How To Invest In Real Estate With SDIRAs and Checkbook Control

Tax Free Real Estate Investing With Self-Directed Retirement Accounts: SDIRA, QRP & 401k

Did you know that you can use a Traditional IRA and Roth IRA to invest in real estate tax free? Do you know the difference between a Traditional IRA and Roth IRA? In this post you’ll get an overview of these accounts and how you can use a self-directed IRA with checkbook control for real estate investing. Continue reading “How To Invest In Real Estate With SDIRAs and Checkbook Control”

CARES Act for Self-Directed Financial Investors: QRP, SDIRA, & Solo 401k

In this post, we focus on CARES Act implications & strategy for tax-favored self-directed retirement accounts: Individual Retirement Arrangements (IRA), Qualified Retirement Plans (QRP), Self-Directed IRAs (SDIRA), Solo 401k, Employer 401k plans & many other QRPs.

The CARES Act, short for Coronavirus Aid, Relief, and Economic Security Act, is a massive $2,000,000,000,000+ tax and spending package signed by President Trump on March 27, 2020. The CARES Act includes many forms of financial relief for businesses and individuals. Continue reading “CARES Act for Self-Directed Financial Investors: QRP, SDIRA, & Solo 401k”

EQRP® & QRP: What Are EQRP®, QRP, Solo 401k & SDIRA?

eQRP® – a marketing term registered to Total Control Financial, LLC – QRP and Solo 401k generate excitement and interest within the self-directed investor community. From crypto-enthusiasts, gold & silver precious metals investors, and tax lien & deed buyers to real estate syndicators, QRP and Solo 401k, as an alternative to SDIRA, is creating incredible buzz. But, there appears to be extensive misunderstanding of QRP and Solo 401k, so we’re providing an educational resource for self-directed investors.

For analysis, review, and FAQ about  QRP, QRP-LLC, Solo QRP, Solo 401k, SDIRA, & Checkbook Control read on. Continue reading “EQRP® & QRP: What Are EQRP®, QRP, Solo 401k & SDIRA?”

Checkbook Solo 401k-QRP: 2019 Year End Maintenance

QRP & Solo 401k Contribution Deadlines

Checkbook Solo 401K and Checkbook SEP-IRA Contribution Deadline. The deadline for contributions to Self-Directed Solo 401(k) Plans and Self-Directed SEP-IRAs is the tax return due date of the business sponsoring the plan, including extensions. Therefore, the contribution deadlines depend on the type of business that sponsored the plan – sole proprietorship, partnership, S-corporation, C-corporation, or LLC taxed as any of the foregoing – and whether you timely file for a tax return filing extension. Filing extensions are especially helpful for those that want to make 2019 contributions, but don’t yet have funds available to do so by the initial required filing date.

W-2 Coordination: Forms W-2, reflecting wages and related tax-reporting for S-Corps/C-corps are filed by 1/31/2020. Therefore, you should make your employee deferral contributions ahead of then, so that they be properly reflected on your W-2.

Deferral Elections: Although deferral contributions can be made to the plan after the end of the year, deferral elections by owners of unincorporated businesses must be made by 12/31/2019. Deferral elections for owners of incorporated businesses must be paid prior to the payroll(s) from which the contribution(s) is withheld. Click here to access Solo 401k 2019 Deferral Election Forms.

QRP & Solo 401k Filing Requirements

Forms 1099-R for Solo 401k Distributions and 401k In-Plan Roth ConversionsForms 1099-R for Solo K distributions must be provided to plan participants by January 31, 2020. Forms 1099-R must be filed with the IRS by February 28, 2020 if paper filed or by April 2, 2020 if electronically filed.

Form 5500-EZ for certain Solo 401k PlansIf Solo 401k plan assets exceeded $250,000 as of December 31, 2019, a Form 5500-EZ is due to the IRS by July 31, 2020. Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns) can be filed with the IRS on or before the normal due date to receive an automatic two-and-a-half-month extension to October 15. Regardless of plan asset value, Form 5500-EZ must be filed for the year in which a Solo 401k Plan is terminated. Checkbook IRAs, for which annual IRS reporting is handled by your custodian, are not required to file Forms 5500.

Forms 990-T (UBIT, UBTI, UDFI) For SDIRAsSD401(k)sSD-DB PlansRetirement accounts that generate more than $1,000 in Unrelated Business Taxable Income (UBTI), should file Form 990-T by April 15, 2020. To request an automatic extension of time to file Form 990-T use Form 8868, Application for Automatic Extension of Time To File an Exempt Organization Return.

Form 990-W (Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations). If UBIT tax liability is expected to exceed $500, estimated tax payments should be made. Payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year.

