CONTROLLING YOUR                    RETIREMENT WITH A                   SELF-DIRECTED IRA                         Chad A. ...
WHAT YOU WILL LEARN  • The   different kinds of Self-directed IRAs and their respective      benefits  • When              ...
WHO IS                        37TH PARALLEL?Tuesday, May 29, 2012
37TH PARALLEL    PROPERTIES    • $100    Million in Commercial        Real Estate Under Management    • Over   60 years of...
PROVEN BUSINESS      Brazos Point Apartments   Hunter’s Point Apartments   EastGate Apartments      The Arbors Apartments ...
SELF-DIRECTED                   IRA TYPESTuesday, May 29, 2012
TRADITIONAL    • Pre-tax  contributions. Taxed on earned income on        withdrawals        • Regular/Rollover   IRA     ...
TRADITIONAL PROS        • Tax           reduction in the year you contribute        • Tax-deferred   equity growth elimina...
TRADITIONAL CONS        • Required       Minimum Distributions at age 70 1/2        • Assumes        your tax rate will be...
ROTH STYLE    • Post-tax          contributions. Tax free gains.        • ROTH-IRA        • Self-directed       Roth 401k ...
ROTH PROS        • Tax-free  equity growth eliminates the tax drag during the            investment        • Tax-free   di...
ROTH CONS        • After         tax contributions. No tax benefit for contribution.        • Many    of us started our lar...
CHECKBOOK IRA        •A        special high-fee self-directed IRA        • Provides       checkbook control of your retire...
FUNDING SOURCES        • Cash        • Roth-IRA        • SEP-IRA       (Contribution cap and flexibility)        • Traditio...
IRA CUSTODIANSTuesday, May 29, 2012
SOME TOP NAMES       Fully Self-directed            Brokerage Self-directed        • Equity Trust                • Fidelit...
WHAT TO LOOK FOR        • Time          in the business (15+ years)        • Assets          Under Administration (1 Billi...
RECOMMENDATION 1        • Overall        - Provident IRA              • www.trustprovident.com              • Sue Archer  ...
PROVIDENT TRUST FEES        • Setup          Fee $50        • Flat Annual        Fee $395        • Minimum           Balan...
RECOMMENDATION 2        • Lower         Fees - IRA Services              • www.iraservices.com/              • More     of...
IRA SERVICES FEES        • Setup         Fee $25-50        • Flat Annual        Fee $250 - $295        • Small         tra...
PUTTING IT ALL                          TOGETHERTuesday, May 29, 2012
STEP 1: COLLET INFORMATION      Where are all of your retirement funds:        • Old           401k with prior employer   ...
STEP 2: PLANNING      What do you want to achieve?   • What’s  the total amount of assets by type by person? (In many case...
STEP 3: SDIRA OPTIONS      Evaluate Custodians   • Speak              with account coordinator   • Get        summary info...
STEP 4: SELECT CUSTODIAN      Transfer Funds   • Request             and complete SDIRA application   • Submit            ...
STEP 5: INVESTING FROM IRA      Your IRA invests on your behalf   • To  invest you will complete a Direction of Investment...
STEP 6: DISTRIBUTIONS      All economic benefit returns to IRA   • The investment distribution (cash flow) checks are sent t...
MAKE YOUR               RETIREMENT WORK                HARDER FOR YOUTuesday, May 29, 2012
LEARN MORE                                888.837.3720                                info@37parallel.com                 ...
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Introduction to Self Directed IRAs

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Transcript of "Introduction to Self Directed IRAs"

  1. 1. CONTROLLING YOUR RETIREMENT WITH A SELF-DIRECTED IRA Chad A. Doty CEO, Co-founder 37th Parallel PropertiesTuesday, May 29, 2012
  2. 2. WHAT YOU WILL LEARN • The different kinds of Self-directed IRAs and their respective benefits • When to use an IRA vs. Cash • What to look for in a good SDIRA custodian • How to structure your commercial real estate investments to provide tax free income and equity growthTuesday, May 29, 2012
  3. 3. WHO IS 37TH PARALLEL?Tuesday, May 29, 2012
  4. 4. 37TH PARALLEL PROPERTIES • $100 Million in Commercial Real Estate Under Management • Over 60 years of real estate Ed Barriskill, Chad Doty, Dan Chamberlain and portfolio management experience • Over 1500 Real Estate Transactions • Acquire $25 Million in new assets every year • Hundreds of investor clients in 13 time zones - domestic and international www.37parallel.comTuesday, May 29, 2012
  5. 5. PROVEN BUSINESS Brazos Point Apartments Hunter’s Point Apartments EastGate Apartments The Arbors Apartments Riverwalk Apartments Woodcreek Apartments University Park Plaza Southwood Business Process Marriott Courtyard Hotel Hilton Garden Inn The Freedom Center Southwest Crossing at Bee CreekTuesday, May 29, 2012
  6. 6. SELF-DIRECTED IRA TYPESTuesday, May 29, 2012
