All Forum Posts by: Brett Synicky

@Richard Nguyen there are lots of good companies out there that do NOT charge asset based fees of any sort. Educate yourself on the difference between Checkbook IRA and Full Custodial IRA. Though fee schedules vary by company, generally speaking, you'll pay more up front for checkbook control and less over time, since the full custodial companies will have transaction fees not to mention the red tape of going through the custodian for all transactions. Checkbook control bypasses the custodian. Because of all of this depending on your investment goals, one may make more sense than the other. You can transfer cash and assets from one IRA to another IRA anytime, this is a non-taxable event. Just some wire fees and maybe termination fees from the custodian and your time to consider...

@Matthew Holden

Do you have checkbook control or full custodial SDIRA? Tasty Trade is a brokerage that has allowed IRA LLCs/Trusts to open brokerage accounts. Worst case you can transfer the money from the current custodian into Fidelity and back and forth it would just create work for you and possible wiring fees....

@Kevin S. It can make sense to buy real estate within your IRA using a Checkbook IRA.  If you use debt to buy the real estate the IRA will incur UBIT so educate yourself on that.  Some opt for private lending to avoid this tax and still have investments secured by RE.   A Solo 401k which is exempt from UBIT on leveraged real estate may be a better option if you have legitimate self employment activity.  Additionally, educate yourself on disqualified persons and prohibited transactions.  

As far as Roth Conversion, it's the question of do you want to pay taxes on the seed or the harvest.  The answer is usually obvious if you can take the tax hit, but in your case assuming 5-7 years away from needing/wanting to distribute money to yourself, this is a decision you need to make with your tax advisor. There are certainly investments you can make to increase the principal in the net 5-7 years.  

You should consider investing in RE outside your retirement account as well since there are different tax benefits available.  

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Quote from @Tessa Mac:

Hello all!

I have two 403b accounts from previous employers and am interested in using this money for a down payment on a property. 

I’ve seen info about 403b loans (doesn’t seem like this is possible since I’m no longer with these employers? Either way it doesn’t seem like the right move to me) or rollover to self-directed IRA and then using that for that down payment. The only other option I see is cashing out the 403b and paying income tax and 10% early withdrawal fee (I’ m 32).

What is the best way to use this money from 403b accounts from previous employer for real estate?

Thanks in advance for your input!

You can roll the 403b’s into a self directed Ira or solo 401k if you qualify. Either of these options would allow you get a non-recourse loan and buy real estate.  Something to note is that you and your immediate family be able to use these properties personally in any way and you should have a 3rd party property manager. Study disqualified parties and prohibited transactions. 

Quote from @Anand Ariyappan:

Hello Community!

I am looking for a good non recourse lender who can help refinance the properties I own on my self directed Solo IRA account. I understand from my account broker that these properties can't be refinanced through regular banks or financial institutions. The firms who can do non recourse loans are very few and only they can do such deals.

Appreciate if any of you been in this situation and recommend a bank/broker who can help me here. The property is in Texas, if that help. 

Thanks,

Andy

 Here's a compiled list on bigger pockets:   

Non-Recourse Lenders

Quote from @Brad Herb:

I have an opportunity to invest in a syndication. Initially I was planning to withdraw Roth IRA $ to invest. However, the sponsor said there is an option to invest in the syndication with a SDIRA. I am interested to know the advantages and disadvantages of using a SDIRA. Do the tax advantages outweigh the SDIRA related fees (ie setup, custodian, transaction, asset specific, administrative)? I appreciate any input. thanks!

While an SDIRA will have UBIT on leveraged real estate, a solo 401k is exempt from UDFI (unrelated debt finance income) generated UBIT. If you’re self employed (or can be) with no full time w-2 employees outside of you and a spouse you should consider the solo 401k instead if SDIRA. It has Roth component and traditional built in.  Only downside is Roth IRA cannot roll into a 401k.  

Furthermore, you should explore checkbook control versus having the custodian make all the investments.  Hope this helps. 

Quote from @Bill Le:

Quote from @Brett Synicky:

Quote from @Rochelle Gerber:

I may leave a current employer and therefore I believe I will be eligible to turn my 401k into a real estate investment product. Pros and cons? ability to use the whole amount and how so ?

You’re most likely going to consider SDIRA or Solo 401k.  Both will allow your retirement dollars to invest in real estate and much more.  The IRA will have UDFI tax on leveraged real estate where the 401k will not.   IRA annual max 7k vs 401k $69k.  Solo 401k requires self employment with no full time employees other than you and a spouse.  Hope this helps. 

Interesting tidbit here. I didn't know that difference between IRA and solo 401k. If your max contribution for SDIRA is $7K a year, do most people just opt to keep mostly with stocks/bonds until they reach a certain point where they can invest? Seems like it would take a really long time before you can buy real estate if you're only allowed to contribution $7k a year.

 Usually yes, however there are crowdfunding opportunities like sparkrental.com that allow for low entry.   

Quote from @Audris Tien:

Hi @Deb, just wondering what self-directed IRA firm you are using to do this for private lending? Thinking about doing the same (for my solo 401K) and considering Rocket dollar, equity trust, broad financial, etc. Wondering if you had any feedback for those firms or if you have something else you'd recommend!

 Make sure to check company reviews and educate yourself on the difference between checkbook IRA and Custodial SDIRA. While every IRA must have a custodian creating a special purpose LLC can allow you to bypass the custodian when making investments and performing transactions which can save time and money. Furthermore unless you have a Roth IRA (can't move into Solo 401k) there really isn't a good reason to establish an SDIRA and a Solo 401k since you can do everything in the Solo 401k.

Furthermore, the Solo 401k really is a superior product than an IRA. No UBIT on leveraged real estate. 10x higher annual contribution limits. Pre-tax and Roth built in. Participant Loan. Cheaper and easier to maintain. Just to name a few.

Be sure to educate yourself on the prohibited transaction and disqualified person rules that apply to both plan types.  

@Rochelle Gerber The Solo 401k is for the business owner and their spouse only.  You cannot have a Solo 401k with full time w-2 employees outside of the married couple.   You can have employees that work less than 500 hours per year but they are ineligible to participate in the Solo 401k plan.  That said, a Solo 401k can easily invest in wall street by opening a brokerage account.