Posts Tagged ‘self directed 401k’

How Much Money Should You Have in Your Retirement Accounts?

Monday, February 17th, 2014

How much do you need to retire

Saving for retirement can seem so frustrating and out of your hands. There are so many things you can do to make sure you are involved with your own retirement. You can even invest your retirement how you want with a with a self directed account. Self directed accounts can be IRA or 401Ks. What is great about a self directed account is that you can invest in things like real estate and gold. There is plenty of other things you can use your IRA to invest in with a self directed account. If you are worried about invest in the stock market then a self directed account is a great option. Once you have a self directed account then what? Start investing!! Even when investing with a self directed account it is important to remember about your end goal of securing a great retirement.

We have extensively gone over retirement and how to prepare for that ever so exciting, yet potentially stressful time. The more you are prepared for retirement the less stressful it will be. Why is it stressful? It is stressful because if you haven’t prepared well enough then you may be wondering if you have enough money in your retirement accounts? This is what most of us worry about. With a self directed account it isn’t always about how much money is in your accounts but what are your assets worth? ¬†Either way knowing you have enough to get through your retirement without running dry is important. Today we will be discussing how much money you will need when you actually do retire.

As knowing a perfect figure can be quite tricky and each situation can rule different outcomes it is wise to sit down with a financial planner to make sure you are on the correct track for your situation. A few of the factors that need to be considered when looking at your situation are:

When You Retire

When you retire can have a huge impact on your retirement income. Just speaking of when you will start collecting social social security between 62 to 70 can be dramatic. Say you earned $50,000 a year and turned 62 in 2013. You could collect roughly $1,011 a month as a single. If you waited until 66 you would be able to collect roughly $1,420 a month (in today dollars). If you started collecting at 70 you would collect roughly $1,972 a month (as before it is in today dollars).

Where you Retire

$300,000 can go a lot farther in places like Daytona Beach, Florida, Pocatello, Idaho, Greenville, S.C. than it can in San Francisco, California, or New York, New York. Make sure you know the cost of living where you are retiring. You may find that you need to adjust your savings plan depending.

What You Plan To Do While Retired

This is an obvious but often overlooked aspect of retirement. If you plan to continue the same lifestyle that you typically had before retirement you should be ok. If you plan to travel and do things that you never did while working you may need to boost your retirement savings plan.

How Long You’ll Live

This is another huge thing to be aware of when retiring. Of course we never know what is going to happen but you should plan for the long haul. There are different ways you can judge how long you will live. There are expectancy calculators and the IRS has a table to guestimate how long you will live. Using those guestimates you’ll be able to know how long you’re going to need money which will be a great insight to figuring out how much you’ll actually need.
With so many variables that go into figuring out how much you actually need is it even possible to have any idea what I should be saving now? Yes, it is very possible to have a good idea of what you need. There are plenty of calculators that help you with your retirement. There is also a general rule of thumb that can give you a good starting point.
  • Age 35: Have saved as much as your current salary.
  • Age 45: Have three times your salary saved.
  • Age 55: Save at least five times your salary.
  • Age 67: When it’s time to retire, a great goal is to have saved at least eight times your ending salary.
This is a great starting point and if followed can give you a very solid basses for your retirement. It still doesn’t beat out getting as detailed as possible though. Look at every aspect of your life and figure exactly how much you spend and do your best to figure out future spending. Again, the more detailed detailed the plan the better. If you follow that detailed plan you are much more likely to be able to go through retirement lasting on your own money. you need to very wise to dig as deep as you can and to get as detailed as possible.

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Fund your Business with a Self Directed 401k

Wednesday, January 29th, 2014

Fund Your Business with Self Directed 401k

Have you ever wanted to start your own business but don’t have the funds available to start the business? Maybe you have been laid off and have funds sitting around in your 401k. Now could be the perfect time to start that business you always wanted to start. Why not use the funds in your 401k to start the business? We will be discussing how it is possible to use your retirment account to fund that business you want to start.

