Intro. to self directed & real estate ir as 06.25.13


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Intro. to self directed & real estate ir as 06.25.13

  1. 1. Introduction to Self- Directed & Real Estate IRAs Presented By Gary Kowalski © 2012 The Entrust Group, Inc. All Rights Reserved
  2. 2. Disclaimer The Entrust Group ("Entrust") does not provide investment advice or endorse any products. All information and materials are for educational purposes only. All parties are encouraged to consult with their attorneys, accountants and financial advisors before entering into any type of investment.
  3. 3. Agenda  Current state of retirement in the U.S.  What are your retirement plan options?  Who is The Entrust Group?  Understanding the basics of self-directed IRAs  Your investment choices  Investment examples  Q & A
  4. 4. Current State of Retirement in the U.S.  1991:  50% of workers expected to retire before age 65  11% of workers expected to retire after age 65  2013:  23% of workers expected to retire before age 65  36% of workers expected to retire after age 65  Over 30% of households have less than $50,000 saved for retirement  Nearly 50% of U.S. workers are not confident that they will retire comfortably Sources: The 2013 Retirement Confidence Survey, Employee Benefit Research Institute and the Center for Disease Control’s National Center for Health Statistics.
  5. 5. What are my Options?  Individual Retirement Accounts (IRAs) • Traditional • Roth  Small Business Accounts • Simplified Employee Pension (SEP) • Savings Incentive Match Plan for Employees (SIMPLE) • Individual(k)  Other Accounts • ESA (Education savings) • HSA (Health savings)
  6. 6. Who is The Entrust Group?  Leader in our industry • Over 30 years of service • Nearly $4 billion in investor assets  Knowledgeable staff • All staff eligible have earned CISP designation  Educators • National CE Program • National and local in-person events and webinars  Local offices / Designated representative Entrust is the premier provider of self-directed retirement plans:
  7. 7. Basics and Advantages of Self-Directed IRAs  What is a self-directed IRA? • “Self-directed” is an industry term for an IRA that invests in non-traditional assets such as real estate, precious metals, private stock, etc.  Take control: • Make your own investment choices  Diversification: • Invest in what you know and understand  Tax savings: • Contributions may be tax deductible • Tax-deferred or tax-free growth
  8. 8. Investment Restrictions  Collectibles • any work of art • any rug or antique • any metal* or gem • any stamp or coin* • any alcoholic beverage  Life Insurance  S Corporations * Exceptions: Gold, Silver, Platinum & Palladium bullion of certain purity
  9. 9.  Residential Real Estate  Commercial Real Estate  Precious Metals  Hedge and pooled funds  Limited Partnerships  Secured and Unsecured Loans  Oil and Gas Ventures  Trust Deeds  Almost anything… What Can I Invest In?
  10. 10.  Your Spouse  Your Parents  Your Grandparents  Your Children  Your Grandchildren  Spouses of Lineal Descendants  IRA Fiduciary Disqualified Persons Certain family members cannot do business with your IRA.
  11. 11. Examples of Acceptable Transactions Remember the Self-Benefit Rule  Partnering with yourself on a new deal  Partnering with your spouse on a new deal  Leasing property to your siblings  Partnering with your cousin
  12. 12. IRA Purchase of Rental Property – example 1  IRA purchases rental property in Hawaii • Purchase contract must be signed by Entrust and signed “Read and Approved” by IRA holder • Vesting must read “The Entrust Group Inc. FBO J. Smith IRA account 12345” • All rents/expenses flow into/out of the IRA • Cannot stay there on holiday; cannot provide sweat equity
  13. 13.  IRA purchases rental property in Davis, CA • Daughter cannot rent from your IRA even at fair value • Examples of ways your IRA can invest: • “Partner” with yourself • Partner with others, including your spouse • Borrow via a non-recourse loan (percentage of net income attributable to the loan may be subject to UBIT (Unrelated Business Income Tax) • Via a single-member LLC IRA Purchase of Rental Property – example 2
  14. 14. Single-member LLCs  Advantages:  Affords “checkbook” control  Immediate access to funds  Ease of investing  Savings on fees  Limited liability protection from claims  Disadvantages:  Cost to create  You maintain records  May be subject to State taxes and filings – check with your financial or tax advisor With an LLC, the IRA account makes an investment in the LLC by acquiring its member shares.
  15. 15. Growing Your Business Enhance your clients’ ability to invest in what you sell  Introduce new ways to invest  Show how to use alternative funding resources  By educating your clients that they can invest with you using their IRAs, you enhance their wherewithal to invest and can attract new clients
  16. 16. Getting Started is Easy Open an Entrust Account Fund Your Account Purchase Your Asset Three Easy Steps 1 2 3
  17. 17. Gary Kowalski 555 12th Street, Suite 1250 Oakland, CA 94607 800-392-9653