Recently I have been having more conversations about using my retirement funds to start a business that I will be employed with and earning my salary. There are organizations that are teaching this strategy to unemployed individuals that have former employers 401k that they want to use to invest in a business. While investing in a business is not a prohibited transaction, however investing in a business that I’m going to run has always been my understanding to be self dealing and personal use.
Internal revenue code 4975 tells us that we nor our lineal decedents or ascendance should benefit from a transaction that our retirement account engages in. Investing a business like a Sub shop is ok, but me working there and earning my livin...Read more
Posted on 05/24/2016 at 12:00:00 AM
Blue Diamond Documents is proud to share an article written by Bruce Silverman of Home Path Financial.
We thank Bruce for sharing his vast knowledge with us. If you have any questions please don’t don’t hesitate to contact me or Bruce directly. Thanks and Enjoy…
There is an old adage in investing no matter what you are investing in; “Buy Low and Sell High”. This is especially true with Real Estate as we are now at a bottom and prices have not been this low in many years. Recently Warren Buffett said if he could, he would buy every single family home he could get his hands on. There is a lot of money being made right now “flipping” homes, and in many ways it is much better than owning rental prop...Read more
Posted on 01/21/2013 at 12:00:00 AM
Hard Money Lending and Hard Money Borrowing
May 9, 2012
Today I want to talk about another way you can use a self
directed IRA to can get out of the stock market and make a nice return in a safe and secured way.
What I want to talk about is becoming a hard
money lender and or a hard money borrower.
First let us define a hard moneylender. A hard money loan is a specific type of asset-based loan financingthrough which a borrower receives funds secured by the value of a parcel ofreal estate. Hard money loans are typically issued at much higher interestrates than conventional commercial or residential property loans and are almostnever issued by a commercial bank or other deposit institution. Hard money issimilar to a bridge loan, which usuall...Read more
Posted on 05/09/2012 at 12:00:00 AM
Here is a sample of some of the questions we get when talking about checkbook control. Hope you find this helpful.
1. Why have I not heard of a Checkbook Control IRA LLC, or investing in alternative assets before?Even though we have always been allowed to invest in alternative investments and the Stock Market since the beginning of IRAs, stock market brokers have done a good job of convincing us that our only choices in our retirement account is Stocks, Mutual Funds CDs or Bonds. In actuality, the IRS never tells what we can invest in, only what we cannot. This list is very short.2. What are considered prohibited assets in an IRA?IRS Section 408 tells us that we should NOT invest in Life Insurance and Collectibles. These are the only two...Read more
Posted on 12/20/2011 at 12:00:00 AM
Today I want to talk to you about individual 401ks also known as solo 401k and what are the benefits of this type of plan? And what are the nuts and bolts of this type of plan? Let’s dig into this topic.An individual 401k is the type of plan that has the ability to invest in anything the law allows, like real estate, private placements or any alternative investment to the stock market. It’s the most tax-advantageous, self-employed plan available with very high annual contribution limits. You can set up this plan even if you’re employed at a full-time job. And, you can borrow funds from the account.An individual 401k plan is available to any individual who is a business owner or who will be establishing a business and do...Read more
Posted on 10/25/2011 at 12:00:00 AM
Over the years of working in the Self Directed IRA world the number one question has always been. What is a prohibited transaction?This is how the code reads:A prohibited transaction happens under the Employee Retirement Income Security Act of 1974 (ERISA) when the plan engages in a transaction that the fiduciary knows or should know is a direct or indirect:1. Sale, exchange, or lease of any property by a party of interest;2. Loan, or extending of credit to a party of interest;3. Furnishing goods, services, or facilities by a party of interest;4. Transfer of plan assets to a party in interest or the use of plan assets by or for the benefit of a partyof interest;Who is a party of interest?Under ERISA, the following are parties in interest...Read more
Posted on 10/10/2011 at 12:00:00 AM
I recently had a conversation with an individual that was considering investing his IRA into a motel. He was a successful executive in the hotel industry so he felt he knew what to look for when considering the many hotel and motel opportunities. He is typical long term employee that had an employer sponsored 401K that allowed him to invest in a select few mutual funds. Over the years he had contributed a substantial amount of salary deferrals, along with company matching he had accumulated a nice little nest egg. The problem is as far as he was concerned, was that he was investing in things he didn’t understand. He was investing in things he had no control over and it just wasn’t working, he always wanted to invest something...Read more
Posted on 09/19/2011 at 12:00:00 AM
If you want to use your IRA to invest in something other than stock market based investments you can open a self directed IRA with a custodian that will allow you to invest in alternative investments. While this type of retirement account will give you more control over where your money is invested, it may be risky for the average investor. It has the same advantages and disadvantages that a stock market based retirement account has if you as the investor makes uneducated investment decisions. Any financial planner worth his salt would tell you to invest in what you know and understand. In classes I teach I will ask my students “who in here has mutual funds?” most everyone in the room will raise their hand. Then I will ask &l...Read more
Posted on 08/19/2011 at 12:00:00 AM
When choosing a Self Directed IRA Custodian here are a few points you will want to keep in mind. First and foremost, you want a custodian that you can have a long term relationship with. You need to feel comfortable with how your communication is with your custodian. Do they answer the phone when you call? Do they call you back when you leave a message? You want a custodian that you feel you can trust and has the experience needed to manage your specific type of alternative investments successfully.
There are many SDIRA custodians to choose from, but their services and fees can vary considerably. Be sure to read the fine print on the custodians’ fee schedules. Take your time comparing the services they provide and the fees they cha...Read more
Posted on 08/09/2011 at 12:00:00 AM
There are a lot of would be investors that want to get their retirement funds out of the stock market and into alternative tangible assets like real estate. But a lot of account holders have a problem; they don’t have enough funds in their retirement account to buy a rental property. Sure there are great deals in real estate today, but that doesn’t matter if you don’t have enough money to grab those good deals.
Today we are going to explore ways to use other people’s money in your self directed retirement account so that you can invest in this buyers market.
The first method is partnerships. Partnerships are probably the most common way of raising capital and for me it is the easiest way to raise capital. A partne...Read more
Posted on 08/02/2011 at 12:00:00 AM