How can this be done? The answer is with a Self Directed 401k that we refer to at Accuplan Benefits Services as a Mysop.  With a Mysop you can utilize IRA or 401k funds to help start and fund your new business.  It is a great way to infuse cash into your business rather than trying to get financing.  It can also help in the event that you still need to get financing but the lender is requiring that you have a certain amount of cash in the business in order to do the loan.

How does a Self Directed 401k (Mysop) Work?

  1. Create Entity.  The entity must be a C Corp.  Accuplan Benefits Services will create the entity with the appropriate state.
  2. Create the Plan (Trust with Plan documents). Accuplan Benefits Services will create the Plan and file with the IRS.
  3. Rollover monies from IRA or 401K to your one.K plan.
  4. Setup Checking Accounts for the Company.
  5. Direct Investments by purchasing stock in the C Corp

What are Some of the Benefits of a Self Directed 401k (Mysop)?

  • Allows for retirement cash to be placed into a company without it being a loan.
  • Eliminates many of the prohibited transaction problems when conducting business.   For more information about this see previous blogs about prohibited transactions inside of an IRA.
  • Provides capital for start ups or other cash strapped businesses.
  • Provides for recourse loans when non-recourse loans are not available or practical.
  • You control your retirement plans rather than relying on another person.  You are much more concerned with how your retirement plan performs than any investment advisor.

Below is an Example of How a Self Directed 401k (Mysop) Could Apply to You

Mysop Bed and Breakfast Example

  1. Accuplan creates a C-Corporation.
  2. Accuplan creates your personalized mySOP plan and your C-Corp adopts the plan.  A 401(k)  is also established for later contributions.
  3. Bob and Carol roll over some of their IRA monies into the mySOP.
  4. Bob and Carol, acting as Manager and Trustee, set up bank accounts for the C-Corp and the 401(k).
  5. Bob and Carol, acting as Trustee of the mySOP (Self Directed 401k), purchase shares of the C-Corp which will be the bed & breakfast.
  6. The C-Corp now purchases the bed & breakfast from the current owners for $500K.

If you have any questions or would like more information about how you can use your retirement funds to start a business please contact us at Accuplan Benefits Services. You can contact me with my information below.

Author: , Self Directed IRA Professional
1.801.683.9291
[email protected]

Disqualified Persons in Regards to Self Directed IRAs and 401ks

Thursday, January 16th, 2014

You will want to set up a self directed IRA account if you plan to invest in gold, real estate or other businesses with an IRA. Setting up an account is fast and easy, but when it comes to investing with your self directed IRA or 401k it can be a bit trickier. You have to make sure you are doing everything correctly to avoid any disqualification of your IRA or 401k.

One basic rule to self directed IRA investing that you need to be aware of pertains to disqualified persons. 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.

A disqualified person is any of the following:

(1)  a fiduciary of the plan;

(2)  a person providing services to the plan;

(3)  an employer, any of whose employees are covered by the plan;

(4)  an employee organization, any of whose members are covered by
       the plan;

(5)  any direct or indirect owner of 50% or more of any of the following:

  • the combined voting power of all classes of stock entitled to vote, or the total value of shares of all classes of stock of a corporation that is an employer or employee organization described in (3) or (4);
  • the capital interest or profits interest of a partnership that is an employer or employee organization described in (3) or (4); or
  • the beneficial interest of a trust or unincorporated enterprise that is an employer or an employee organization described in (3) or (4);

(6)  a member of the family of any individual described in (1), (2), (3), or
      (4) (i.e., the individual’s spouse, ancestor, lineal descendant, or any
      spouse of a lineal descendant);

(7)  a corporation, partnership, trust, or estate of which (or in which) any
       direct or indirect owner described in (1) through (5) holds 50% or
       more of any of the following:

  • the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation;
  • the capital interest or profits interest of a partnership; or
  • the beneficial interest of a trust or estate;

(8)  an officer, director (or an individual having powers or responsibilities
      similar to those of officers or directors), a 10% or more shareholder,
      or highly compensated employee (earning 10% or more of the yearly
      wages of an employer) of a person described in (3), (4), (5), or (7);

(9)  a 10% or more (in capital or profits) partner or joint venture of a
       person described in (3), (4), (5), or (7); or

(10)  any disqualified person, as described in (1) through (9) above, who
         is a disqualified person with respect to any plan to which a
         multiemployer plan trust is permitted to make payments under
         section 4223 of ERISA.

