All Forum Posts by: William W. Humphrey

It is often helpful to look at the expenses associated with choosing and adopting a plan, periodic restatement, etc.  Also, be aware that all banks do not handle the account type used by 401(k)s with the same facility.  I can help you get started if you would like to send me a private message.

Hi Todd, 

We have a number of collaborative B2B services for real estate investment offerings.  I would be happy to provide more details via a one on one connection.

I encourage you to talk with your CPA or other tax person in advance of taking distribution.  While taking out contributions is not taxed and penalized, taking distributions of earnings may incur both depending on your age.  

Having the Roth do the investing, instead of taking distribution and then investing, means that you may be able to never pay tax on the earnings that the $30K makes.

Keep in mind that there are a number of real estate investments that an IRA can make, some of which do not require a large cash amount. Some investments that I have seen:

IRA partners as tenants-in-common with other investors (which can be pretty much any person or entity) on a property.

IRA originates a bridge loan or construction loan.

IRA purchases a fractional piece of an existing note.

IRA purchases an interest in an LLC that is investing in real estate.

The point being, even a smaller amount in an IRA can begin to create earnings in the real estate asset class.

When choosing an IRA custodian for real estate in particular, you may want to look for convenience features such as free, online bill pay for your IRA to disburse funds, the ability of your renters to pay their rent to your IRA online, etc.

I always encourage investors to run the numbers on competing scenarios. For instance, what are the long term consequences of being able to invest approx. 35% (referencing your numbers from above, 10% penalty + 25% taxation) less cash into the initial purchase? What is the tax impact of owning the property personally vs. owning it in your IRA when rent comes in? Etc. Sometimes putting the numbers down on paper can make a decision more clear.

From a strategic investing standpoint, it is worth noting also, that an IRA can distribute real estate to the account holder "in-kind", meaning that the property never leaves your control. It simply changes from you owning it in a tax-advantaged account vs. owning it personally. This could be relevant if you are willing to put up with use, sweat equity rules, etc. for real estate in an IRA for a length of time. You can make this in-kind distribution at any point that you choose. And, if you wait until after 59.5 years old and distribute in-kind, of course, the 10% penalty goes away.

Some 401(k) plans allow for an "in-service" distribution.  This means the participant, while remaining employed by the company, can roll over a portion of the money in the 401(k) without tax or penalty.  Ask the plan administrator or trustee to see if the plan document has this provision in it.

Hi Eddie, I would be happy to provide you with some resources for your educational event(s).  We can even create a private, live webinar for your network.   In fact, there are some downloadable resources on  www.newdirectionira.com that might work for you.  There are lots of options as long as you are staying in the educational realm.

Hi Jeff, While we don't give any vendor recommendations, I can offer a few thoughts. Dealer markups (i.e. commission, premiums, etc.) do vary a lot; so price shopping can make a big difference. Shipping costs can also make a big difference. Your decision of where and how to store the coins can be key in terms of your IRA's compliance and therefore risk. Home storage has gotten a good bit of negative press and opinion lately, and, of course, the IRC section 4975 text about "providing services" for your IRA assets is something about which you may want to consult with your legal team. That said, in both an online and local shopping environment, you can find solid pricing. If you are thinking about coins other than US minted American gold eagles, I will again suggest your consult your legal team.

Hi Jason,

A Solo 401(k) plan with you as the Trustee usually provides the investor with the most control available.  You can obtain a plan document from us (without need of a CPA, though we always encourage you to talk with your CPA about all of your financial plans) that allows your 401(k) to buy and sell real estate, have a personal loan provision, have Roth contributions for the participant, etc.  The plan document is the key to give you control and agility.