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Sdira presentation 2012
- 1. Introduction to Self-Directed IRAs Presented By Gary Kowalski Director of Sales
- 2. Preface What is a self-directed IRA? An industry term for an IRA that invests in non-traditional assets such as Real Estate, Private Stock, Precious Metals, etc.
- 3. About The Entrust Group Administrators for self-directed retirement plans Leader in our industry • Over 30 years of service • 14,000+ clients and nearly $2 billion in investor assets
- 4. About The Entrust Group Entrust is the premier provider of self-directed retirement plans: Knowledgeable staff • All staff eligible have earned CISP designation Educators • National CE Program • National and local in-person events and webinars Local offices
- 5. 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.
- 6. Investment Choices Single family and multi-unit Trust deeds homes Leveraged property Apartments Precious metals Condominiums Limited liability companies Commercial property Limited partnerships Developed & undeveloped land Unsecured/secured loans Mortgages, lease/options Joint ventures Foreign property Life settlements
- 7. Investment Restrictions Prohibited Assets Collectibles • any work of art, • any rug or antique, • any metal* or gem, • any stamp or coin*, • any alcoholic beverage Life Insurance S Corps (S corporation tax laws prohibit IRAs to invest in them.) * Exceptions: Gold, Silver, Platinum & Palladium bullion of certain purity
- 8. Disqualified Persons Your Spouse Your Parents Your Grandparents Your Children Your Grandchildren Spouses of Lineal Descendants IRA Fiduciary Certain family members cannot do business with your IRA.
- 9. Examples of Acceptable Transactions Partnering with yourself on a new deal Partnering with your spouse on a new deal Partnering with your cousin Leasing the property to your siblings Remember the Self-Benefit Rule
- 10. IRA Purchase of Vacation Property IRA purchases vacation 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
- 11. IRA Purchase of Rental Property Rental property in Davis • Daughter cannot rent from your IRA even at fair value • IRA can borrow funds to purchase real estate • Percentage of net income attributable to the loan may be subject to UBIT (Unrelated Business Income Tax)
- 12. LLCs With an LLC, the IRA account makes an investment in the LLC by acquiring its member shares. Advantages: Affords “checkbook” control Immediate access to funds Ease of investing Savings on check fees Limited liability protection from claims Disadvantages: Cost to create You maintain records Single investment at inception May be subject to State taxes and filings – check with your financial or tax advisor
- 13. Business Trusts With a business trust the IRA account makes an investment in the business trust by acquiring its "beneficial interests." Advantages: Affords “checkbook” control Immediate access to funds Ease of investing Savings on check fees Greater privacy of information Disadvantages: Cost to create; more expensive than LLC May be subject to State taxes and filings – check with your financial advisor
- 14. Plan Types Traditional IRA Other Special Plans: Roth IRA Coverdell (ESA) Individual (k) Health Savings Accounts (HSA) SEP & SIMPLE 401(k) - Record keeping for defined benefit plans that allow for alternative investing. - Required plan documents (“Do your own”) Funds from a Qualified Plan, including 401(k), 403(b), 457 plans can be rolled into an IRA.
- 15. Getting Started is Easy Three Easy Steps 1 2 3 Open an Fund Your Purchase Entrust Account Your Asset Account
- 16. The Next Steps Take Action On Our Website 1 Sign up for a class or webinar Calendar of events Schedule a meeting with an 2 Entrust representative E-newsletter Read about self-directed 3 retirement accounts Due Diligence Info 4 Call our office Free Reports FAQs 5 Join us on Facebook & Twitter
- 17. Gary Kowalski Director of Sales 555 12th Street, Suite 1250 Oakland, CA 94607 800-392-9653 www.TheEntrustGroup.com
Editor's Notes
- During the intro slide the individual introduces himself and why he is presenting: Because we are educators,Because many people have not heard about SDIRAs and whyWhen you leave the room you will feel empowered to learn more to start investing in non-traditional assets with your IRA.
- About The Entrust Group- Introduce our services. Let the audience know what it is we do. Take this opportunity to let the audience know that we are the leaders in education for our industry. what we do - Introduce our services
- About The Entrust Group- Introduce ourselves. Take this opportunity to let the audience know that we are the leaders in our industry. We are the only ones in our industry that have local offices. Most of our staff is CISP. We provide ongoing education for our staff.Who we are- Introduce Entrust
- It is mandatory that you read the disclaimer.
