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.

What is a Traditional IRA?

An IRA, or Individual Retirement Arrangement, is described in Section 408 of the Tax Code and provides for tax deductions and tax-deferred returns on investments in the account. You get a tax deduction for each dollar you put into the account, up to $5,500 per year or $6,500 for those aged 50 and up – and no taxes are paid earnings in the account. When funds are distributed from the account at retirement income tax must be paid.

What is Roth IRA?

A Roth IRA, described in Section 408A of the Tax Code, provides for the reverse treatment. There’s no tax deduction for contributions to the account, but investment returns within a Roth IRA are completely tax-free, forever. If you may have very high returns on your retirement account investments a Roth IRA is preferable to a Traditional IRA.

What Assets Can An IRA Invest In?

According to the tax code and regulations, an IRA can invest in anything other than life insurance, collectibles, and S-Corp stock. That means real estate, private loans, tax liens, private stock, and any investment you can think of ARE allowable.

What is NOT a Self-Directed IRA?

Technically, all IRAs are self-directed. When you open an IRA at Schwab, Fidelity, or another brokerage, they don’t choose the investments for you (unless you pay them to do so). You’re free to choose from among any stock or mutual fund available on their platform.

If you’d like to invest in real estate, as allowed by the tax code, the brokerage representative informs you that doing so is not allowed. Says who? Not the IRS. The IRS follows the tax code which allows real estate investing. The reason brokers don’t allow investing in real estate on their platforms is that they’re not able to handle those investments and make money off you.

What is a “Traditional” Self-Directed IRA (SDIRA)?

A traditional Self-Directed IRA is an IRA held by specialized trust companies that are capable of administering non-traditional IRA investments, such as real estate and private loans. In a traditional SDIRA the custodian holds the IRA cash and handles all investment paperwork as trustee of your SDIRA. Being that these companies don’t have investment platforms they generate revenue from administrative fees, which can be substantial. In addition, every disbursement and every deal doc must be processed, approved, and signed for by the trustee. This can cost you valuable time when you’re trying to close a deal.

What is a self-directed checkbook control IRA?

A checkbook control SDIRA has all the benefits of a traditional SDIRA without any of the downside. A checkbook control IRA gives you direct control of the cash in your IRA and allows you to sign all deal documents. With a Checkbook IRA, custodian fees are minimized and investment flexibility is maximized. Checkbook IRAs use a specialized IRA-LLC structure to that enables you to handle real estate IRA investments with the same ease as real estate deals outside of a retirement account.

Should I use a self-directed Solo 401k for real estate investments?

Self-directed Solo 401(k)s are a great vehicle for retirement plan real estate investing and extensive tax benefits for those that qualify. However, not everybody qualifies for these but it is definitely something you should explore.

ReSure is led by Bernard Reisz CPA and assists investors nationwide with total control SDIRA, QRP & 401k. Whether you’re looking to invest in real estate or the stock market, the ReSure team can help you do so with confidence.

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”

Solo 401k Contributions: Understanding & Optimizing

Solo 401k contributions to a Checkbook-Control Qualified Retirement Plan – a Checkbook 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 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 “Solo 401k Contributions: Understanding & Optimizing”

Podcast: Everything You Need To Know About Self-Directed Retirement Investing

Get answers to the most common questions  – and learn advanced strategies – related to Self-Directed IRA, Checkbook IRA, Self-Directed Solo 401k, and Checkbook 401k. Bernard Reisz CPA was interviewed by John Casmon of Casmon Capital for the Target Market Insights podcast to answer frequently asked questions about the use of tax-sheltered retirement accounts for real estate investing. Continue reading “Podcast: Everything You Need To Know About Self-Directed Retirement Investing”

Solo 401k Podcast: How It Integrates With Your Total Tax Strategy

Great Solo 401k Checkbook podcast discussion with Mark Jensen, leader of the Mark Jensen Commercial Real Estate Team, in which we challenged standard tax and financial assumptions. If you’re in real estate sales, mortgage brokering, or get real estate management/syndication revenue, this one’s for you: Continue reading “Solo 401k Podcast: How It Integrates With Your Total Tax Strategy”

