…and not knowing could be costing you thousands each year in extra expenses and unneeded tax hassle.
Welcome. My name is Joshua, and I’m the owner at CompleteIRA.com. In this report, I want you to focus and keep your eye on your money as I layout in plain detail what most Custodians don’t want you to know.
I’m not here to knock any Custodian or Administrator, but I want you to see what is so clear to me after looking at the setup of thousands of IRAs (especially “self-directed IRAs”).
I support self-directed Custodians and Administrators – they handle the paperwork that allows their clients to diversify their portfolios in ways that just were not possible with any ease in the past. But somewhere along the way, the lines got blurred and there may be some strategic moves you’re missing because what is best for you isn’t best for a given firm’s business model. That’s what this report is about.
My goal is for you to make wise use of your retirement account dollars, maximize wealth creation, and provide for your retirement. This includes saving costs on fees, year-end valuations, (possibly) slashing your taxes, and improving your investment options via enhanced flexibility.
The main reason most people get a self-directed IRA is to invest in something they can see, touch, and understand for greater returns and control. A self-directed IRA can buy real estate, mortgages, options, tax liens, run leasing operations, and much more. They require more paperwork (tracking and reporting for the IRS) thus they cost more to setup and maintain than the ‘free’ IRAs at places like Merrill Lynch or Schwab.
If you only buy stocks, bonds, and mutual funds then there is no need to have a self-directed IRA and incur the fees for processing and maintaining an account.
Self-directed IRAs and solo 401(k)s are great – if you are going to self direct and do the due diligence on potential investments.
Let’s expose a few myths about IRAs that could save you a good deal of money. You’ll be able to do more (and pay less) for the rest of your life.
Myth #1 – Buy Real Estate Directly into your IRA Account
Your self-directed IRA can own real estate but it should never own real estate which is titled directly into your IRA Custodian or Administrator. There are two main reasons why you should never take the title to any real estate owned by your IRA into the name of your Custodian or Administrator:
1. The liability associated with real estate exposes you to lawsuits. You can protect yourself with insurance but the unintended consequences of rental properties have cleaned out the wallets of many unsuspecting owners. When you title property directly into your IRA Custodian’s name for your account, you expose the Custodian and your account, and it is easy to avoid by adding a layer of protection.
2. Anonymity: Keep the ownership of your real estate private whether it’s retirement account owned or personally held. This is easily done using land trusts for privacy. It’s simple, the beneficiary of the trust is the real owner but the trust is not recorded thus the only name that’s recorded in the courthouse is the name of the trustee that you select. Land trusts are a safe way to hold title to real estate. For more information on land trusts, email information@completeIRA.com for a summary of the uses of land trusts to hold real estate.
Myth #2 – Get Checkbook Control using IRA LLCs (Also known as “Checkbook IRA”)
This is going to hit a nerve, and it’s critical to your retirement account and financial well-being.
Custodians and Administrators do not like when you ask them to form an LLC with your IRA. The reason they don’t like IRA LLCs is because they lose control of what your IRA is doing and all the fees that they receive every time you buy an investment.
Just think of the fees they rack up:
- Same day service
- Wire fees
- Notarization fees
- New asset fees
Not only that, they lose the interest spread they would have made on your cash deposits. Believe me, these cash deposits create a lot of income for the Custodian and if every client did this, they would lose a fortune of the potential spread they make in their accounts and what they actually pay out to their client.
Self-directed IRA Custodians and Self-directed IRA Administrators will tell you a different reason for why they don’t like the IRA LLC. They will tell you that they are concerned you will screw up your entire account by doing prohibited transactions in the LLC. And they are absolutely right…
Here’s a quick and simple way to protect yourself if you use an IRA LLC:
1. Never be the Managing Member
2. Make sure the LLC is ERISA compliant
3. Never self deal or involve prohibited parties
4. Have the Managing Member keep perfect books and provide an accurate year end valuation to the IRA Custodian or IRA administrator.
Myth #3 – IRA LLCs are the Best Way to get Checkbook Control for your Self-directed IRA and especially if you are Buying Real Estate
Absolutely – NOT!
This is the biggest myth being perpetrated by promoters of IRA LLCs and Real Estate IRAs. Why? Look at the fees they generate for this new cottage industry of IRAs.
Think about this: These ERISA compliant IRA LLCs cost $2,000-$3,000 to form, plus they have annual fees of up to $800 per year and are regulated by the state. It gets worse, every year you have to file paperwork and do an income tax return.
There is a much better way to get checkbook control of your IRA at no cost up front, no annual fees, and no state reporting its called: The Preservation IRA Trust.
Folks, this is so easy and simple. The only reason you don’t know about it is because most providers, whether IRA Custodians, IRA Administrators, or IRA facilitators can’t make any money off you if you used one.
This is what many savvy investors have been doing for years, including some of my clients. You don’t need this with a 401(k) because you already have checkbook control. It could add another layer of protection for 401(k)s but it’s perfect for self-directed IRAs.
