All Forum Posts by: Brett Synicky

@Chris Burton Love this story! Creative and thank you for sharing, I'm sure this will help a lot of people in the same predicament. 

Highly recommend you looking into a checkbook IRA instead of cashing out.Sure you can take out the principle since you've already paid taxes on it but this money is supposed to be for your retirement and in a Roth your real estate can grow tax free, though check with a CPA to see if STR will trigger UBIT in an IRA. Either way the numbers can still make sense. Furthermore you can vastly increase your returns through leverage using a non-recourse loan but that will definitely trigger UBIT but again the numbers can still make a lot of sense. 

If you are self employed with no full time employees then you should consider a Solo 401k for your traditional funds and no UBIT on leveraged real estate. 
Yes to avoid taxes and penalties (under 59.5) the money would need to stay in the retirement account. Warren Buffet said the most important part of investing is to protect your principal. 

@Daria B. got it! If you have checkbook control you'll have a bank account with a bank that has FDIC insurance up to $250k per account. Not per checking account but per Ira LLC which is the "relationship" with the bank. Technically as the manager of the LLC you can open an accout with any financial institution though they don't all cooperate when it's an IRA owned LLC. Some banks can spread your funds around to multiple banks if you carry a balance over $250k and want to have all the necessary FDIC insurance…merry Christmas!

Technically any bank can operate as an IRA custodian but they don't all do it. There are companies like midland used to that will act as custodian. I think what you're referring to is a checkbook IRA so you can bypass the custodian when performing transactions/investing and all assets/accounts will be held in the name of a special purpose LLC or Trust which is the instrument that gives you checkbook control. Happy hunting!

@Kelly Taylor who doesn’t like tax free atm withdrawals?  the more Roth the merrier!  Have you looked at a solo 401k?   Roth and pre-tax built in so makes Roth conversions simpler among other things.  What do you wish to invest in?  

@Jun Lee Solo 401k is a great vehicle for investing!   Glad you’re looking into it. I love seeing people invest using it, especially in their Roth. 

@Kaushik Sarkar Lot's of good providers our there.  Learn about Checkbook IRA vs. SDIRAs.  Also Solo 401k could be a better option for you if you're self employed with no FT W2 employees.   

@Maria Jeanette Educate yourself on the difference between Checkbook IRA and Custodial IRA. I believe Equity Trust does both. They are a reputable company. Understand the difference between owning RE personally versus in a retirement plan. It can make more sense to do PML's in the IRA instead of rentals, particularly if you use leverage since the IRA will incur UDFI on that portion of the income derived from the mortgage. Also Solo 401k is exempt from that tax if you qualify instead of using SDIRA.  

@Marcus Robert Well done on your investment prowess so far.  A few things in response to what you wrote:

1.  Some employers, (when you're 50+) 401k adoption agreements will allow you to do an "in-service-rollover".  Basically you stay working there and rollover funds into another qualified plan.   Check with the plan administrator and use that verbiage.  

2.  59.5 is when you can take distributions without penalty.  As others have said there is no way for you to access those funds for personal use without taking a distribution which will be a taxable event...

3.  When you transfer retirement funds into a self directed account you can certainly buy real estate with it.  Something to consider is to convert the pre-tax funds/assets to Roth so you have tax free atm withdrawals at retirement.   When you convert an asset to Roth you have to get a third party valuation and often they come in at a major discount..25-60% so your taxable amount is way lower than the actual conversion.  

4.  Educate yourself on the differences between checkbook control and custodial control.   Also consider Checkbook IRA vs. Solo 401k.   Some significant differences between the two.  

Godspeed in this journey.  

@Sam Fujii Has to be non recourse.   List of lenders here:  Non-Recourse Lenders