Self-Directed IRA & 401K Investor 2018 Tax Filing Calendar

A comprehensive 2018 Tax Filing Calendar for self-directed retirement plans, businesses, exempt organizations, trusts and estates, and individuals. Continue reading “Self-Directed IRA & 401K Investor 2018 Tax Filing Calendar”

Checkbook Solo 401K: Year End 2017

Happy New Year to All!
 
2017 has been an exciting year for checkbook control – from the explosive emergence of Cryptocurrency to Tax Reform – we in the self-directed retirement community have had a stake in the evolution of the investment and tax landscape. In this post we’ll highlight how 2017 regulatory events relate to Checkbook Solo 401k investors and provide year-end tax planning tips.

Continue reading “Checkbook Solo 401K: Year End 2017”

Checkbook Solo 401k: Is It Better Than A Self-Directed IRA?

Self-Directed IRAs, Checkbook-Control IRAs, and IRA-LLCs are powerful alternative investment vehicles with great tax benefits. However, for those that qualify, Checkbook Solo 401K Plans are far better vehicles for retirement-account real estate investing. In this post will introduce the fundamentals of Checkbook Solo 401k Plans and their benefits. Continue reading “Checkbook Solo 401k: Is It Better Than A Self-Directed IRA?”

Solo 401k Loan FAQ & Answers

Checkbook Self-Directed Solo 401k Plans, also known as a Checkbook QRP, provide a great feature that can be leveraged in so many ways: A Checkbook Solo 401k Loan. The loan proceeds can be used to finance anything you’d like and the interest payments are made to yourself.

In fact, Checkbook 401k Loan Interest Payments can be viewed as a way to make backdoor contributions – beyond the Solo 401k contribution limits – to your Checkbook Solo 401k tax advantaged retirement accounts. Once those interest payments are paid to your Solo 401(k) plan or QRP, those funds become additional plan assets that can be invested tax-free.

Do you have debt to pay off? Do you want to purchase a new vehicle? Pay for education? Or, would you like to make an investment outside your Solo 401k using Solo 401k funds? The Checkbook Control 401k loan feature is your best option. In this post will cover all that you need to know to legally take advantage of this Checkbook QRP feature. Continue reading “Solo 401k Loan FAQ & Answers”

Roth Solo 401k Contribution Guide

What type of funds can be contributed to a Solo 401k Roth account?

There are many sources of funds for Self-Directed Solo 401k plans and most – but not all – can be contributed to the Roth Solo 401k subaccount. Following are eligible sources of funds for a 401(k) Roth account: Continue reading “Roth Solo 401k Contribution Guide”

Solo 401K Roth Contribution Q&A

What is a Roth Solo 401k Plan? What is a Solo 401k Plan?

Understanding Roth Solo 401(k)s requires that we first understand the basics of traditional Solo 401k plans.

401K Plans, creatively named after Section 401(K) of the Tax Code, are Defined Contribution qualified retirement plans that allow employees to choose (“elective deferral”) to contribute all or part of their compensation to a tax-advantaged account and exclude the amounts contributed from current taxable income. The tax code calls this a “cash or deferred arrangement,” or CODA. A 401k Plan can be combined with other types of plans, such as Defined Benefit and Cash Balance Plans, to maximize tax deductions and allow for multiple forms of plan contributions. The typical 401(k) Plan provides for  employer profit sharing contributions, in addition to employee contributions. Self-Directed Solo 401(k) Plans are 401(k) plans for businesses that don’t have full-time employees other than business owners and their spouses, which can be designed to include very attractive features such as Roth 401k Contributions and After-Tax Employee Contributions.

What is a Roth Solo 401k Plan?

Continue reading “Solo 401K Roth Contribution Q&A”