For additional information, see Publication 560 on the IRS website.

The below infographic shows disqualified persons. The infographic is a general rule and different situations could deem others as disqualified persons or not a disqualified person. Talk to a professional to know if your specific situation involves anyone that would be considered a disqualified person.

Click on the image for a bigger view.
Disqualified Persons

Contact us or comment below with any questions or to learn more about self directed IRAs.

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Q3-2012 Precious Metals Self Directed IRA Update

Sunday, October 21st, 2012

The World Gold Council just released their Q3-2012 Gold update. We thought that we would review some of the highlights.

Q3 Summary

  • Gold (US$/oz) returned 11.1% in the third quarter as investors responded to further central bank measures aimed at stimulating the economy. Volatility decreased during the period, with gold prices experiencing little movement in the first half of the quarter; correlations to other assets, generally low, remained similar to those seen in Q2.
  • Central banks announced a continuation of their unconventional monetary policy1 programmes in Q3.
  • Central banks have numerous rationales for undertaking unconventional monetary policy, including lowering borrowing costs and supporting financial markets.
  • Financial assets have responded to central bank policy announcements, but gold’s reaction has been the strongest.
  • There is a consensus that these policies drive investment into gold purely due to inflation-risk impact. We believe that there is not one but four principal factors that provide further support to the investment case for gold:
    • Inflation risk
    • Medium-term tail-risk from imbalances
    • Currency debasement and uncertainty
    • Low real rates and emerging market real rate differential

Source: World Gold Council Q3 Report

If you want to see more of the details we recommend you click on this link World Gold Council Q3 Report to read more.

What this means for self directed IRAs

The report shows that if our recommendations for buying and holding gold over the last quarter, you would have realized a 11.1% return on investment. The report supports our commentaries regarding central banks, QE and inflation concerns. These trends are not reversing, but continuing and strengthening.

Those self directed IRA accounts with precious metals have been positioned well and have seen significant returns. For those self directed IRA investors not holding metals or not holding a balanced portfolio of metals, should take note.

Self Directed IRA recommendations for precious metals IRAs

We still recommend buying and accumulating metals in your self directed IRA. You should check your portfolio balance and exposure to precious metals to insure a proper allocation.

For those of you with the correct balance of metal, we recommend to continue holding your metals positions.

Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

Inflation Shows Its Taking Hold And What This Means For Self Directed IRAs

Sunday, October 14th, 2012

Wholesale inflation shows that prices increased by 4.7% for energy related goods and 0.2% for food. That is a total of 4.9% annual increase in the price of energy and foods. Core inflation (what the good ‘ol Fed and government uses) shows around 2.3%.

What does this mean?

What these numbers reflect is:

1. Inflation that the average Joe lunch bucket experiences is much higher than what the government tells us.

2. Inflation is quite large and significant

The Fed and the President continue to attempt to tell us that they are implementing policies that are going to fix the economy (a/k/a jobs, employment). Yet, they report false, misleading numbers that do not match what we see and experience when we engage in the economy (buying goods and services – getting stuff).

The numbers show that inflation is running at something like 6-7% per year when you factor energy and food. For some inexplicable reason, the government does not think those things count when measuring inflation. However, consumers are experiencing these levels of inflation. Additionally, incomes are not anywhere near these annual levels of increases. Compound this with the fact that savers (low risk investors, retired people,, etc) cannot even make 1/2% of interest in their savings due to the government’s low interest policies.

Self Directed IRA investment recommendations

Despite what many on Wall Street and the government tell you, precious metals continue to be a must have in your self directed IRA account. Metals are the ultimate inflation hedge.

Hard assets in your self directed IRA are also critical. We continue to recommend that people hold tangible investments such as loans, real estate, tax liens, deeds of trust, or small business ownership. These assets will be held away from the direct manipulation of Wall Street and the government. These are investments that you know and understand.

Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.