All Forum Posts by: Loren Whitney

Hey All,

This is my first time mentioning one of our webinars in the BP marketplace. I am Loren Whitney, Asst. Director of Business Development at New Direction IRA. I am an active user here on BP and our firm sponsors the SDIRA forum category.

Today (9/3/14), I'll be hosting a free webinar from 11am-11:25am MT on the idea of using retirement funds for private money loans. I'll discuss the basic rules and guidelines of accomplishing these types of investments as well as some strategy. If you've been thinking about using an Self Directed IRA for real estate or lending, this is a great way to get your feet wet. I look forward to live participation and questions so please join in if you're able.

You can register here: https://attendee.gotowebinar.com/register/79640830...

Thanks for your time and l look forward to networking!

In this scenario, I must state that I'm not able to offer any tax, legal or investment advice. That being said, your logic is accurate. Everyone has a different tax situation and in some scenarios, a Traditional IRA is a better choice than a Roth. If you're financially savvy, you can do a comparative analysis between both options to see if one is better for you in the long run. This is not an easy analysis to do and it often left to financial planners or advisors.

One thing I will say is that you have the option to perform more than one Roth conversion. Instead of converting an entire balance, you can potentially convert smaller increments year-over-year. This is just one strategy that may allow you to reduce your taxation if you can avoid stepping up tax brackets. Again, this depends heavily on several factors and there is no "right strategy".

Be sure to learn about the 5-year Roth conversion rule if you're considering any sizable distributions anytime soon.   

I look forward to hearing what others say. Good luck! 

@Glenn Gray 

Nice to meet you here on BP. I'm a local in the Denver area as well.

Investment titling from here out is extremely important to maintain your tax advantages. All of your investments (IE - brokerage account) need to be conducted in the name of the LLC. The IRA is indirectly involved at this point, much like a holding company. You're conducting investments in the name of the LLC now. If you haven't already done so, I would suggest reviewing Internal Revenue Code, Sections 408 and 4975.

Feel free to write me with specific questions.  

Make sure that your custodian is not only knowledgable and swift with transactions but also able to offer adequate technology to support all the day-day expense requests you need to make. Do they offer online bill pay? And do they charge check fees? Best of luck. Dmitriy Fomichenko Well said Dmitriy.

One of the most common reasons is because the funds are already in a retirement plan and withdrawing them is counter productive.

Cornelius Amos I think you're talking about acquiring a mortgage in the name of the IRA, correct? Yes, this is possible and many investors take this path. You are required to use a non-recourse loan because the IRA cannot be personally guaranteed. When using leverage, your IRA will be subject to UDFI, a special tax that's derived from the debt leveraged profits. Be sure to learn how this will effect your retirement plan as well as investments. You should also consider looking into an Individual 401k as it comes with far more benefits than an IRA. It is also exempt from UDFI in a buy-hold scenario. Best of luck!

You're right about the UDFI in a solo(k) Albert.

UBTI and UDFI are what result in UBIT.

I just posted a excerpt BP blog post from publication 598 yesterday that talks about these topics exactly.

@Barrett Dunigan 

Happy to help. There are no differences between IRA accounts as it relates to UBIT subjectivity.

UBIT is triggered two ways:

1. 1. UBTI - Unrelated business taxable income
2. 2. UDFI - Unrelated debt financed income

I just wrote a Bigger Pockets blog on this exact topic that I think you'll appreciate. Check it out!

Investing with an SDIRA - Understanding UBIT, UDFI, and UBTI

Let me know if I can help with anything else!

You raise a good point. It will always boil down to the entities option to take on new non-accredited investors. The portals will usually screen people because a majority do required accrediated investors. You're not the first to encounter this issue. I hope that laws change in the future to make it easier for investors.

This appears to be marketing for private equity more than anything else. It feels like a B2B marketing website to me, attempting to attract crowdfunding portals.

Either way Paul, you should be able to go straight to any crowdfunding website that allows private investors and utilize your IRA for those types of investments. The portals themselves are all acting as middlemen. Your actual contractual agreements all take place directly with the entity you're investing in. If you find a company you'd like to invest in, attempt to contact them.