All Forum Posts by: Jeff Nash

I'm not sure what the nature of your situations is and if it is an active trade or business, but the consideration of general versus limited partners might be important as well.  If your wife is not really involved because she works full-time she might really be considered a limited partner which might be better for self-employment tax purposes.  The husband/wife endeavors often require some additional planning.  Check with a tax advisor and attorney. 

  

Each state has different operational protocol, fees, and annual filing requirements depending on whether you are a domestic or foreign (out-of-state) entity.  Both of these states have annual reporting requirements which must be done to maintain good standing.  It is common to see people form entities that have no activity but they fail to maintain compliance because they are unaware that there are still reporting requirements.  Here are some helpful links below for reference purposes.  Note that I am not an attorney and don’t know all the details of your situation so I advise that you consult with one, and/or your tax professional to ensure you are handling the situation properly from all perspectives (legal, tax, and operational).

 https://dos.myflorida.com/sunb...

https://www.sos.state.tx.us/co...

Our clients primarily use Interactive Brokers for the competitive rates and not having to allocate anything to any security or financial instrument.  Here is a link to their pricing - https://www.interactivebrokers....  

The caveat to the above statement is that you have to open a Pro account rather than a Lite account where the difference is being associated with a financial professional or not. 

There are other ways to earn higher short term yield (9 months or less I’m holding period) but that would involve taking more risk than parking funds in idle cash.  If preservation of capital to the highest level is your objective than money market accounts and CDS etc as previously noted all appear to be adequate possible solutions without knowing anything else about your situation.  

Hi German, I'll send you a request to connect.  

Yes, the word “like-kind” is a bit misleading as it just has to be real property that you are exchanging.  There are criteria that has to be met in order for an exchange to work but assuming it is then you can do an exchange as described. 

As a quick follow up, I want to disclaim that I am not a valuation expert or appraiser, but I imagine the scenario you described regarding the value of the investment would be less likely early on where you have a day 1 unrealized loss of that magnitude.  Depending on the sophistication of the sponsor and size of the fund, they likely would be able to provide you with the value of the units or investment annually.  The fair market value of course would be expected to differ from the accounting or tax basis of the investment as reported to you.

If there is a potential timing opportunity or tax arbitrage such as in your example, then you could convert based on whatever is permissible under your 401k plan. This would be no different than if you held a publicly traded stock in a traditional IRA and it was beat down but you expect it to eventually recover (and perhaps too your income in that given year is also down or less than normal) so it might be wise to consider converting to a Roth.

Hi Mike, just to clarify a few things:

The maximum Roth 401k contribution for 2023 is $22,500, and if you are 50 or older you can do an additional catch-up contribution of $7,500.  

The maximum of all contributions to a 401k plan is $66,000, or $73,500 if you are 50 and older.  

I assume you are self-employed and have your own 401k with all the plan design bells and whistles (not the generic plans offered by larger popular custodians and trading platforms). If this is the case, you can implement the mega back door Roth strategy which works similar to a regular back door Roth IRA, only with a lot more money. So let's say you are under 50 and make the regular contribution of $22,500 to the Roth 401k and now you have another $43,500 to contribute to hit the statutory limit. You would put that in the After-Tax account and then immediately convert it to the Roth so that future earnings are not taxed. The After-Tax account is almost like a clearing account just like a Traditional IRA is when you implement a back door strategy.

It depends on your financial situation, income potential, expectations to remain at that employer. and whether there are any other available alternatives.  Without knowing all the details of your situation it is difficult to say with exact certainty.  Normally borrowing from a 401k may not be the best option if there are available alternatives. Feel free to message me.  

If you are interested in real estate and alternative investing you might be better off setting up a self-directed solo 401k plan.  Depending on your age, income and investment objectives, that might be a better option than a SEP.  I was not particularly a fan of the SEP for many reasons pre-SECURE Act 2.0, but it is been improved with the legislation. I am not aware though if the custodians are up to speed yet with the changes. Feel free to connect and message me as I might be able to help if I know more about your situation.  

I agree with the other respondents regarding the issue of LLC/PLLC. If the LLC is not an option with the realtor business (eliminates S-Corp election option) then I don't think it is worth setting something up for investment purposes assuming you don't already have a large RE portfolio.

As for your other question, for most of my business owner clients I recommend using Interactive Brokers because interest earned on just cash (not putting it in any financial instrument or security) earns a very competitive rate relative to the many alternatives. Currently it’s 4.33% but with restrictions (see Pricing on their website). You also have the other large players like Schwab/TDA, Fidelity, Pershing, Vanguard, etc online platforms, and regional banks and credit unions. These options should be better than your typical savings accounts which have not generally been offering the same level of competitiveness.