Archive for September, 2015

Let’s Talk About the Pros and Cons of President Obama’s “myRA”

Monday, September 28th, 2015

myRA pic 3

(image credit to The Monday Face)

In the State of the Union of January 2014, President Obama announced his plans to introduce a program called “myRA” which stands for My Retirement Account. It’s specifically built for workers who may not have a current retirement account, but would like to start building a nest egg. Here are a few of the specifications for opening a myRA.

How does it work?

The account is essentially a Roth IRA, so the contributions that you make each month are made tax-free, and through direct deposit (which means that your work will first have to offer the program). Your contributions are made automatically on whatever day works best for you, like a certain day of the month, or multiple paydays within a month. If/when workers switch jobs, the account stays with you since your employer isn’t administering the account, so no worries on that front.

The funds that you deposit are invested in government savings bonds, and backed by the U.S Department of the Treasury, so savers can never lose their principal investment. The cap on myRA contributions are $5,500, a year under current limits, just like with regular Roth IRAs.

Who’s eligible?

This new program is mainly aimed at low to middle-income americans who don’t have access to employer-sponsored retirement plans. With no fees to maintain the account, and no fees to open the account, it’s ideal for the target demographic. But all workers may invest in a myRA, including those who would like to supplement an existing 401k plan, as long as their household income falls below $191,000 a year.

What are the downsides?

One of the main downsides is that it’s not a long-term retirement plan. The myRA plan is mainly meant as a kickstarter for your retirement, because once a participant’s account balance hits $15,000, or the account has been open for 30 years, they will have to roll it over to a private sector Roth IRA, where the money can continue to grow tax-free. Another downside is interest that the account will gain, you’re not going to have a huge amount of earnings on this account. The White House said the accounts will earn the same rate as the Thrift Savings Plan’s Government Securities Investment Fund that it offers to federal workers. That fund earned around 1.5 % in 2012, and had an average annual return of 3.6% between 2003 and 2012.

The lack of investment control that the account holder has might also be a downside for some. As we said above, the funds are invested in government savings bonds, and so subsequently, the opportunity for workers to have some investment freedom is out the window unfortunately.

The truth is that no one thinks this alone will fix the fact that millions of Americans have little-to-no retirement savings, but retirement advocates are cheering on the new program as an important step in the right direction.

Author: Tanya

Who Does Checkbook Control Work Best For?

Thursday, September 24th, 2015

cb control 4

As we all know, a self-directed IRA gives you freedom to break free from the confines of Wall Street. It allows you to invest in what you wish to make investment decisions that make sense for you, and what you want, like real estate, or a chicken farm, or in the latest technology. No matter what, it’s up to you.
Adding a tool like checkbook control to your IRA account will only give you more independence. Without authorization hassles, bureaucratic interference, or prohibitive guidelines, it’s your no-string-attached answer.
But who exactly would checkbook control work best for? We’ve got answers!

The Real Estate Mogul

If you’re in real estate in anyway, you know the costs of owning property. There’s sometimes just more than what meets the eye, and property ownership is very unpredictable, which is partly why a lot of people invest in real estate I think. Where checkbook control comes into play is right along side of that unpredictability. If something does go wrong, and needs to get fixed straight away, or taxes need to be paid, it’s easy to get it taken care of with checkbook control. Just sign the check, and it’s done. No calling your IRA holder, no waiting on hold.

The Investor

Money needs to move fast in the world of investing. The fastest way to get your money where you want it, if you’re investing through your IRA, is with checkbook control. Period. Back in the day, it used to be that you had “a guy”, a guy that would take your money, and invest it for you, however they saw fit. Which lead to a lot of abuse of funds, misleading, and over-promises. With checkbook control, you’ve completely cut out the middle-man altogether, and you’re now taking charge.

Everyone

Honestly, what this all comes down to is that if you’re serious about growing your IRA, and you’re serious about taking control, then your answer just might be checkbook control.

