All Forum Posts by: Brett Synicky
Brett Synicky has started 25 posts and replied 771 times.
Post: Self- Direct IRA investments- Real Estate
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Christopher Costea:
@Brett Synicky the ladder. Converting to a SDIRA. I read the SDIRA investing book from bigger pockets and it seems like it defeats the whole purpose of what investing in real estate is about. It seems like a lot of the tax benefits get negated. I am interested non the less.
Thanks for the clarification. It's important to note that converting a retirement account to a self directed account is a tax neutral event. A few things. Self Directing is not about one or the other regarding real estate. The point of investing in RE inside a retirement account is that the gains are either tax deferred or tax free in a Roth. If you own a few homes inside an IRA and later sell them and the money goes back into the plan then is yours at 59.5 you won't care about the tax benefits "missed". Again that's not the point. The point is that you can invest in non-public assets like RE and others that you know and control (unlike wall street) and therefore presumably build your retirement account up much higher. Nothing wrong with wall street btw. Also I'm not advocating real estate as an investment for your IRA. I actually prefer private lending but that's the beauty. You choose. When I said it's not an all or nothing, I meant: If you know and understand rental real estate it's likely something you'd want to do inside of AND outside a retirement account. Also the Solo 401k (if you qualify) is exempt from UDFI tax on leveraged real estate. However with an IRA, if the plan has a mortgage, before the tax is calculated you subtract the first $1000, deduct expenses, and depreciate, with all of this being proportionate with the LTV. Talk with a CPA or figure out how to calculate this on a potential deal before moving forward with it. Sorry for the long message.
Here's a few helpful links to read through:
Non-recourse lenders
Solo 401k
https://www.biggerpockets.com/member-blogs/2810/21298-solo-401k-advantages
Sdira self directed ira
https://www.biggerpockets.com/member-blogs/2810/blog_posts/28450-real-estate-ira
Prohibited Transactions
Disqualified Person
Post: Self- Direct IRA investments- Real Estate
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Christopher Costea:
Hello, I am 34, with W2 job in health care. I am also doing my MBA while taking care of my first born. Living in NY. Tri state area very hard to invest in. I think passive is the way to go for me. I have always maxed out my retirements. I have a 401k, Roth and Regular IRA. I have been teaching myself as I go. Does anyone have any advice on thoughts about investing locally vs away? Also does anyone regret tapping into their 401K, IRA early?
By “tapping into” do you mean early distributions or converting them to a self directed account where you’re able to invest in non-public assets like real estate, etc?
Post: Cap call prohibited transaction guidance
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Bryan DeFoe:
Hello All, I’m evaluating whether to participate in preferred equity capital calls for two syndications:
1 - I originally invested via my personal trust and via my solo 401K. I’m now considering contributing the full capital call amount from the solo 401K.
2 - I originally invested through my personal trust, and I'm now considering contributing the full capital call amount from my Roth IRA (via SDIRA).
In both cases, the sponsor would credit my new contribution toward my original investment for purposes of fulfilling the capital call and converting the existing equity into preferred equity. The new funds are being invested in a separate preferred equity vehicle, but the benefits would flow to the entire original investment.
My key question: Does using retirement funds (solo 401K or Roth SDIRA) to support a deal where my personal trust also holds equity create a prohibited transaction under IRS rules, even if the entities are technically investing in different vehicles?
I’m aware that indirect benefit to a disqualified person (like myself or my trust) could raise concerns. I’d appreciate views or a referral to someone familiar with ERISA and retirement-plan investing in syndication deals.
It's when people try and get creative and cute when they get in trouble. If you have to go out of your way to justify probably not a good idea. You don't need an attorney to answer this question and other than having the same prohibited transaction rules ERISA has nothing to do with this.
The simple question to ask is this: "Am I or any disqualified party going to benefit directly or indirectly if my retirement account performs this transaction/activity?" If the answer is yes, then it's a prohibited transaction.
Post: Newbie - Would love input from the BP community
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Cassandra Alabada:
Hello all.
Real Estate Newbie who would love to get into the game. However, I am having both analysis paralysis and hesitation. It's part of my personality to function systematically, observing both sides of the coin, and come to a consensus knowing the potential outcomes with it's risks. As of now, I was hoping to get your thoughts on the following ideas:
1. Using a 401k towards investment, specifically, using a old/stagnant 401k from a former employee. Is it worth rolling it over as a solo 401k, LLC versus withdrawing?
