Posts Tagged ‘self directed iras’

A Breakdown of Retirement Terms and What They Mean

Monday, December 4th, 2017

Don’t let the retirement industry terms confuse you, or deter you from pursuing your own retirement account. Here are a handful of the must-know terms to help you get your toes into the pool.

Custodian

An IRA custodian is a financial institution like a bank, credit union or trust company that acts as a bank. IRA custodians are regulated by the IRS and rigorously aim to comply with laws and regulations to keep your IRA tax-deferred or tax-free. They hold your retirement account contributions, as they are the only entity that’s allowed to physically hold assets.

REITs

REITs stand for real estate investment trusts, they are an entity that owns income-producing real estate. Most REITs specialize in particular types of property, residential, industrial, commercial, and retail. Some REITs even own real estate-related debt, like mortgages.

Self-Directed IRA

This is an account type for retirement savers, they can be either Roth or Traditional. The difference between regular IRAs and a self-directed IRA is that with a self-directed IRA you’re allowed to invest in alternative assets like gold and silver, real estate, pretty much anything that is a tangible asset. Self-directed IRAs are definitely not for everyone since they require work on behalf of the account holder. 

Required Minimum Distributions

Just as they sound, an RMD is a retirement distribution that you’re required to take. The reason that you’d be required to take the money is that if you have a Traditional IRA, and you turned 70 ½, that’s when you’re required to start taking money. If you have a Roth IRA, there aren’t actually any required minimum distributions.

Annuities

An annuity is a type of insurance that you can buy alongside your 401K or IRA. The idea behind an annuity is that if you outlive the funds that you have in your retirement account, the since money in your annuity will then kick in as income. Annuities give retirement savers peace of mind and help those who outlive their retirement accounts.

FAQ on UBIT–Unrelated Business Income Tax and IRAs

Monday, October 23rd, 2017

There’s a lot of misconception when it comes to UBIT, and that’s because it can sound daunting and scary when taxes are involved. Understandably. But there’s no reason to fret, it’s really not as scary as it sounds.

One reason that it might be confusing is that when we think of self-directed IRAs, we think of them being tax-deferred or tax-free. When you make an investment, and that investment makes money, it goes back into your IRA without having to pay taxes on it. So when we’re told that some unexpected tax event has occurred, it can feel like you’ve done something wrong but don’t worry, we got you covered.

Q: Do I have to file for Unrelated Business Income Tax?

A: Probably. Anybody who has made investments that are considered unrelated business activity—like an LLC—and contains debt financing within the tax-advantaged qualifies for UBIT.

Q: Is UBIT considered a prohibited transaction by the IRS?

A: In short, no. It is not illegal nor is it considered a prohibited transaction within retirement accounts. But keep in mind that some transactions that make a UBIT event occur may also have prohibited transaction issues.

Q: When do I have to pay it?

A: Just as with all taxes, April 15th of the following year. So any taxes your IRA qualified for in 2017 is paid next April 15th 2018, paid via IRS Form 990-T.

Q: Does it still apply if I have a Roth IRA?

A: It does, yes. Regardless of the fact that Roth IRAs grows tax-free, and aren’t taxed at retirement, UBIT rules still apply to some investments that are held within the Roth account.

Q: Is it possible to keep any retirement account from paying UBIT?

A: Yes actually, a solo 401K account is not subject to this tax when invested in real estate, but is subject to UBIT when invested in an LLC.

 

Real Estate Update – Housing and The Self Directed IRA

Saturday, November 24th, 2012

The recent housing starts for October 2012 shows a 3.6% improvement. The south and midwest regions of the country are showing the most robustness. The chart below shows the historical housing starts numbers.

Chart: Housing Starts

What we see if that the bottom has been formed with clear support. Starting in Jan 2012 we see the uptrend pattern forming. With the favorable numbers shown in October 2012, we are not seeing a pattern or trend that causing a break in the upward trend line.

Multi Unit Starts

The numbers also show that we are seeing upward trends in multi unit properties. The demand continues to be there to support the starts on such properties.

What these numbers mean for self directed IRA

As we have noted in previous updates, we believe a bottom has been formed in the real estate market. Prices appreciation is still tamped down. Demand continues to be strong for rentals and multi unit rentals. The economic recovery continues to be soft and delicate. However, barring a new major meltdown, which is possible, investment properties are ripe for picking up at low prices. We continue to support hard assets in your retirement portfolio. We still believe that real estate investing is good for those self directed IRA investors that do their homework on the right investment properties.

Why Gold Went Up Now With The Feds QE3 – What This Means For Self Directed IRAs

Sunday, September 23rd, 2012

This past week the Fed announced that it would engaged in a continuous stimulus program from now through 2015 due to the continued weak and anemic labor market. The Fed committed to a monthly outlay of $40B to purchase mortgage backed securities. the theory here being that this will help stimulate housing and subsequently the labor market.

We’ve been hearing and talking about QE3 all summer. Despite the fact that we all knew and understood that QE3 was coming, gold moved sideways in the $1500 to $1600 territory, for weeks. Now, just before QE3 is announced, gold spikes up past $1700 and into the $1750 range.

What’s going on here?

Not to be one to engage in conspiracy theories, buts its almost as if there is insider information being passed around. We’ve known for weeks there would be some sort of Fed action. We did not have any really significant economic news, yet, gold is up suddenly.

Its our theory that there are insiders that do get a glimpse as to what is coming. More specifically, such inside information clearly bodes well for metals.

Self Directed IRA Actions

Metals have definitely shown the next new bull leg. QE is here to stay. The government has not fixed one single problem in our country. The American electorate can’t clearly see that their current president has not delivered, yet the think that they may still want to vote for him despite his inability to deliver tangible results. Based upon this the risk is on. We see nothing positive coming from the government and maybe not the presidential election. Dr. Ben is printing like mad. the dollar will continue to be debased and lose value. Inflation will continue to creep into our lives.

We still have a buy and hold action for gold and silver in your self directed IRA. We recommend holding physical gold and silver for the ultimate hedge and protection with your self directed IRA.

June Housing Numbers (Corrected) and Your Self Directed IRA

Friday, July 27th, 2012

Monthly changes in June home sales showed a decline of 8.4% for new homes, a decline of 5.4% for existing homes. Though large on a monthly basis, in the big scheme of things there numbers were not meaningful.  Both numbers continue to show a developed and established pattern of low-level stagnation.

Weakness in homes sales has been blamed on too-low inventories of houses for sale.  The low inventories are part of the issue, but there is something a self-fulfilling cycle at play, due to low prices likely keeping some houses off the market.  Also throttling down activity for both purchasers and sellers is the continued consumer liquidity and credit issues.

Inventories of homes for sale are relatively low at 6.6 months supply in June for existing home sales was up by 3.1% from May and was at its highest since December 2011.  For new home sales, June inventories reflected a 4.9 months supply, up by 8.9% from May, and at the same levels seen in March and April, which last were exceeded in January 2012.

How does this effect your self directed IRA?

Its clear that home sales are not recovering and really have not improved significantly for the last 5 years. Home sales are a key driver of the economy in the form of consumer spending. Until home sales become less volatile with a significant pattern of improvement, the economy is not going to recover. This spells opportunity for holding investment property in your self directed IRA.

This also presents the case where the Fed and the government will continue to interfere in the inner workings of the economy which ultimately leads to printing. This will drive inflation and more instability. This means that you should be considering having a proper allocation of precious metals in your self directed IRA.

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.