If you have more questions about a self-directed IRA, checkbook control, or any of the services that Accuplan offers, feel free to get in touch with us today! Our contact information is listed below.

Office: (801) 266-9900
Fax: (877) 890-0929
Toll Free: (866) 454-2649

Author: Tanya

New to Self-Directed IRAs? Here’s a Breakdown {infographic}

Thursday, September 17th, 2015

sdira breakdown

Self-directed IRAs are what we do best at Accuplan. They’re perfect for the investor that wants absolute control of their retirement funds, and know exactly what they want, and how they envision their future. But if you’re just starting out, say you’ve been funding your retirement accounts for the last 20 years or so, and you’ve grown a healthy amount, and now you’re ready to invest. There’s a lot of information about IRA LLCs, or self-directed IRAs, or investing in gold, so where do you start? It’s best to start with HOW things work

Click the infographic to enlarge.

Self-Diected IRA Infographic

Author: Tanya

Flipping Houses Using Your Self-Directed IRA

Monday, September 14th, 2015

flipping iraFlipping property is an increasingly appealing option, not only for investors but for everyday people. With the economic recovery and accompanying rebound in home prices, as well as the slowdown in new-home construction, flipping is a prime investment opportunity in many markets across the board. There is good money to be made in the business of acquiring homes that are distressed (usually in physical condition or even financial distress), rehabilitating those homes, and then, in turn, reselling the property to a buyer, or even to another investor looking for a cash-flow rental property.

Familiarize Yourself with Self-Directed IRA Rules

  • Now, if you do elect to use a retirement account to hold real estate – whether you are flipping it or not – you need to keep some strict rules in mind:
  • You cannot stay overnight in the property – even for one night.
  • You cannot let your spouse, your children or parents, or any in-laws stay in the house.
  • You cannot use the house to benefit any advisor who works with you on your IRA.
  • You cannot rent the house to yourself, nor to any disqualified persons, even at market rates.
  • You cannot buy the property from or sell the property to your own IRA, nor may any disqualified persons mentioned above.
  • You cannot intermingle IRA and non-IRA funds.
  • You cannot take money out of the IRA unless you take it in the form of a distribution, which may be taxable. There may also be penalties involved for early withdrawals.
  • You cannot lend money to your self-directed retirement account, nor borrow from it.
  • Neither can any disqualified person mentioned above.
  • Your IRA cannot contract for goods and services with you, nor with any entity that you or any of the above-disqualified persons control. That means you cannot buy a property in an IRA and then hire yourself or your son-in-law to provide the landscaping or property management services.

Get Used to the Hands-off Approach

All the investments you make with you self-directed IRA must be done fully at arm’s length. What we mean by that is when it comes to flipping property, you will have to be comfortable with handling your investment at a distance. Your role will be to operate basically as a fund manager; making decisions, negotiating and executing contracts, selecting vendors, and conducting the financial transactions associated with your IRA through checkbook control, or through your IRA’s custodian. It’s also good to note that you cannot be directly involved in a hands-on sense, such as serving as contractor yourself. Hands off.

Learning About Leverage

Depending on the balance in your self-directed IRA, you may be able to flip real estate as an investment strategy by using cash for all of your purchase transactions, which is ideal. Doing so would certainly make the process go more quickly, and could potentially allow you to engage in more transactions and boost your returns.
But, if you choose to use leverage by borrowing money to purchase real estate for flipping, it’s important to understand that you may be incurring a current year tax liability because of that borrowing. Using leverage to make investments within an IRA can generate what’s known as “unrelated business taxable income.” And unlike other types of income, you generate with your IRA, unrelated business taxable income is not tax exempt.

Finally, if you’re considering flipping houses with your self-directed IRA, make sure to go into each transaction well educated and well prepared. Real estate investing (and flipping in particular) might be fun and exciting, but it’s still investing. So if you’re not already experienced with this type of investment, start with smaller transactions and proceed cautiously until you learn more, and grow as an experienced investor.