Just like the expensive, state charted LLCs, you don’t want to be the signor on the bank account of your Preservation IRA Trust, instead you simply select a trustee.
Many clients that use this have all their IRA assets titled into their Preservation IRA Trust except real estate. All their real estate is titled into a land trust and the beneficiary of the land trust is the Preservation Trust. It looks like this:
Custodian > (For example: Pensco) > Preservation Trust (beneficiary is the Custodian of your account) > (Pensco FBO John Smith IRA #20371) > Land Trust (beneficiary is Preservation Trust).
This Preservation Trust is free exclusively for all new clients of CompleteIRA.com. To receive more information, contact us today at information@completeIRA.com.
Myth #4 – Self-directed IRAs are Better than 401(k)s
Nothing could be further from the truth!
401(k)s are a superior retirement account vehicle and they trump IRAs in every area. But there’s a catch, not everyone can have one. The criteria is simple. You must have a closely held business that is basically family owned, or just you and your spouse.
The solo 401(k) is perfect for contractors, real estate investors and attorneys or any closely held family business.
Here is a brief list of the amazing benefits of a solo 401(k):
1. Contributions are as high as $49,000 for an individual and $54,500 if you are over the age of 50. If your wife works for the company and has a salary than she can do the same. That’s up to $105,000 a year per household to be contributed to your retirement account.
2. Contributions are tax deductible to your company or LLC.
3. You can personally borrow up to $50,000 from the retirement account for any reason, without penalty.
4. If you buy real estate using non recourse loans, there is no UBFI. That means all the profit you make including the financial portion of the acquisition is unreported for tax purposes and compounds tax free or tax deferred in your retirement account.
5. If you screw up and perform a prohibited transaction in a solo 401(k), the exposure for penalties and interest is limited to that one transaction. This is unlike an IRA, where your entire account is exposed. In fact, that’s why many IRA Custodians and IRA administrators suggest getting more than one account in order to spread the risk in your IRAs. Of course you are also creating more fees for them to collect.
6. You can designate part or all of our 401(k) contributions as a Roth contribution. This means the Roth contribution and the percentage of value created from the investments associated to the Roth contribution can be distributed tax free.
7. When you set up a solo 401(k) at CompleteIRA, you have complete checkbook control with a one time upfront fee and flat annual fees of less than $200.
Myth #5 – IRA Custodian and IRA Administrator’s Transaction Fees are a Necessary Evil
Let’s just say they are evil, the fees that is.
Look, I understand paying for a product and receiving value. I also understand that a dollar saved is a dollar earned. As a good steward for your money, you owe it to yourself to negotiate the best opportunity for you and your family.
You did that when buying a car right?
Same with buying a house? You bet.
So why should it be any different with the selection of your self-directed IRA Administrator or self-directed IRA custodian?
Besides, when you handle your retirement accounts properly, there is every good reason for you to have checkbook control of your 401(k) and the trustee that you select to have checkbook control of your self-directed IRA.
Take control of every facet of your retirement account and we will assist you every step of the way.
A Complete Solution
That’s why at CompleteIRA.com we do things differently.
Our primary focus is on education. We know people are looking for good information and we want to deliver it straight to you. Our clients get ongoing support to make sure they can be confident in using their plan to the fullest.
We setup Solo 401k plans for most of our clients; and we make sure they are correct and easy to use from day one. Our flat administrative fee is among the lowest in the industry – you are not penalized for having or creating wealth.
What’s next? We’ve developed a 20 Minute Self Directed Retirement Question and Feasibility Consultation to help you answer that fully. This is conducted over the telephone with you and one of our senior staff. Here is what we will accomplish together in this no-nonsense session:
• Your current questions answered. One or two unknowns can confuse and clutter a situation making it more complicated than it needs to be. Let’s quickly and easily clear up any lingering questions and provide a clear picture for you. Once we’ve answered all your questions and we discuss your resources and your goals, only then can we help identify the roadmap to your retirement. Keep in mind I was a financial planner, I am an investor and our model for investing with retirement accounts arose from our own needs to provide for our retirement.
• Cost Savings without Hassle. You’re all too familiar with how easily taxes and financial service fees can eat away at your earnings and spending power. We’ll review four key areas related to retirement accounts that most people and advisors miss that can add thousands to your retirement income.
Schedule permitting, I handle each consultation myself. I’ve reviewed hundreds of high net worth individuals and more than a thousand retirement accounts personally. You’ll be speaking with someone uniquely qualified to answer your questions and give you options in a clear and complete fashion.
Our consultation will consist of the best intelligence and newest strategies that I can offer you. There is no charge for this call, but please keep in mind the call is limited to 20 minutes. Upon request, the call can be recorded and a copy sent to you so you don’t have to worry about taking notes – just concentrate on the discussion.
We usually can have the consultation within 1-2 days of your call. To secure a time, please call 888-252-5851 or email firstname.lastname@example.org and one of our customer service staff will gather your availability and advise you regarding matching slots.
I look forward to assisting you in any way possible on this journey.
email@example.com or call 1-888-252-5851