- By using Entrust as the administrator for your account, you get much greater flexibility in the number of investment choices you have. You are not limited by the parameters set up by the custodian.
- Although Internal Revenue Code 4975 lists very few investment restrictions, certain transactions (as opposed to investments) are prohibited.
- The critical aspect in determining whether a transaction is prohibited is understanding who is considered a “disqualified person”. It is best to think of your IRA as a completely separate entity. Disqualified persons are a spouse, ascendants, and lineal descendants and any spouse of a lineal descendant as well as the IRA Fiduciary. Although brothers, sisters, aunts, uncles and step-children are not disqualified persons dealing with close family members could still be considered a prohibited transaction because of the indirect rule.
- Partnering With Your IRA to Invest in Real Estate or any other type of investmentRule: You must be able to purchase the property outright without the use of your IRA funds. If you do not have enough personal funds and must partner with your IRA, this is considered “self dealing” because you personally benefit. Example:You would like to purchase property worth $100,000. You only have $50,000 total, including credit lines and cash, in the bank. You also have $50,000 in your IRA. You would not be able to make this purchase by partnering with your IRA because of the self benefit rule. Arms-Length TransactionsInvestments made with self-directed IRAs must be at arms length, which means that a willing buyer and willing seller are coming together with no undue influence from outside sources.Example: You want to sell your IRA investment property to a friend discounted 50% of fair-market value. You would not be able to make this sale because of the undue influence.
- Partnering With Your IRA to Invest in Real Estate or any other type of investmentRule: You must be able to purchase the property outright without the use of your IRA funds. If you do not have enough personal funds and must partner with your IRA, this is considered “self dealing” because you personally benefit. Example:You would like to purchase property worth $100,000. You only have $50,000 total, including credit lines and cash, in the bank. You also have $50,000 in your IRA. You would not be able to make this purchase by partnering with your IRA because of the self benefit rule. Arms-Length TransactionsInvestments made with self-directed IRAs must be at arms length, which means that a willing buyer and willing seller are coming together with no undue influence from outside sources.Example: You want to sell your IRA investment property to a friend discounted 50% of fair-market value. You would not be able to make this sale because of the undue influence.
- *Remind audience to consult legal or financial representative to learn more about prohibited investments within an IRA and structuring a business
- *Remind audience to consult legal or financial representative to learn more about prohibited investments within an IRA and structuring a business
- IRAs provide tax deferred retirement fund growth Let the audience know what types of plans can be self directed. Let them know that all types of IRA and qualified funds can be used……especially those old 401k funds that are still sitting with ex-employer plans. Whether you’re an individual or owner of a business, Entrust has a solution for you.Cover the tax benefits that these individual or business plans can offer. Tax advantages through tax deductible contributions and tax deferred earnings with the potential through the Roth accounts of tax free earnings.Discuss the difference between a Traditional account and a ROTH account. KEY DIFFERENCE IS: Traditional accounts you pay tax later not now – Roth accounts you pay now not later – CONTROL over taxes NOW vs. later. What will tax brackets be in 10, 15, 20 years?ROTH: If you do not need the tax deduction in the year that you are making your contribution, choose a Roth IRA because it is more flexible. At any time, you can withdraw your contributions. After you are 59½ and your Roth IRA has been open for five years, you can remove your earnings without penalty and without owing any taxes. And you aren’t required to take distributions at age 70½ or ever.SALES POINT: All types of plans can be self directed. If you have an old employer plan sitting around….move it to your Entrust account. Don’t forget to mentions those 401k plans that they have sitting around at old employers. Those can easily be rolled over to their Entrust account.
- How to get started. Walk them through the easy steps of setting up an Entrust account, funding an Entrust account. Make sure they see that this process is very easy. Mention that they can always call or stop by the local office to complete the paperwork3 easy steps to getting startedStep 1: The first step is to complete the Entrust New Account Kit. This will establish your cash account with the bank. Step 2: Once your account is established, you will be set to fund your account. As, we mentioned earlier there are many ways to fund your new account. You may transfer funds from an existing IRA (in part or whole), you may roll funds over from a qualified plan…..or you may make you annual contribution to an IRA or an Individual(k).Step 3: Purchase your Asset. Locate and conduct due diligence on the asset
- The Next Step-Let the audience know how they can learn more about self directed accounts. Let them know about your upcoming events. Let them know where they should go if they are looking for investment ideas. Mention: Make yourself a note to do 3 of the 5 things listed this week.