All Forum Posts by: Bernard Reisz

@John Hyre & @Justin Windham For purposes of clarity, I've seen it - so no curiosity here.

@John Hyre Regarding plan design, Safe Harbor is the "last choice" - not the first. Once all options are explored and deemed not to be feasible should a "Safe Harbor" plan be adopted. Of course, for many - if not most - small businesses, Safe Harbor is the way to go. Still, defaulting to Safe Harbor results in many business owners missing huge tax deductions and/or unnecessarily over-contributing to employees. 

"One-size-fits-all" financial & tax products/services are the hallmark of a "provider" taking shortcuts to increase their own revenue and profit at the expense of "clients." It requires real effort to explore all options, based on each client's tax profile and objectives.

In some instances, such as "Safe Harbor" vs Non-Safe Harbor, not exploring all options "just" means incremental increased cost and missed deductions to some clients. Not ideal and not the route I'd advocate, but bearable.

In other instances, in which a financial/tax service provider promotes non-compliance to unwitting consumers, the potential costs can be astronomical to all clients.

Consumers of financial & tax services should always seek - and get - total transparency from their service/product providers.

@John Hyre Great to see you on this forum and appreciate your vote on my post earlier in this thread. Although we've never met, I've previously come across your content and respect you as a voice for all that can be great in the self-directed space - from both a compliance and strategy perspective.

Regarding your inquiry here, I can't respond to it directly for multiple reasons:

• I would not comment on a specific company or individual
• Marketing terms and trademarks have no inherent meaning - essentially meaningless - and the "product" can being sold using a trademark can theoretically change over time in any number of ways.

That being said, the best way for an expert such as yourself to get answers is directly from "the horse's mouth." Either reach out to them directly or get answers and review docs from multiple folks that have signed up for it.

For the edification of those that don't possess your level of expertise, a few generalities about the QRP & Solo 401k space may prove valuable.

• What is a "Solo 401k?" A "Solo 401k" is a 401k plan for which there are no non-owner employees eligible to participate.
• In other words, "Solo 401k" vs "ERISA plan" has nothing to do with whether your document provider calls it a Solo 401k or something else.
• If a business with no non-owner employees adopts a 401k plan it is a "Solo 401k," regardless of what the document provider calls it.
• If a business WITH non-owner employees adopts a 401k plan - even with a plan document that does not address ERISA, non-discrimination testing, etc., etc., etc. - it is NOT a "Solo 401k" regardless of what the document provider calls it.
• A "Safe harbor 401k" is still a "Solo 401k" if there are no eligible non-owner participants. BUT, if the plan document is not prepared correctly a Solo business that adopts a "Safe Harbor 401k" is - in a best case scenario - "shooting themselves in the foot."
• If a business that does have non-owner employees adopts a 401k plan, THEY SHOULD NOT BUY A DOCUMENT. They need meaningful compliance support from true QRP & 401k experts. Detailed and expert ongoing compliance support is needed. Anyone that buys/sells a QRP document without awareness of the compliance factors and does not engage/provide ongoing support for annual testing and compliance is being reckless.
• To the non-initiated, "Safe Harbor 401k" is just a plan design that's exempt from lots of QRP non-discrimination testing. It does NOT mean that if you buy a Safeharbor 401k document that you're "safe" from severe IRS & DOL penalties if the plan is not operated compliantly.
• From a plan design perspective, "Safe Harbor 401k" is often NOT the optimal design and results in unnecessary costs to the business owner AND missed tax deductions.

@Michael Plaks 🤣

An honor to merit a response from you... even if it entails some ribbing!🤩

Always looking forward to your pithy wit & wisdom!

@Taylor L. Way overdue, but I make an effort to honor every tag - which I'm honored to receive - with a response... even if takes some time to get to it. :) 

The pro rata rule does apply to 401k plan Roth conversions. BUT, (1) after-tax contributions and associated earnings can (theoretically) be isolated from (2) pre-tax contributions and associated earnings, thereby presenting opportunity to be more surgical & strategic with 401k & "QRP" conversions.   

Caveat: This is still a way oversimplified response to a question that can have incredible nuance to it.

@Yonah Weiss So many! And, there's def overlap between our lists. 

@Daniel Hyman

@Brandon Hall

@Taylor L.

@Mark Pedroza

@Michael Plaks

Hit the tag limit, but definitely thankful for so many more incredible pros on BP. Thank you all!

@Kyle Moffat Here you go! https://www.passivewealthstrat...

@Michael H. Although you haven't provided figures, based on the median private loan size and interest rate it does seem the prices you were quoted are excessive.

Within the space, broadly, there are 3 types of providers - which are described and listed in order of pricing from lowest to highest:

1. Providers that are doing the rudimentary basics of getting an LLC/trust properly established and assisting w/ SDIRA custodian paperwork.
2. Providers that are providing varying degrees of additional value in the form of compliance, structure, strategy, and more. 
3. Providers that are just selling as much as they can, for the highest price they can get.

Self-evident that you're best off focusing on the 2 former categories and avoiding the latter. Within the first 2 groups you'll be getting honest service from honest providers. You get to select the level of service and value-add you'd like in a market that's relatively efficient.

As an FYI, podcast recording I did with @Taylor L. on this topic has a been a valuable resource to many. 

Taylor - Thanks for the tag! Glad to chime in and hope it's helpful.

@Yonah Weiss Thanks for the mention! You can always be counted upon to indicate both when cost seg WILL and WON'T add value. Kudos!

@Brad Hales To understand the answer to question it's important to understand both cost seg and retirement account taxation. 

Cost seg is simply the art and science of teasing out the individual depreciable components of a multi-component asset. No more, no less. In other words, it's does not represent special tax treatment that an account has to qualify for. So, every taxpayer can use it, so long as they have use for the additional deductions. 

Retirement accounts are taxpayers, just like individuals. They just have special treatment exempting them from certain chapters of the tax code and subjecting them to others.

At the risk of stating the obvious, you and your retirement accounts are all separate taxpayers.

If you invest in a syndication that uses leverage using a retirement account, it will receive a K1reflecting income/loss just like any other investor. Hopefully (but not so likely), Box 20 will provide the info needed for UBIT calculations and filing. 

@Taylor L. Honored by the mention! 

A great & popular resource is the podcast episode you hosted.