  7. 7. TRADITIONAL • Pre-tax contributions. Taxed on earned income on withdrawals • Regular/Rollover IRA • SEP-IRA • Self-directed 401k (Solo K)Tuesday, May 29, 2012
  8. 8. TRADITIONAL PROS • Tax reduction in the year you contribute • Tax-deferred equity growth eliminates the tax drag during the investment • You can shape your taxable gain by shaping your distributions after 591/2.Tuesday, May 29, 2012
  9. 9. TRADITIONAL CONS • Required Minimum Distributions at age 70 1/2 • Assumes your tax rate will be lower in retirement • Assumes your living expenses will be lower in retirement • Limited mechanisms to withdraw funds early w/o penaltyTuesday, May 29, 2012
  10. 10. ROTH STYLE • Post-tax contributions. Tax free gains. • ROTH-IRA • Self-directed Roth 401k (Solo K)Tuesday, May 29, 2012
  11. 11. ROTH PROS • Tax-free equity growth eliminates the tax drag during the investment • Tax-free distributions provide insurance against future tax hikes and freedom from lifestyle constraints due to income shaping • No Required Minimum Distributions • Greater early distribution flexibilityTuesday, May 29, 2012
  12. 12. ROTH CONS • After tax contributions. No tax benefit for contribution. • Many of us started our largest chunks of savings before Roth’s were introduced. • Conversion can be pricey (take the earned income tax hit all in one year)Tuesday, May 29, 2012
  13. 13. CHECKBOOK IRA •A special high-fee self-directed IRA • Provides checkbook control of your retirement • Only real estate scenario we’ve seen that looks good is someone that does: • Private Notes • Wholesale • Renovation FlipsTuesday, May 29, 2012
  14. 14. FUNDING SOURCES • Cash • Roth-IRA • SEP-IRA (Contribution cap and flexibility) • Traditional IRATuesday, May 29, 2012
  15. 15. IRA CUSTODIANSTuesday, May 29, 2012
  16. 16. SOME TOP NAMES Fully Self-directed Brokerage Self-directed • Equity Trust • Fidelity • Pensco • Charles Schwab • Provident Trust • Morgan Stanley • IRA Services • Merrill Lynch • Entrust MidSouth • Sterling TrustTuesday, May 29, 2012
  17. 17. WHAT TO LOOK FOR • Time in the business (15+ years) • Assets Under Administration (1 Billion and Up) • Good service record (ERISA, Social Media) • Not a marketing company • Flat “Reasonable” Fee Structure • Human ContactTuesday, May 29, 2012
  18. 18. RECOMMENDATION 1 • Overall - Provident IRA • www.trustprovident.com • Sue Archer sue@trustprovident.com • Excellent service • Strong organization and AUA • Flat fee modelTuesday, May 29, 2012
  19. 19. PROVIDENT TRUST FEES • Setup Fee $50 • Flat Annual Fee $395 • Minimum Balance $250 with credit card on file $500 without • Small transaction feeTuesday, May 29, 2012
  20. 20. RECOMMENDATION 2 • Lower Fees - IRA Services • www.iraservices.com/ • More of a self service experience • Prompt and efficient with less personal interaction • Flat fee modelTuesday, May 29, 2012
  21. 21. IRA SERVICES FEES • Setup Fee $25-50 • Flat Annual Fee $250 - $295 • Small transaction feeTuesday, May 29, 2012
  22. 22. PUTTING IT ALL TOGETHERTuesday, May 29, 2012
  23. 23. STEP 1: COLLET INFORMATION Where are all of your retirement funds: • Old 401k with prior employer • Your IRA • Spousal IRA • Child IRA • What types of accounts pre-tax saving/post-tax/etc. • Collect it all documentationTuesday, May 29, 2012
  24. 24. STEP 2: PLANNING What do you want to achieve? • What’s the total amount of assets by type by person? (In many cases you can merge accounts of the same type) • You cannot merge people or tax treatment • Look for larger pools of capital ($50,000 plus) • Review merging all same type funds into 2 to 3 master accounts (reduce fees and complexity)Tuesday, May 29, 2012
  25. 25. STEP 3: SDIRA OPTIONS Evaluate Custodians • Speak with account coordinator • Get summary information on the company • Check BBB, ERISA, Social Media • Don’t just look at fees. Track record and service model are more importantTuesday, May 29, 2012
  26. 26. STEP 4: SELECT CUSTODIAN Transfer Funds • Request and complete SDIRA application • Submit transfer paperwork from current custodian to new one. • Verify funds have arrived at new custodianTuesday, May 29, 2012
  27. 27. STEP 5: INVESTING FROM IRA Your IRA invests on your behalf • To invest you will complete a Direction of Investment letter with your custodian approving the project • The custodian will then complete the paperwork and fund on your behalf. • SEC disclosure forms will still be completed by you.Tuesday, May 29, 2012
  28. 28. STEP 6: DISTRIBUTIONS All economic benefit returns to IRA • The investment distribution (cash flow) checks are sent to the IRA company. • All equity distributions checks are sent to the IRA company. • You receive a copy of all checks with a report on performance. • K-1s (annual tax documents) are sent to you and your custodian.Tuesday, May 29, 2012
  29. 29. MAKE YOUR RETIREMENT WORK HARDER FOR YOUTuesday, May 29, 2012
  30. 30. LEARN MORE 888.837.3720 info@37parallel.com 37parallel.com ACHIEVE PERMANENT WEALTHTuesday, May 29, 2012
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