a financial strategy. But that’s also the good news. There are options out there for everyone, and there’s a lot of unexplored territory. It all just comes down to finding what best suits us.

The Low-Down on Required Minimum Distribution and How it Affects You

Monday, August 17th, 2015

CaptureWhether you’re thinking about retirement, or you’re currently retired, you have lots of choices to make regarding your IRA, and what’s right for your overall retirement plan.
There is at least one decision though, that the IRS will make for you, and that’s the age that you must begin taking income from your IRA. It’s known as a Required Minimum Distribution or RMD. You may or may not have heard of this before, and if you haven’t, don’t worry, we’ll break it down for you.

When do I start withdrawing funds?

As a general rules, you must take your first RMD by April 1st following the calendar year you turn 70½. If you participate in an employer sponsored plan, your starting year for RMDs is the year you turn 70½ or the year you terminate employment, whichever is later. The RMD deadline for subsequent years is December 31.
For instance, if you’ll be 70½ this March, this is the first year you need to take an RMD. The deadline for doing so, though, is April 1 of next year. You’ll need to take your second RMD by December 31 of that same year, either in a lump sum or in installments.

How is an RMD calculated?

Generally, the required distribution is determined through a formula that involves the amount of your accounts and your life expectancy. If you don’t take the RMD, there are serious penalties that can get up to 50 percent of the amount that you were supposed to withdraw.

What types of accounts do RMDs apply to?

You generally have to take an RMD from any retirement account to which you have made tax-deferred contributions or had tax-deferred earnings. These accounts include:

  • Traditional IRAs
  • 401(k), 403(b) and 457 retirement plans
  • SEP IRAs
  • SIMPLE IRAs
  • Inherited beneficiary qualified accounts
  • Pension and profit sharing plans

Roth IRAs are an exception. You are not required to take RMDs from a Roth IRA during your lifetime. The reason Roth IRAs are an exception is because you’ve already paid taxes on your Roth account as you’ve made payments into it.