Solo 401k/QRP Required Minimum Distributions

  • Remember that RMDs required from 401(k) plans and 457(b) plans have to be taken separately from each of those plan accounts. Therefore, if you have more than one defined contribution plan, you must calculate and satisfy your RMDs separately for each plan and withdraw that amount from that plan. This differs from the rules that apply to IRAs, for which you may aggregate your RMD amounts for all of your IRAs and withdraw the total from one IRA or a portion from each of your IRAs.
  • Remember that designated Solo 401k-QRP Roth accounts are subject to the RMD rules. This, too, differs from the rules that apply to Roth IRAs, for which there are no RMD requirements for while the owner is alive. 
  • The penalty for failing to take an RMD is very harsh: The amount not withdrawn is taxed at 50%. The account owner should file Form 5329Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with his or her federal tax return for the year in which the full amount of the RMD was not taken. (The penalty may be waived if the account owner establishes that the shortfall in required distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. In order to qualify for this relief, you must file Form 5329 and attach a letter of explanation.)
  •  As a 5% or more owner of the business that sponsors a Solo 401k, you must start RMDs by April 1 of the year following the year you turn 70½, even if you are still employed by the company and have not yet retired.
  • After the first RMD, you must take subsequent RMDs by December 31 of each year, beginning with the calendar year containing your required beginning date.
  • Your RMD is generally determined by dividing the adjusted market value of your Solo 401k as of December 31 of the preceding year by the distribution period that corresponds with your age in the Uniform Lifetime Table (Table III in IRS Publication 590-B, Distributions Individual Retirement Arrangements (IRAs). If your spouse is your sole beneficiary and is more than 10 years younger than you, you will use the Joint Life and Last Survivor Expectancy Table (Table II in IRS Publication 590-B).

Solo 401k-QRP Year-End Maintenance Resources

Checkbook Solo 401k 2019 Contribution Calculator: Click here to access a web-based 2019 Solo 401k Contribution Calculator. Note: The calculator may be used to provide an approximation of your allowable 2019 Solo 401k contribution amount, not a precise indication of the correct amount. Your actual contribution amount should be calculated in conjunction with your tax professional. Specifically, those that have both W-2 and self-employment income should be sure to work with a qualified professional when calculating their Solo 401k contributions.   

Understanding and Tax Optimizing Your Solo 401k Contributions: Click here for an in-depth discussion of 401k contribution rules and regulations, as well as the tax factors that you should take into account to maximize the tax benefits of your Solo 401k plan.

Helpful IRS Resources For Solo 401k-QRP Plan Maintenance

IRA-LLC, 401k-LLC & QRP-LLC: How To Complete Form W-9 Tax ID

Which EIN should you use with your IRA-LLC, 401k-LLC, IRA-Owned LLC, Checkbook IRA?

Self-Directed IRA (SDIRA) investors that have checkbook control ask:

  • What is the correct way to complete Form W-9 for an IRA-LLC?
  • Whose TIN should I use when investing with an IRA-LLC?
  • Should I use my SSN when investing with my IRA-LLC?
  • Whose EIN should be entered on a W9?

Continue reading “IRA-LLC, 401k-LLC & QRP-LLC: How To Complete Form W-9 Tax ID”

Broad Financial Review of Solo 401k

This broad financial review of Solo 401k provides the ultimate Solo 401k high-level guidance to investing in alternative assets, including real estate, cryptocurrency, Bitcoin, hard-money lending, private lending, private equitytax liens, gold & silver, and many other alternative assets. Continue reading “Broad Financial Review of Solo 401k”

Solo 401k & 199A QBI Tax Deduction

Every Checkbook Solo 401k investor is impacted by the tax innovation introduced by The Tax Cuts and Jobs Act. The key provision of Tax Reform for Solo 401k adopters to focus on is the new IRC 199A 20% Qualified Business Income – QBI – tax deduction. By definition Solo 401k and QBI go hand-in-hand – and  a Solo 401k can help you maximize the value of this impactful tax deduction. Continue reading “Solo 401k & 199A QBI Tax Deduction”

QRP & Solo 401k Contributions: Understanding & Optimizing

401k-QRP & Solo 401k contributions to a Checkbook-Control Qualified Retirement Plan – a Checkbook 401k-QRP – have multiple tax benefits: (1) They are tax-deductible, reducing your taxable income & tax liability to the IRS and (2) they grow tax-deferred, with no annual taxes on earnings and profits within the Solo 401k.

Tax-deductible QRP-401k & Solo 401(k) contributions consist of 2 components: (1) Employee Elective Deferrals and (2) Employer Non-Elective Contributions (profit sharing). However, you may have heard various other terms used to describe 401(k) Plan contribution types. Following is a comprehensive guide to Solo 401k contributions, terms,  and calculations. Continue reading “QRP & Solo 401k Contributions: Understanding & Optimizing”