2. Starting off with single family rental homes or utilize creative financing to obtain a larger acquisition such as an apartment complex (multifamily home)?
Hope to hear from you all.
Thanks!
-Cassandra
Welcome to BP. I think you'll find this to be a great resource for you in your investing journey. Here's some helpful information for you regarding self directing your retirement.
Non-recourse lenders
Solo 401k
https://www.biggerpockets.com/member-blogs/2810/21298-solo-401k-advantages
Sdira self directed ira
https://www.biggerpockets.com/member-blogs/2810/blog_posts/28450-real-estate-ira
Prohibited Transactions
Disqualified Person
Post: Need CPA or Enrolled Agent
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Katie Nguyen:
Quote from @Brett Synicky:
@Katie Nguyen 1. Don't take an early withdrawal it's not worth it. Save the money the old fashioned way or don't do it.
2. You and your lineal descents are disqualified parties. You, your spouse, your children and their spouses, your parents and grandparents. Keep it third party from there and you're good.
3. A prohibited transaction in an IRA usually disqualifies the entire plan. Don't risk it. For a Solo 401k, you'll have to pay a 15% excise tax for the amount involved and "reverse" the transaction or a 100% tax can be imposed.
Thank you so much, Brett! Yes I will keep my #2 investment with a Qualified party, non lineal descents. Great advice!
Do you know any reliable Solo 401k or SD IRA provider?
Thank you in advance.
Post: Need CPA or Enrolled Agent
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Katie Nguyen:
Hello to all tax pros,
I am new to BP and are sincerely looking to connect with BP's tax pros for tax guidance and tax preparation for 2025. I am thinking of taking an early withdraw of 100k from my former employer's 401k, loaning is not an option for me. Can you suggest?
1. What and if there are legal strategies ideals for Offsetting this 100k income with passive rental income?
2. Can a SDIRAs or Solo 401k Trust account legally allow a direct funding for investment in a personal promissory note with relatives?
3. How could ones screw up, what is the violation penalty for me?
Thank you everyone for your expertise contribution to the BP community. Your care to response with complete, correct, truth is much appreciated.
Respectfully,
Katie Nguyen
Post: Need CPA or Enrolled Agent
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
@Katie Nguyen 1. Don't take an early withdrawal it's not worth it. Save the money the old fashioned way or don't do it.
2. You and your lineal descents are disqualified parties. You, your spouse, your children and their spouses, your parents and grandparents. Keep it third party from there and you're good.
3. A prohibited transaction in an IRA usually disqualifies the entire plan. Don't risk it. For a Solo 401k, you'll have to pay a 15% excise tax for the amount involved and "reverse" the transaction or a 100% tax can be imposed.
Post: IRA vs SDIRA to help with investing like real estate,S&P500 ETF; SPY
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Gp G.:
New employer is not providing any 401k match at all.
ROTH version of SDIRA is better compared to Traditional SDIRA? Solo 401k is suitable in my situation of w2 job related 401k conversion? Please advise
More Roth is better at retirement of course, but only you can answer the question about paying taxes now or later, along with a discussion with your CPA. Your 2nd question is unclear.
Post: IRA vs SDIRA to help with investing like real estate,S&P500 ETF; SPY
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Take a look at Solo 401k and checkbook IRA.
Solo 401k has a participant loan option.
Ira does not. You could do a 60 day rollover to access the funds but must be put back before the 60 days or it’ll be a distribution. Really no good way to access the funds for personal use until 59.5.
Post: Question about investment using w-2 related 401k Money in multi family unit
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 797
- Votes 428
Quote from @Gp G.:
Hi All.
I am thinking of removing my w-2 related 401k amount of about 183k by paying a penalty, taxes and investing in a multi family deal.I may get around 140k after penalties, taxes to invest in a multi family deal. What is the best area and unit mix I can invest in? I prefer my local Atlanta area to avoid a lot of travel and manage property manager, maintenance expenses better. Also I like to buy a deal myself to avoid any challenges and complications in future with a group which I never did in the past. Any pros and cons of this approach. Any better approaches? Any good connections I can connect in this regard like CPAs, realtors, property managers etc. Is a self directed IRA better approach as I am planning to switch my job in next month or so. Who can help me set up a self directed IRA with a reasonable amount of fee? Please advise.
Yes consider a checkbook IRA or Solo 401k. I wouldn’t cash out. It’ll cost you a ton and you’ll most likely regret it later.